Melat, Pressman & Higbie, L.L.P. v. Hannon Law Firm, L.L.C.
2012 CO 61
Colo.2012Background
- Hannon, Melat, Howarth, and Williams entered a contingent fee agreement sharing one third to each on settlements, with clients receiving two thirds minus costs.
- Howarth joined a later fee-sharing arrangement allocating 40% to Howarth and 20% to each of Melat, Hannon, and Williams; the fee-sharing agreement did not address withdrawal scenarios.
- Hannon withdrew in 1998 from the Cotter case due to disagreements; Hannon claimed costs of $160,231.35 and 541.1 attorney hours plus 1881.9 paralegal hours.
- Cotter litigation settled in 2004, six years after withdrawal; Melat paid Hannon costs but refused to share attorney fees.
- Hannon filed a quantum meruit suit against Melat and Howarth in 2007 seeking the reasonable value of services up to withdrawal; trial court dismissed on accrual theory; appellate court held accrual occurred at recovery, not withdrawal; court of appeals affirmed against client but reversed accrual timing.
- This opinion affirmatively holds that withdrawing counsel may sue former co-counsel for quantum meruit, and accrual occurs when settlement or judgment that generates fees becomes known.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Accrual timing for co-counsel quantum meruit | Hannon claims accrual upon recovery that makes fees payable | Accrual occurs at withdrawal or upon recovery depending on timing | Accrues when settlement knowledge arises, not at withdrawal |
| Authority of Chapter 28.3/28.8 to bar co-counsel recovery | Chapter 28.8 does not bar co-counsel recovery; not about fee-sharing between attorneys | Chapter 28.3 protects clients by requiring notice; co-counsel recovery is separate | Chapter 28.8 does not bar co-counsel quantum meruit; 28.3 governs client notice, not co-counsel sharing |
| Effect of fee-sharing agreement on client recovery | Recovery from co-counsel does not impose extra client liability beyond agreement terms | Fee-sharing agreement governs distribution; client protections remain | Recovery from co-counsel permissible without increasing client payment under underlying contingent fee terms |
Key Cases Cited
- Dudding v. Norton Frickey & Assocs., 11 P.3d 441 (Colo. 2000) (quantum meruit; client notice requirements; equity restrains unjust retention)
- Elliott v. Joyce, 889 P.2d 43 (Colo. 1994) (notice under contingent fee agreements; client awareness foundational to recovery)
- Mullens v. Hansel-Henderson, 65 P.3d 992 (Colo. 2002) (reasonableness of fees; contingent-fee notice; RPC Rule 1.5(a) factor in quantum meruit)
- Jones v. Cox, 828 P.2d 218 (Colo. 1992) (accrual of a claim when a suit may be maintained; general accrual principle)