UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 90-13
In a case accepted by Attorney A on a contingency fee basis, Attorney A properly associates Attorney B to assist in the handling of the case. Attorneys A and B enter an oral fee splitting arrangement after full disclosure to and with the consent of the client. In a prior decision, the court imposed an order prohibiting opposing attorneys from making ex parte contact with employees of defendant. During the course of representation but prior to the resolution of the case, Attorney B is ordered to withdraw by the court upon motion of the defendant, due to Attorney B's violation of a Court Order prohibiting ex parte contact with employees of the defendant. Attorney A is not allowed to communicate with Attorney B pursuant to the Court's Order. At the time of the court ordered withdrawal of Attorney B, Attorney B has invested 45 hours in the case. Attorney A continues with the litigation and successfully conducts the proceedings until a settlement is reached.
Questions:
(1) May Attorney B recover attorneys fees from Attorney A after being ordered to withdraw by the court upon motion of the defendant?
(2) If so, what method should be utilized to determine the amount to be paid to Attorney B?
Summary:
In a contingency fee case in which attorneys A & B enter a fee splitting arrangement, if Attorney B, who has been working on the case under no disqualification, subsequently becomes disqualified without fault of Attorney B, and is removed from the case by Court order, and Attorney A successfully completes the representation, Attorney B should be entitled to reasonable attorney's fees based on quantum meruit, but limited to the proportion of services rendered by Attorney B in comparison to Attorney A.
Opinion:
Contingent fee agreements and fee splitting arrangements are authorized by Rule 1.5(C)(D)(E). Assuming that the attorneys have complied with these provisions, the issue is whether an attorney, who presumably has worked on the case under no disqualification for 45 hours, may recover for that work, if he is forced to withdraw due to a subsequently arising disqualification, prior to the successful completion of the case. Attention is directed to Rules 1.5, 1.16. Rule 1.16(D) provides for the attorney's duties and rights upon termination of the attorney-client relationship. It reads as follows:
(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned. The lawyer may retain papers relating to the client to the extent permitted by law. The lawyer may retain a reasonable nonrefundable retainer.
Pursuant to Rule 1.16(D) the inference can be drawn that a lawyer is entitled to retain the fee that he has earned upon termination of representation. See SC Bar Advisory Opinion 83-25 (7/85) (See also, Eleazer v. Hardaway Concrete, Inc. 281 S.C. 344, 315 S.E.2d 174 (S.C. App. 1984) (An attorney is entitled to reasonable value of the services performed for his client in the absence of a controlling contract, statute, or rule of court fixing the amount of compensation); Singleton v. Collins, 251 S.C. 208, 161 S.E. 2d 246 (1968) (attorney has the right to be paid for professional services rendered, and when there is no contract, the law will imply one). The rule does not address the situation in which an attorney is ordered to withdraw by the court upon motion of the opposing party, but merely allows for retention of fees earned upon termination, without regards to the party requesting withdrawal. Thus, at least in the situation in which the attorney is acting in good faith and without disqualification up to the time of withdrawal, he should be entitled to recover a reasonable fee.
Due to the fact that the attorney's representation was terminated prior to the resolution of the matter, the discharged attorney may collect no more than the value of services actually rendered. See SC Bar Advisory Opinion 83-25 (7/85); 7A C.J.S. Attorney and Client 290(B). Any collection of fees will be subject to the restrictions of Rule 1.5 which provides in pertinent part as follows:
(A) A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:
(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) The likelihood that the acceptance of the particular employment will preclude other employment by the lawyer; (3) The fee customarily charged in the locality for similar legal service; (4) The amount involved and the results obtained; (5) The time limitations imposed by the client or by the circumstances; (6) The nature and length of the professional relationship with the client; (7) The experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) Whether the fee is fixed or contingent.
See also Strickland v. Strickland, 197 S.C. 248, 376 S.E. 2d 268 (1989). In addition, due to the fee splitting arrangement, the attorney's quantum meruit claim should be limited by Rule 1.5(e)(1) which states:
(e) A division of a fee between lawyers who are not in the same firm may be made only if:
(1) The division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation; Under the questions presented, there is no written agreement with the client, and the attorney's recovery is limited to the proportion of services performed by each attorney.
It should be noted that this opinion is based upon the assumption that the attorney's conduct which leads to disqualification is not made with knowledge or reckless disregard of the court order. Intentional misconduct on the part of the attorney may prevent him from recovering compensation for his services. 7A C.J.S. Attorney and client Section 287(c) (1980). Generally, it is the attorney who is discharged without cause, SC Public Service Authority v. Weeks, 201 S.C. 199, 22 S.E. 2d 249 (1941), or without his fault, Searson v. Sams, 142 S.C. 558, 141 S.E. 107 (1928), who is entitled to recover in quantum meruit for his services. There is conflicting authority as to whether the attorney who is discharged for cause may recover the value of his services. 7A C.J.S.
Attorney and Client Section 290(b). Thus, it is the opinion of the Ethics Advisory Committee that Attorney B may recover a reasonable fee based upon quantum meruit for legal services rendered prior to withdrawal due to a subsequently arising disqualification, as long as the disqualification does not arise due to the intentional misconduct of the attorney. This recovery should be limited to the proportion of services rendered by Attorney B in comparison to Attorney A.