Carol A. MAGER, Roberta D. Liebenberg & Ann D. White T/A Mager, Liebenberg & White v. Lynn M. BULTENA, Michael J. Salmanson, Esq., Linda D. Falcao, Esq., and Salmanson & Falcao, LLC (Three Cases)
Nos. 2442, 2444, 2445, 2447 EDA 2000
Superior Court of Pennsylvania
March 26, 2002
Reargument Denied May 30, 2002
797 A.2d 948
Argued April 17, 2001.
¶ 13 Alternatively, were we to determine that the motion was not moot, we would nonetheless affirm Judge Solomon‘s order denying the motion as we are unpersuaded by Appellant‘s first argument that Appellee was not entitled to a writ of possession because there allegedly was no underlying judgment of possession. Appellant cites
¶ 14 Although the docket entries indicate that Appellant initially perfected a supersedeas on the judgment of possession from District Magistrate Mitchell, the supersedeas was terminated on February 24, 2000, upon praecipe of Appellee confirming that Appellant failed to deposit into court a bond or sum of money in the amount of monthly rent due for a period in excess of 30 days. Reproduced Record (R.R.) at 1a. On March 6, 2000, Appellant deposited into court a bond in the amount of two months’ rent, however, Appellant made no further deposits after this date. R.R. at 1a-2a. At the time that Appellee praeciped for the writ of possession on March 3, 2001, the record reflects that she had not deposited any money into court for almost a year and, therefore, there was no supersedeas of record to stay the judgement of possession entered by District Magistrate Mitchell. See
¶ 15 Furthermore, at the time that Appellant presented the motion to the trial court, Judge Solomon was aware that Appellant had failed to comply with the terms of his December 22nd order, and that over ten months had passed since the expiration of the original April 12th agreement that also required that Appellant vacate the Property. Upon these facts, we cannot conclude that Judge Solomon erred in denying Appellant‘s motion to set aside the writ of possession or stay its execution.
¶ 16 Order AFFIRMED.
Richard T. Brown, Philadelphia, for Salmanson & Falcao, LLC.
Gavin P. Lentz, Philadelphia, for Bultena.
Lawrence J. Fox, Philadelphia, for Mager, Liebenberg & White.
McEWEN, P.J.E.
¶ 1 These cross appeals have been taken from the judgment in the amount of $183,600.00 entered in favor of the law firm of Mager, Liebenberg and White, (hereinafter ML & W) and against the law firm of Salmanson and Falcao, LLC (hereinafter S & F or appellant) and its client, Lynn M. Bultena, in this litigation over counsel fees. We are constrained to reverse and remand for the entry of a judgment in conformity with Pennsylvania law.
¶ 2 This unseemly lawsuit was initiated by Carol Mager, Roberta Liebenberg, and Ann White, trading as the law firm of Mager, Liebenberg and White (ML & W), against Michael Salmanson, individually, Linda P. Falcao, individually, the law firm of Salmanson and Falcao LLC (S & F) and Mr. Lynn M. Bultena, individually. ML & W, in its complaint, claimed entitlement to the fee which had been received by appellant as a result of Mr. Salmanson‘s representation of Lynn M. Bultena in a qui tam case1 involving Mr. Bultena‘s former em-
¶ 3 Mr. Salmanson was employed as an associate at ML & W from July 1992 until June 10, 1997, when he resigned and began a practice with his wife, Linda Falcao. Mr. Bultena, as a result of a direct referral to Mr. Salmanson, had retained the law firm of ML & W in March of 1996, pursuant to a written retainer agreement dated March 15, 1996, which provided for Mr. Bultena to pay all costs associated with the firm‘s representation and to pay an hourly fee of $200.2 Mr. Salmanson‘s agreement with his employer, ML & W, provided for him to receive 15% of all fees the firm collected from Mr. Bultena as an attribution fee for originating the client. The parties agree that no member of ML & W, other than Mr. Salmanson, ever worked on any matter for Mr. Bultena, and that at all times, ML & W paid 15% of the fees it collected from Mr. Bultena to Mr. Salmanson as an attribution fee.
