Opinion
99-CV-391
February 8, 2000
Brian D. Premo, Esq., Premo Hernandez, Attorneys for Plaintiff.
Stephen R. Coffee, Esq., and Thomas J. DiNovo, Esq., O'Connell Aronowitz, Attorneys for MacKrell, Rowlands, Premo, Pierro, P.C.
Robert Ruslander, Esq., Ainsworth, Sullivan, Tracy, Knauf, Warner, Rushlander, P.C., Attorneys for Defendants.
MEMORANDUM-DECISION and ORDER
I. INTRODUCTION
On September 2, 1999, plaintiffs attorney Brian D. Premo, Esq. ("Premo") filed an application for court approval of a settlement agreement reached between plaintiff and defendants, as well as court determination of attorney fees due to him and to MacKrell, Rowlands, Premo Pierro, P.C., d/b/a/ MacKrell, Premo, Pierro Levine, P.C. ("the Firm"). The settlement agreement was approved by Order dated October 12, 1999. Defendants were directed to distribute, inter alia, Three Hundred Twenty-nine Thousand Eight Hundred Seventy-one and 97/100 Dollars ($329,871.97) of plaintiffs settlement proceeds to Premo as the fixed and approved attorney fees for legal services rendered in this action. (See 10-12-99 Order ¶ 5.) Further, Premo was directed to deposit the entire designated amount of attorney fees into an interest-bearing escrow account in his name at MT Bank, 80 State Street, Albany, New York, pending further determination by the court. Id. ¶ 6. The following constitutes the court's determination of the distribution of said attorney fees to Premo and the Firm.
II. FACTS
On January 16, 1998, plaintiff executed a retainer agreement with the Firm to represent him in an action for the wrongful death of his ex-wife, on behalf of his infant son, and as administrator the decedent's estate. The retainer agreement made a provision in the case of termination of the representation, as follows:
The attorneys shall be entitled to payment of their full contingent share of any settlement of or judgment on the claim(s) or action(s) for prosecution or adjustment of which they are retained, if wrongfully discharged by client, or the quantum meruit value of their services rendered if they are otherwise discharged, substituted or withdraw from representation before such settlement or judgment is obtained.
(Premo Aff. 9-2-99 Ex. B (emphasis added).) Premo was named as of counsel in the retainer agreement, and he proceeded to investigate, research applicable law, and otherwise provide representation regarding the wrongful death claim.
In late January 1999 the members of the Firm agreed that the Firm would be dissolved and would cease operations as of February 15, 1999. (Premo Aff. 11-29-99 ¶ 38.) On February 15, 1999, the Firm ceased operations. (MacKrell Aff. ¶ 55; Pierro Aff. ¶ 18.) After being notified by Premo that the firm would be dissolved as of February 15, 1999, (Premo Aff. 11-29-99 ¶ 43), on February 16, 1999, plaintiff retained Premo to represent him in the wrongful death claim. (Santalucia Aff. 9-2-99 ¶ 25.) Plaintiff and Premo agreed that any fee due to the Firm would be paid out of Premo's contingency fee. On February 19, 1999, plaintiff entered into a retainer agreement with Premo for representation in the wrongful death claim. (See Premo Aff. 9-2-99 Ex. C.; Santalucia Aff. 9-2-99 6 26.) Premo continued to investigate, research, and otherwise provide legal representation regarding the wrongful death claim.
In order to avoid any statute of limitations difficulty, (MacKrell Aff. ¶ 59.), Premo filed this action on March 16, 1999. On March 17, 1999, plaintiff and defendants reached an agreement-in-principle to settle the action. On July 13, 1999, the settlement agreement was confirmed in writing, and the application for approval to this court followed.
III. DISCUSSION
Premo applies for a court determination that the Firm is entitled to quantum meruit payment. Premo contends that when the Firm dissolved on February 15, 1999, it withdrew from representation of plaintiff and therefore it is entitled to payment based upon quantum meruit rather than a contingency fee in accordance with the retainer agreement.
