Opinion of the Court by
Appellants, Kenneth H. Baker and Wo Sin Chiu, appeal from an opinion of the Court of Appeals which affirmed in part and vacated in part a decision of the Jefferson Circuit Court. On discretionary review to this Court, we reverse the Court of Appeals and remand the case for further consideration.
This matter involves the enforcement of an attorney’s lien by Appellees, Richard Shapero and Carl Frederick. On March 27, 1998, Wo Sin Chiu sustained serious injuries from an auto collision. He remained in the hospital for fifteen (15) days, with seven (7) of those days being in intensive care. The trial court found as fact that Chiu’s sister initiated contact with Richard Shapero and asked to retain his services. On April 1, 1998, Shapero sent a paralegal to the hospital where Chiu was assisted by his sister in signing an Employment Agreement with Shapero. The Employment Agreement specified that Shapero, or one of his designees, would represent Chiu in any litigation arising from the auto collision in return for a forty percent (40%) contingency fee. Shapero then immediately transferred the case to Carl Frederick, who began working on the matter with an associate. On May 7,1998, Chiu discharged Shapero and Frederick and hired other counsel. Four days later, Chiu rehired Shapero and Frederick. However, on July 14, 1998, Chiu discharged Shapero and Frederick permanently and retained the services of Kenneth Baker.
With Baker as his attorney, Chiu ultimately received a total settlement of $175,000. Shapero and Frederick immediately filed an attorney’s lien against the settlement, claiming entitlement to the contingency fee set forth in the Employment Agreement signed by Chiu on April 1, 1998. Pursuant to the standards set forth in
LaBach v. Hampton,
In the 1979
LaBach
case, the Court of Appeals addressed “the proper measure for the allowance of a fee to an attorney employed under a contingent contract who is discharged without cause before completion of the contract.”
Id.
at 436. Citing to
Henry v. Vance,
Since this 1979 ruling, it has been noted that Kentucky’s policy of allowing attorneys who are discharged without cause to claim entitlement to a contingency fee on a former client’s final recovery, even though they never completed the contracted work, is an extreme minority position. Most jurisdictions only allow these discharged attorneys to claim fees on a
quantum meruit
basis.
See
Lester Briekman,
Setting the Fee when the Client Discharges a Contingent Fee Attorney,
41 Emory L. J. 367, 373 n. 37 (Spring 1992) (citing the vast majority of jurisdictions which apply true
quantum meruit
recovery for attorneys who are discharged without cause);
Limitation to Quantum Meruit Recovery, Where Attorney Employed under Contingent-Fee Contract is Discharged without Cause,
A closer examination of
LaBach, supra,
reveals that the predecessor cases cited in that opinion do not support the reasoning therein. For example,
LaBach
cited our 1901 case of
Henry v. Vance, supra,
as authority for its decision. In
Henry v. Vance,
however, the Court specifically held that discharged attorneys “should [generally] be relegated to an action to recover [on]
quantum meruit.” Id.
at 276. This rule, the Court determined, is consistent with the client’s unqualified right “to discharge his attorney at any time, with or without cause, even in a case where a contingent fee has been agreed upon.... ”
Id.
The reasoning and holding in
Henry v. Vance
was reaffirmed on at least two occasions prior to the Court of Appeals’ opinion in
LaBach. See Hubbard v. Goffinett,
In accordance with the vast majority of other jurisdictions that have addressed this issue, we hold 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. As such, the Court of Appeals’ opinion is reversed, and this matter is remanded for proceedings in conformity with this opinion. Specifically, Shapero
As well as asking that Labach be overruled, Appellants further challenge, as clearly erroneous, the trial court’s finding of fact that Appellees’ conduct did not amount to unethical solicitation in violation of SCR 3.130 — SCR 7.09. As support for their argument, Appellants reference the trial court’s seemingly inconsistent finding that Chiu was “for all purposes, incapacitated when his sister helped him sign” the employment contract that was presented to him in the hospital on April 1, 1998. However, the trial court also considered and found additional findings of fact compelling: (1) Shapero had not initiated contact with Chiu or his sister; and (2) Chiu conceded at trial that he did voluntarily retain Shapero and Frederick in the hospital on April 1, 1998, and again on May 11, 1998. While we do not in any way encourage or condone the presentation of an employment contract to an incapacitated man in his hospital bed, we also cannot say that the trial court was clearly erroneous in ruling that the totality of these circumstances do not amount to unethical solicitation.
Appellants next allege that even if Appellees’ conduct did not amount to unethical solicitation, Chiu is not contractually obligated to pay any attorney fees to Appellees whatsoever since he was incapacitated at the time he signed the employment contract.
See Conners v. Eble,
Although Chiu may not have had the legal capacity to contract on the day the employment agreement was executed, he clearly ratified his assent thereto by his subsequent actions.
See Central Adjustment Bureau, Inc. v. Ingram Associates, Inc.,
Finally, Appellants allege the trial court erred in finding that Appellees were discharged without cause. Upon review, we are not persuaded to reverse the trial court’s and the Court of Appeals’ holdings on this issue.
Appellants’ remaining arguments are rendered moot by this opinion and are unlikely to recur upon remand.
The decision of the Court of Appeals is reversed; and the case is remanded for further proceedings consistent with this opinion.