¶ 4 Mr. Bultena testified that as a result of his prior employment with California Blue Shield, he had considerable experience with qui tam cases and, prior to presenting the rough draft of the complaint to Mr. Salmanson, spent between 100 and 200 hours drafting his qui tam complaint and organizing and reviewing the documents which supported the allegations of the complaint. Counsel for ML & W conceded at trial that the client, Mr. Bultena, in fact did the bulk of the work on the complaint.3
¶ 5 ML & W, via Mr. Salmanson, billed Mr. Bultena at the hourly rate of $200.00 for a total of 17.25 hours of time which Mr. Salmanson spent editing and reviewing Mr. Bultena‘s complaint prior to its filing. All parties are in agreement that Mr. Bultena paid in full for the editing and filing of the qui tam complaint at the rate of $200.00 per hour. The qui tam complaint was filed, pursuant to the
¶ 6 In February of 1997, at the request of Mr. Bultena, ML & W entered into a new compensation agreement which was signed on February 24, 1997, but which related back to June 21, 1996, and covered the 13¾ hours billed since July of 1996. The new agreement provided for ML & W to be paid a contingent fee based on any recovery received by Mr. Bultena in the qui tam case. Mr. Bultena did not receive a refund of those costs and fees he had already paid to ML & W for the work performed prior to July 1, 1996, but ML & W agreed that Mr. Bultena would receive a credit for those sums against any contingency fee which might be owed to ML & W. Only an additional quarter hour of time was recorded by Mr. Salmanson from March of 1997 until his departure from ML & W in June of 1997. No provision was made in either of the two ML & W fee contracts for termination of the representation by the client prior to a resolution of the case.
¶ 7 When the law firm had declined to hire Mr. Salmanson‘s wife, Linda Falcao, as a regular employee as a result of a belief that married people should not work together, Mr. Salmanson resigned. Mr. Bultena then notified ML & W by letter dated June 10, 1997, that he had been referred to Mr. Salmanson specifically rather than to the firm of ML & W and desired to have his file transferred immediately to Mr. Salmanson.4
¶ 8 As of the date of Mr. Bultena‘s termination of ML & W in June of 1997, the federal government had not agreed to intervene in the action against Blue Shield, Mr. Bultena had not been informed of the existence of two other relators who would later attempt to claim his share of the settlement with Blue Shield under the first to file rule of
¶ 9 Settlement negotiations between Blue Shield and the federal government commenced in March of 1998, more than nine months after ML & W‘s representation of Mr. Bultena had ceased, and result-
¶ 10 When Mr. Bultena, through counsel, filed a request for an award of statutory counsel fees in the qui tam action, Mr. Salmanson requested a copy of his time sheets from ML & W, and used these time sheets to separately include in the fee petition 30.50 hours of ML & W attorney time for a fee of $6,100.00 and ML & W costs of $744.66. Mr. Salmanson also accounted for 78.80 additional hours of attorney time for himself and 26.70 hours of attorney time for Linda Falcao while at Salmanson & Falcao, LLC for an additional counsel fee of $21,100.00 and additional costs incurred by Salmanson & Falcao, LLC of $753.56. Thus, the total amount requested in the fee petition was $27,200.00 in fees and $1,498.22 in costs.
¶ 11 ML & W thereafter claimed entitlement to the entire fee received by appellant and instituted suit by filing the five-count complaint which gave rise to the instant litigation.
¶ 12 Count I set forth a cause of action for breach of contract against Mr. Bultena,5 claiming that “[ML & W] by providing all of the legal services necessary to establish liability under the False Claims Act and substantially all of the services required by the ML & W agreement before its services were terminated, earned its full fee,” sought an award of “one third of the $2.88 million recovery.”
¶ 13 In Count II, ML & W claimed that it was entitled to “compensation in quantum meruit in an amount believed to be in excess of $50,000” under the theory of unjust enrichment claiming that “[d]efendant Bultena has been unjustly enriched to the extent that he has obtained all the legal services necessary to establish liability in the qui tam action without compensation to plaintiff.” (emphasis supplied)6
¶ 14 In Count III, which ML & W designated as a claim for “breach of contract” against Linda Falcao and Michael Salmanson, individually, and against Salmanson & Falcao, LLC, ML & W claimed to be an “intended beneficiary” of the fee agreement entered into between appellant and Mr. Bultena and alleged that it was entitled to the contingent fee because “[d]efendants Salmanson, Falcao and Salmanson & Falcao, LLC, breached its [sic] fee agreement with defendant Bultena by failing to pay plaintiff [ML & W] for the legal services to be rendered in connection with the qui tam action.” (emphasis supplied)
¶ 15 In Count IV, ML & W set forth a claim for “unjust enrichment” against Michael Salmanson, Linda Falcao, and Salmanson & Falcao, LLC, claiming that the defendants “reaped the benefits of plaintiff‘s efforts by settling defendant Bultena‘s qui tam claim less than three weeks
¶ 16 In the fifth and final count of the complaint, ML & W claimed that Salmanson and Falcao, individually, and the appellant corporation, were liable “for the full lost contingent fee or, in the alternative, in quantum meruit“, based on tortious interference with contractual rights since they “interfered with plaintiff‘s contractual right to receive payment for the legal services it provided to defendant Bultena with regard to the qui tam action by refusing to pay the amount due under the ML & W agreement between defendant Bultena and plaintiff.”