The Firm argues in opposition that it did not withdraw from the representation. Accordingly, the Firm argues it is entitled to the entire amount of the contingency fee, less the reasonable value of services Premo provided subsequent to February 15, 1999, to be distributed to the Firm members according to its regular methodology. In other words, the Firm contends that this action (and the related contingency fee) is a Firm asset.
A. Entitlement to Fees
An attorney's compensation is a matter determined by agreement between the attorney and client, subject to approval of the court if the plaintiff is the guardian of an infant. N.Y. Jud. Law § 474 (McKinney 1983); Lynn v. Agnew, 179 A.D. 305, 308 (N Y A.D. 4th Dep't 1917). Where the written contract agreement between attorney and client is clear and unambiguous, the written terms must control regardless of apparent conflicting oral representations. See Liner Technology, Inc. v. Hayes, 213 A.D.2d 881, 882-83 (N.Y.App.Div.3d Dep't 1995).
In this case the written retainer agreement between plaintiff and the Firm provides for a contingent fee of 33-1/3 percent out of monies recovered by way of any judgment, settlement, or otherwise, after certain disbursements. (MacKrell Aff. Ex. A.) The agreement provides for payment of the Firm's full contingent share upon wrongful discharge by plaintiff. Id. Additionally, however, the agreement provides for payment based upon the quantum meruit value of the Firm's services rendered if the Firm is "otherwise discharged, substituted or withdraw[n] from representation before such settlement or judgment is obtained."Id. These terms are clear and unambiguous, and accordingly control the apportionment of fees to the Firm. See Liner Technology. Inc., 213 A.D.2d at 882-83. Because plaintiff brought this action as guardian of an infant on the infant's behalf, apportionment of fees is subject to approval of the court. See N.Y. Jud. Law § 474.
The fee provisions of the agreement can be stated another way: upon termination of the representation, a full contingent share is due to the Firm if the termination of the representation is wrongful on the plaintiffs part, but the fee due is based upon quantum meruit for any other termination. Here the representation by the Firm terminated on February 16, 1999, when plaintiff retained Premo to prosecute the wrongful death claim. (Santalucia Aff. 11-29-99 ¶ 18; Premo Aff. 9-2-99 Ex. C.) There is no contention that plaintiff wrongfully discharged the Firm. Moreover, it could not seriously be argued that any termination of the representation by plaintiff was wrongful, given that the termination occurred only upon plaintiff's learning that the Firm was dissolved. Accordingly, the fee due to the Firm must be based upon quantum meruit, in accordance with the retainer agreement between plaintiff and the Firm dated January 16, 1998. (MacKrell Aff. Ex. A.)
The Firm argues that the wrongful death claim and the associated contingency fee are Firm assets subject to distribution to the Firm members according to their prior agreement. The Firm contends that there was no agreement, either during the operation of the Firm or upon its dissolution, regarding how pending contingency fee cases would be distributed in the event of Firm dissolution, and therefore the distribution should be made according to established case law.
Two premises underlie the Firm's argument. First, in order for the Firm's argument to succeed, the premise must be accepted that there was no termination of the representation on the plaintiffs wrongful death claim. The Firm argues that it did not withdraw from the representation, as suggested by Premo. The Firm citesShandell v. Katz, 217 A.D.2d 472 (N.Y. A.D. 1st Dep't 1995), to support its assertion that Premo taking the file and executing a new retainer agreement with plaintiff does not remove the wrongful death claim as an asset of the Firm.
In Shandell, plaintiff left the partnership taking fourteen cases with him for which he obtained contingency fees. 217 A.D.2d at 472. The remaining partners formed a new partnership (which was found to be invalid) and kept 289 cases for which contingency fees were obtained. Id. Where the partnership agreement was silent as to contingency fees obtained after dissolution, the court found, contingency fee cases were assets of the partnership subject to distribution. Id. at 472-73.
