Kentucky Tort Report

Attorney Discharged for Cause entitled to Quantum Meruit for Fees per NPO of COA - Cooper v. Gordon

In Shapero v. Frederick, [Attorney Contigent Fees: BAKER V. SHAPERO (SC 10/19/2006)], the Kentucky Supreme Court reversed LaBach v. Hamilton and determined a an attorney discharged without cause had a lien on the file in a personal injury lawsuit for the quantum meruit of his/her services.

More recently, the COA in a nonpublished decision held in Cooper v. Gordon 2006-CA-000689.pdf  relying upon LaBach v. Hamilton that an attorney discharged FOR CAUSE was not entitled to a full fee but at best entitled at most to quantum meruit for services rendered prior to discharge. 

An attorney was discharged after filing suit but did very little work, new attorney filed suit and obtained policy limits settlement of $25,000.  Trial court serving as fact finder in fee dispute determined that suit was filed and no action taken by attorney for nearly two years prior to discharge and no settlement proposals or documents sent to insurance company until about the time of discharge.  COA affirmed TC division of fee of $7,807.50 to new attorney and $523.83 for discharged attorney filing suit.

Contigent Fees: "Supreme Court Rules Quantum Meruit Applies to Attorneys' Liens in Contingency Cases" [Ky Torts & Ins. Law Blog]

Ed Brutscher has posted a commentary to the recent decision by Kentucky's Supreme Court in Baker v. Shapero involving a fee dispute between law firms in Louisvillek Kentucky. 

The posting is entitled "Supreme Court Rules Quantum Meruit Applies to Attorneys' Liens in Contingency Cases".

It held, that "when an attorney employed under a contingency fee contract is discharged without cause before completion of the contract, he or she is entitled to fee recovery on a quantum meruit basis only, and not on the terms of the contract. This view is consistent with the client's unqualified right to discharge his attorney at any time. The case was remanded to allow Shapero and Frederick a chance to prove the quantum meruit value of their services. (The amount considered reasonable to compensate them for their services rendered in the quasi contractual relationship) .

By overruling prior case law, Kentucky now falls in line with the majority of other states.  However, here are some comments "off the cuff".

• The rule does not apply if the attorney is discharged for cause which now creates a risk of bar complaints by the client and a closer look by the second attorney to identify ethical issues to justify retention of the entire fee.
• Quantum meruit addresses value of the services which is NOT limited to an hourly rate but looks at the value of the work done and affect on the outcome, eg., pending offers, reserves, issues resolved, status of treatment.
• What if the attorney was discharged for frivilous reasons on a refusal to act unethically, eg. refusing to loan the client money?

Attorneys on contingent fee cases have little to no protection and the circling of an unscrupulous few to prey on the injured may be an unintended consequence of this decision.   A contract is a contract, and an attorney appears to be less than an employee at will.  If a client signs a contingent fee contract, it might be fairer to hold the client to that contract for sixty days (unless discharge for cause is warranted) to allow the relationship to develop and keep the others away.