¶ 17 The trial court, in response to preliminary objections, dismissed the tortious interference claim set forth in Count V of the complaint,7 and dismissed all claims against Michael Salmanson and Linda Falcao, individually. The case proceeded to a non-jury trial on the contract and quantum meruit claims asserted by ML & W against the professional corporation and Mr. Bultena. The court denied recovery on the contract claim8 and found that the quantum meruit value of the services of ML & W was 25% of the contingency fee (resulting in an award of
¶ 18 ML & W, in its appeals,10 contends that the trial court erred:
- in dismissing Mr. Salmanson and Ms. Falcao as individual defendants in response to preliminary objections;
- by undervaluing the services provided by ML & W, and
- by reducing the award to ML & W by 15% to account for an origination fee.
¶ 19 Appellee/cross-appellant Lynn Bultena in the appeal at No. 2444 EDA 2000 contends that the trial court erred in awarding 25% of the contingent fee to ML & W, while appellee/cross-appellant Salmanson & Falcao, LLC, in its appeal at No. 2442 EDA 2000 contends that the trial court committed reversible error when it refused to recognize the bright-line rule that the client‘s measure of liability to a discharged attorney is not a pro rata share of a contingent fee but rather quantum meruit based on a reasonable hourly rate.
¶ 20 ML & W initially contends that the trial court erred in dismissing Linda Falcao and Michael Salmanson individually. This claim is patently meritless. While the essence of the claim asserted by ML & W is an alleged entitlement to counsel fees based on a written contract between ML & W and Mr. Bultena, ML & W argues that Mr. Salmanson and Ms. Falcao are individually liable to ML & W on its claim for counsel fees either based on their acts prior to the creation of the corporation or
based on the “participation theory” which imposes personal liability on persons that would otherwise be protected by the corporate form where they have personally taken part in the wrongful actions of the entity.... [which actions included] their refusal to tender compensation to ML & W for the reasonable value of its services, under both a breach of contract and unjust enrichment theory; their failure to inform ML & W of the settlement reached with regard to Mr. Bultena‘s qui tam action; and their instructions to Mr. Bultena regarding payment of plaintiff‘s legal fees.
These arguments highlight the morass created by ML & W‘s refusal to accept the elements of the causes of action contained in its complaint—contract and unjust enrichment—as well as the nature of damages available under those causes of action, and the nature of the liability of the named defendants.
¶ 21 The trial court, in recognition of the fact that ML & W‘s claim for counsel fees lies only against its client, Mr. Bultena, dismissed Linda Falcao and Michael Salmanson and, but for the corporation‘s request that it be substituted for Mr. Bultena as a result of the indemnity agreement, the trial court presumably would have also dismissed the corporation as a defendant. Contrary to the arguments of ML & W,
We held in Styer v. Hugo, 422 Pa.Super. 262, 619 A.2d 347 (1993), affirmed, 535 Pa. 610, 637 A.2d 276 (1994), that an attorney, who initially represented a client and is dismissed, does not have a quantum meruit action against the attorney who ultimately settles the case. [Id., at 271,] 619 A.2d at 352. We also stated that the initial attorney may have had a valid quantum meruit claim against the client as of when the attorney was terminated. [Id., at 270,] 619 A.2d at 351.
Fowkes v. Shoemaker, 443 Pa.Super. 343, 661 A.2d 877, 879 (1995), appeal denied, 544 Pa. 609, 674 A.2d 1072 (1996) (emphasis supplied). Thus, as ML & W possessed no claim in quantum meruit against anyone other than Mr. Bultena, the trial court properly sustained the preliminary objections of Michael Salmanson and Linda Falcao.
¶ 22 ML & W next claims that the trial court undervalued its services while appellees both contend that the trial court overvalued those services by improperly basing the fee on the contingent fee agreement entered into by Salmanson and Falcao, LLC and Mr. Bultena rather than on quantum meruit.
¶ 23 The trial court found that ML & W was entitled to a quantum meruit recovery on its claim for counsel fees but found, in relation to that claim that:
19. Neither the fee agreement of March 12, 1996, nor that of February 24, 1997, between plaintiff and defendant Bultena provided guidance as to fees to be paid to the plaintiff in the event that
he [sic] was discharged without cause prior to the contingency. 20. Defendant Salmanson‘s testimony regarding the number of hours worked on defendant Bultena‘s matter, between June 1996 and June 1997 is incredible.
