The Right To Sue For Fees

A client retained an attorney (Levy) for a 1/3 contingent fee to sue his prior lawyers for malpractice. After the case was lost on summary judgment, there was an appeal that reinstated the case. The client then hired new counsel (the “GSR” firm) for the malpractice action. The new firm agreed to pay the Levy 30% of its fee.

The malpractice case was dismissed and the client hired a new lawyer (number four if you are counting) to sue the GSR firm for malpractice in its handling of the malpractice case. That case settled for $125,000.

Levy sued for his fees. The trial court dismissed the fee complaint, holding that Levy had waived his right to quantum meruit compensation by agreeing to accept a portion of the GSR’s firm’s fee. On appeal, the New York First Department reversed, holding that the contingency agreement between the client and Levy controlled. “[i]n disputes between attorneys, the discharged attorney may elect to receive compensation based on quantum meruit or on a contingency basis, whereas as against a former client, the discharged attorney is entitled to quantum meruit only…” Levy may pursue his fee claim to recover the fair and reasonable value of his services in the first case. (Mike Frisch)