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Fired Lawyer Can Recover Pre-Firing Fees Under Quantum Meruit – No Evidentiary Hearing is Required – IL Appeals Court
The estate of a young woman killed in a car crash hired an attorney (Lawyer 1) to file a personal injury suit against the drivers involved in the crash. The estate representatives entered into a 1/3 contingent fee arrangement with the attorney who placed an attorney’s lien on any recovery by the estate.
About 2 years later, the estate fired Lawyer 1 and hired Lawyer 2. Lawyer 2 eventually facilitated a settlement for the estate in the amount of $75,000 and filed a motion to adjudicate the Lawyer 1’s attorney lien.
Lawyer 1 claimed he was entitled to $25,000 – 1/3 of the settlement amount. After considering his affidavit and time records, but without an evidentiary hearing, the trial court awarded Lawyer 1 a fraction (about $14K less) of what he sought on a quantum meruit basis (number of hours times hourly rate).
On appeal, Lawyer 1 argued the trial court denied him due process by not holding a formal hearing and erred by not awarding him more fees given the settlement’s proximity in time to his firing.
That’s the procedural backdrop to Dukovac v. Brieser Construction, 2015 IL App (3d) 14038-U, a recent unpublished Third District decision that addressed whether a fee petition requires an evidentiary hearing and the governing standards that guide a court’s analysis when assessing fees of discharged counsel.
The Third District upheld the trial court’s fee award and in doing so, relied on some well-settled fee award principles.
In Illinois, a client has the right to fire an attorney at any time. Once that happens, any contingency fee agreement signed by the client and attorney is no longer enforceable.
After he is discharged, an attorney’s recovery is limited to quantum meruit recovery for any services rendered before termination.
In situations where a case settles immediately after a lawyer is discharged, the lawyer can recover the full contract price.
In determining a reasonable fee under quantum meruit principles, the court considers several factors including (i) the time and labor required, (ii) the attorney’s skill and standing, (iii) the nature of the case, (iv) t he novelty and difficulty of the subject matter, (v) the attorney’s degree of responsibility in managing the case, (vi) the usual and customary charge for the type of work in the community where the lawyer practices, and (vii) the benefits flowing to the client.
A trial court adjudicating a lawyer’s lien can use its knowledge acquired in the discharge of its professional duties along with any evidence presented at the lien adjudication hearing.
Here, the appeals court that the trial court properly considered discharged Lawyer 1’s time records and affidavit in making its quantum meruit award. Even though there was no evidentiary hearing, the time sheets and affidavit gave the trial court enough to support its fee award.
Afterwords:
This case provides a good synopsis of the governing rules that apply where an attorney is discharged and the case soon after settles. A trial court has wide discretion in fashioning a fee award and doesn’t have to hold an evidentiary hearing with live witness testimony.
A clear case lesson is that a discharged petitioning attorney should be vigilant in submitting detailed time records so that the court has sufficient evidence to go on in making the fee award.
No Claim-Splitting or Res Judicata Issue Where Bank Refiles Breach of Note Claim After Prior DWP – From the Illinois Archives
BankFinancial, FSB v. Tandon, 2013 IL App (1st) 113152 serves as fairly recent reminder of the possible pitfalls that await a plaintiff who chooses to voluntarily dismiss or non-suit certain complaint counts when other counts of the complaint are involuntarily dismissed – such as by a motion to dismiss filed by a defendant.
The strategic reasons for taking a voluntary dismissal are several. A non-suit can be a time-buying device when you get to trial and you realize you need more time to secure witnesses and strengthen your case. Having some chronological breathing room to further develop your case can pay psychological and financial dividends for both client and lawyer. But as BankFinancial amply illustrates, the right to voluntarily dismiss a claim and later refile it has limits.
In this breach of contract and mortgage foreclosure case, Plaintiff filed a three-count complaint for mortgage foreclosure, breach of contract (the promissory note) and breach of guaranty in 2003.
In 2006, Plaintiff voluntarily dismissed the foreclosure count and in 2008 the remaining claims were dismissed for want of prosecution (“DWP”). A few month later, in January 2009, the plaintiff filed a new lawsuit, repleading its breach of note and breach of guaranty claims.
The trial court dismissed the 2009 case based on res judicata and plaintiff appealed.
Held: reversed.
Q: Why?
A: Res judicata’s central purpose is to preclude parties from contesting matters they had a full and fair opportunity to litigate. To further this purpose, a final judgment on the merits is required to trigger res judicata’s application. A “final judgment” is one that terminates the litigation between the parties on the merits.
A voluntary dismissal of a case or a DWP is, by definition, NOT a final judgment since when a case is DWPd, the court doesn’t reach the merits of a case.
After a DWP, Code Section 13-217 allows party one year to refile an action within one year and the DWP order doesn’t become final until the one year refilling period expires. (¶¶ 29-30).
Illinois also disallows the related doctrine of claim splitting. Claim splitting applies where a plaintiff tries to refile a claim that he previously voluntarily dismissed in an earlier proceeding AFTER another count of the complaint in that prior action was involuntarily dismissed.
So, if in Case No. 1, a plaintiff’s negligence claim is (involuntarily) dismissed on a defendant’s motion and then plaintiff voluntarily non-suits his remaining breach of contract claim, the plaintiff cannot later file the breach of contract claim in a new action. This will be deemed impermissible claim splitting because it subverts the law’s desire for finality and efficiency.
Applying these rules, the court held that the plaintiff could properly refile its breach of note and guaranty claims. The voluntary dismissal of the foreclosure count wasn’t a final judgment nor was the DWP of the note and guaranty counts. The DWP order didn’t become final until a year elapsed from the DWP order date. Since the plaintiff refiled its note and guaranty counts within a year of the DWP, the refiled action was timely. As a result, the plaintiff’s refiled suit wasn’t barred by res judicata or the claim splitting rule.
Afterwords:
This case crystallizes the proposition that if a plaintiff non-suits a complaint count or gets a claim(s) DWPd, he can refile the dismissed claims within one year and avoid any dismissal motion based on res judicata.
If a plaintiff non-suits one claim after a different complaint claim is involuntarily dismissed, he will likely be barred from refilling the non-suited claim in a second action under res judicata and claim-splitting rules. In such a setting, the plaintiff should either litigate the remaining count(s) (the count(s) that isn’t (aren’t) dismissed) to judgment or ask the court for a finding that he can immediately appeal the order dismissing the involuntarily dismissed claim.
Other References:
Hudson v. City of Chicago, 228 Ill.2d 462 (2008)
Rein v. Noyes & Co., 172 Ill.2d 325 (1996)