The finding of the Shandell Court is inapposite here, first because the Court relied, at least in part, on N.Y. Partnership Law § 73. Any partnership law is inapplicable to this case because the Firm was a professional services corporation, subject to N.Y. Business Corporations Law. Second, there was no indication in Shandell that the clients in any of the cases at issue had terminated the prior representation and executed new retainer agreements.
Moreover, Shandell does not address the question of whether the representation with the dissolving firm terminated, whether by discharge, substitution, or withdrawal. The Firm raises the issue of its withdrawal (or failure to withdraw) from the representation. The Firm's reliance on its not having withdrawn is misplaced. The key issue requiring resolution is whether the representation terminated.
According to the retainer agreement between the Firm and the plaintiff, upon termination of the representation the only circumstance permitting the Firm to collect its full contingent share of any proceeds from resolution of the claim would be wrongful discharge by the plaintiff, which is not at issue here. The retainer agreement provides, in other words, that in the case of any discharge, substitution, or withdrawal the Firm is entitled only to quantum meruit value for services rendered.
Discharge means the firing of an employee. Black's Law Dictionary 475 (7th ed. 1999). Withdrawal, on the other hand, means removing oneself from employment. Id. at 1595. Similarly, substitution means to designate one person to take the place of another. Id. at 1444. Terminate means to end; to conclude. Id. at 1482. Thus, whether initiated by the client or the attorney, a discharge, substitution, or withdrawal results in the same end: termination of the representation, that is, the complete severance of the attorney-client relationship. Id.
Considering the circumstances involved here, particularly dissolution of the Firm and plaintiffs execution of a new retainer agreement with Premo, it is abundantly clear that the representation by the Firm was terminated. Accordingly, there is no need for this court to make a specific finding whether the termination was by withdrawal, substitution, or discharge. Even accepting the Firm's assertion that it did not withdraw, the representation still was terminated. Accordingly, the Firm's argument in this respect fails.
The second premise underlying the Firm's argument is that Premo carried on in the representation as part of the winding up of the affairs of the Firm. Premo obviously does not accept the truth of this premise. Rather, Premo clearly intended to carry on in the representation of the wrongful death claim individually, rather than as a representative of the Firm in its winding up.
The Firm's argument that Premo, as a member of the former firm, had an ethical duty to carry on in the representation of the client must also fail. While there is no question that the Firm had an ethical duty to aid its clients with transitioning the prosecution of their cases, once the client retained other counsel (in this case Premo) the duty ended. See DR 2-110; State v. Davis, 133 Misc.2d 1031, 1033 (N.Y.Sup.Ct. 1986); see also In re Blumrosen, 253 A.D.2d 239, 241 (N.Y. A.D. First Dep't 1999). Additionally, plaintiffs intent and understanding is that the Firm ceased to represent him in the wrongful death claim as of no later than February 16, 1999, Premo represented him in this claim as of February 16, 1999, and any fees due to the Firm would be paid based upon an hourly rate for services performed up to February 16, 1999. (Santalucia Aff. 11-29-99 ¶¶ 16-18, 22.)
Interestingly, the Firm avers that the intent at dissolution was for each member to take the remaining contingency fee cases, bring them to resolution, then distribute the contingency fees in accordance with the Firm's agreement, as a part of the winding up process. However, the Firm has made no mention of any other case in which a fee was distributed in this manner. Lack of any such information dispels the accuracy of the Firm's averment as to the members' intent.
