Law Firm Not An Employment Agency – Can Recover In Quantum Meruit For Negotiating Personal Services Contract (IL Law)

 

Todd W. Musburger, Ltd. v. Meier, 394 Ill.App.3d 781 (1st 2009), while dated, is still post-worthy for its in-depth discussion of a lawyer’s quantum meruit recovery  from a client after the client fires the lawyer under a contingent fee contract.

The defendant radio personality had previously hired the plaintiff law firm under a multi-year written contract to serve as the defendant’s exclusive agent in negotiating defendant’s radio and television contracts.  That contingent fee contract called for the defendant to pay plaintiff 5% of the gross amount of any contract consummated by the plaintiff.

Plaintiff claimed that after the fee agreement was verbally renewed, the plaintiff spent about 200 hours over a one-year period negotiating the renewal of defendant’s radio contract with the WLS (AM 890) station and shopping defendant to competing stations.

Plaintiff alleged that its aggressive negotiation efforts culminated in a $12M/10-year contract offer from WLS; an offer rejected by defendant.  Plaintiff would have received $600,000 under the parties’ contingency contract if the defendant accepted the station’s offer re-upped there.

After it was fired by the defendant, the firm sued to recover for the value of its pre-termination work on the defendant’s behalf.

At trial, a jury awarded damages to the plaintiff of about $70K and the defendant appealed.

Held: Affirmed:

Q: Why?

A:  The court stated the operative rules governing attorney-client relationships and an attorney’s entitlement to recover fees:

a client may discharge her attorney at any time, with or without cause;

–  when a client fires an attorney who was representing the client on contingency, the contingent-fee contract ceases to exist and is no longer operative;

– a discharged attorney may be compensated for the services rendered before the termination of the contingent fee contract on a quantum meruit basis;

– Quantum meruit is based on the implied promise of a recipient of services to pay for valuable services because otherwise the recipient would be unjustly enriched.”

– in quantum meruit recovery, the former client is liable for the reasonable value of the services received during the attorney’s employment.

–  an attorney’s quantum meruit recovery can be barred if an attorney has engaged in illegal conduct;

– just because a client doesn’t receive tangible benefits from a lawyer’s services, doesn’t mean a lawyer can’t recover  in quantum meruit.

The court affirmed the jury verdict and rejected all of defendant’s arguments on appeal.

The court first rejected defendant’s argument that plaintiff was prevented from recovering since it wasn’t licensed as a private employment agency under the Illinois Private Employment Agency Act 225 ILCS 515/11

The court found that plaintiff – a law firm – didn’t meet the statutory definition of “employment agency” since the plaintiff was hired to draft and negotiate on-air talent contracts.  It wasn’t a recruiter or job placement firm.

Next, the court affirmed the trial court’s barring defendant’s retained expert, a lawyer, from testifying that plaintiff shouldn’t have been allowed quantum meruit recovery and that plaintiff breached its fiduciary duties to the defendant.

In Illinois, the decision to admit or bar expert testimony is within the sound discretion of the trial court and the trial court’s ruling will not be reversed absent an abuse of that discretion.

Expert testimony is admissible if the proffered expert is qualified by knowledge, skill, experience, training, or education, and the testimony will assist the trier of fact in understanding the evidence.  But – “expert testimony as to legal conclusions that will determine the outcome of the case is inadmissible.”

Here, the trial court properly barred the defendant’s expert’s quantum meruit opinions since they invaded the province of the trial court.  It’s an axiom that the trial court decides legal issues while the jury decides factual ones.  The defendant’s excluded testimony that plaintiff wasn’t entitled to quantum meruit recovery was a pure legal conclusion.

The court upheld the jury’s quantum meruit damages award.  The court cited the voluminous trial testimony (over 100 pages in the record), offered in chronological detail, where plaintiff discussed the nature and difficulty of the contract negotiations carried out on defendant’s behalf, the money and degree of responsibility involved, and the time and labor required  Plaintiff’s testimony was supported by a radio station executive who had first-hand knowledge of the negotiations.

Afterwords:

  • This case provides a useful summary of quantum meruit in a fairly convoluted and interesting fact pattern involving high-level personal services contracts;
  • A law firm isn’t a job placement agency under the Illinois Private Employment Agency Act and so doesn’t have to be licensed to recover for employment contract negotiations;
  • A lawyer can recover for pre-termination services where he can support and quantify the services either through documentary or testimonial evidence.

 

 

Published by

PaulP

Litigation attorney at Fisher Kanaris, P.C. representing businesses and individuals in all types of commercial disputes.