One further point deserves brief mention. Even accepting, arguendo, the Firm's contention that plaintiffs wrongful death action is a firm asset, a quantum merit valuation would not be unreasonable. If, as the Firm suggests, the rule of Kirsch v. Leventhal, 181 A.D.2d 222, 225 (N.Y.App.Div.3d Dep't 1992), applied, the value of the partnership's interest would be determined as of the date of dissolution. The Firm would not be entitled to the full contingent fee. Id. at 226. To the extent the successful resolution of the case was attributable to Premo's postdissolution efforts, skill and diligence, the value of the Firm's members' interest proportionately would not be "attributable to the use of [the members'] right in the property of the dissolved [firm]. See id. (internal quotation omitted). Notably, although relying upon Kirsch, the Firm does not suggest a value at dissolution, to say nothing of a method for determining a value.
In accordance with the terms of the retainer agreement, the Firm is entitled to the quantum meruit value of the services it provided from the date it was retained, January 16, 1998, up to the date the representation was terminated, February 16, 1999.
B. Calculation of Fees
The reasonable value of an attorney's services is determined by considering several factors: "the skill required to handle the problem; the time and labor required; the lawyer's experience, ability and reputation; the customary fee charged by the Bar for similar services; and the amount involved." Mar Oil. S.A. v. Morrissey, 982 F.2d 830, 841 (2d Cir. 1993). In calculating the reasonable attorney fees, the court establishes a lodestar figure by multiplying the number of hours reasonably expended by the attorneys by a reasonable hourly rate. Blum vs. Stenton 465 U.S. 886, 888 (1984).
A reasonable hourly rate is $175.00 per hour. The Firm submitted detailed billing records showing an expenditure of 110.9 hours between the date it was retained to represent plaintiff in the wrongful death claim, January 16, 1998, and the date the representation terminated, February 16, 1999. The expenditure of 110.9 hours over this period of time is reasonable. Accordingly, the reasonable value of the Firm's services in its representation of the plaintiff in this wrongful death claim is $19,407.50, calculated as follows:
The Firm included detailed billing records relating to custody determinations of plaintiffs infant, as well as administration of the estate of plaintiffs decedent. Any services rendered by the Firm pertaining to matters outside this wrongful death action are immaterial here and cannot be considered. Furthermore, it is apparent from the submissions regarding this fee dispute that the Firm intended the representation in those other matters to be pro bono, as a determination in those matters was a precursor to the Firm's retention in the wrongful death action.
110.9 hours x $175.00 per hour = $19,407.50.
As agreed by Premo and plaintiff, this amount is to be paid out of the $329,871.97 fixed and approved attorney fees for legal services in this claim as set forth in the October 12, 1999, Order.
IV. CONCLUSION
The Firm is entitled to the quantum meruit value of the services it rendered in its legal representation regarding the wrongful death claim, encompassing the period from its retention on January 16, 1998, to the termination of the representation on February 16, 1999. The reasonable value of the legal services rendered is $19,407.50 (110.9 hours at $175.00 per hour). The Firm is also entitled to its proportional share of the interest earned during the pendency of this dispute, while the full amount of the fixed and approved attorney fees were held in an interest-bearing escrow account held by Premo. This amount is to be paid out of the fixed attorney fees approved by the court on October 12, 1999. The remainder of that account is to be released from escrow.
Accordingly, it is
ORDERED that
1. Plaintiff's application for judicial approval of payment of the quantum meruit value of legal services rendered to him in this action by MacKrell, Rowlands, Premo Pierro, P.C. is GRANTED;
2. Between March 1, 2000, and March 15, 2000, Brian D. Premo, Esq. shall pay over to MacKrell, Rowlands, Premo Pierro, P.C. the sum of Nineteen Thousand Four Hundred Seven and 50/100 Dollars ($19,407.50) from the interest-bearing escrow account opened in his name at MT Bank, 80 State Street, Albany, New York, as directed by the Order dated October 12, 1999, plus the proportional share of interest accrued on that amount;
3. After the payment over to MacKrell, Rowlands, Premo Pierro, P.C. is made as directed, the remaining funds in the MT Bank escrow account is released from escrow to be paid to Brian D. Premo, Esq.
IT IS SO ORDERED.