21. Defendant Salmanson performed work for defendant Bultena without properly documenting all of his hours.
22. Total amount of hours worked by all defendant Bultena‘s attorneys as documented was 30 hours.11
The trial court, based, in part, on these findings, concluded that:
The amount of fee plaintiff is entitled to shall be the same amount that defendant Salmanson negotiated for himself in his own fee agreement with defendant Bultena, which is the greater of (a) the regular hourly rate for all time expended or (b) pro rata share of calculation of the total hours worked.
Inasmuch as the court cannot determine the total number of hours worked because Mr. Salmanson did not properly document his hours, the court awards a fee of 25% share of the total amount based upon the 30 documented hours of time and other time that was undocumented.
¶ 24 The precise argument urged upon us by ML & W and accepted by the trial court in this case, was made to, and rejected by, the Superior Court in Hiscott and Robinson v. King, 426 Pa.Super. 338, 626 A.2d 1235 (1993), appeal denied, 537 Pa. 641, 644 A.2d 163 (1994) by the predecessor attorneys in a contingent fee case, who argued that they were entitled to have the jury determine “the relative value of the services performed by both lawyers ... and that such value should not be limited to an hourly rate.” Id. at 1237. This Court, in rejecting that argument, observed:
The right of a client to terminate the attorney-client relationship is an implied term of every contract of employment of counsel, at least where the attorney has no vested interest in the case or its subject matter. [Com. v.] Scheps, 361 Pa.Super. [566] at 575, 523 A.2d [363] at 367. In determining the method of compensating attorneys who are released from serving their clients in a case such as this one, we look to the rule set forth in Sundheim, supra:
A client may terminate his relation with an attorney at any time, notwithstanding a contract for fees, but if he does so, thus making performance of the contract impossible, the attorney is not deprived of his right to recover on a quantum meruit a proper amount for the services which he has rendered.
Id., 140 Pa.Super. at 533, 14 A.2d at 351; accord Dorsett v. Hughes, 353 Pa.Super. 129, 133-34, 509 A.2d 369, 371 (1986). See also Lampl v. Latkanich, 210 Pa.Super. 83, 231 A.2d 890 (1967) (discharged attorney may recover under quantum meruit); Thole v. Martino [Martino], 56 Pa.Super. 371 (1914) (when client through his own action makes it impossible for attorney to perform the contract, quantum meruit recovery is permitted).
Hiscott, supra, at 1237 (footnote omitted). Nor have we been able to find any Pennsylvania appellate court support for the argument urged upon us by ML & W. Consequently, we find that the verdict awarded by the trial court is unsound as it fails to take into consideration the fact that under Pennsylvania law, upon Mr. Bultena‘s discharge of ML & W, the contingent fee agreement no longer existed and could not be revived, in whole or in part, by the court.
¶ 25 While the termination of the contract by Mr. Bultena created an immediate right in ML & W to compensation for all work performed and costs incurred pursuant to that contract, that right included only quantum meruit compensation which is to be calculated based on the number of hours worked multiplied by a fair fee. ML & W itself set the “fair fee” at $200.00 per hour.12
¶ 26 While the trial court concluded that Mr. Salmanson could not possibly have worked only minutes on the qui tam case between March of 1997 and June of 1997, the record does not provide any support for this conclusion. ML & W was, at all relevant times, in possession of Mr. Salmanson‘s time sheets and computer and phone records for that three month period and yet failed to introduce any evidence of any actions in the qui tam case other than two short faxes which were received by Mr. Salmanson during this period. Mr. Salmanson attached his time records both for the period before and for the period after he left ML & W to the fee petition filed in federal court. Those records reflect the following monthly totals:
| June 1997 | 15 minutes |
| July 1997 | 12 minutes |
| August 1997 | 0 minutes |
| September 1997 | 3 hours, 33 minutes |
| October 1997 | 1 hour |
| November 1997 | 1 hour, 18 minutes |
| December 1997 | 7 hours, 24 minutes |
| January 1998 | 2 hours, 12 minutes |
| February 1998 | 0 minutes |
| March 1998 | 2 hours, 3 minutes |
| April 1998 | 3 hours |
| May 1998 | 12 hours, 24 minutes |
| June 1998 | 25 hours, 9 minutes |
| July 1998 | 9 hours, 15 minutes |
| August 1998 | 3 hours, 21 minutes |
| September 1998 | 7 hours, 42 minutes |
These records readily reveal that, during the first three months after leaving ML & W, Mr. Salmanson spent only 27 minutes on Mr. Bultena‘s qui tam case, a figure which, as we have noted, ML & W does not dispute.
¶ 27 Moreover, despite the fact that it was ML & W‘s burden to prove that there was unrecorded time spent by Mr. Salmanson on the qui tam case while employed by ML & W, the accuracy of ML & W‘s records is immaterial to the measure of compensation which may properly be
¶ 28 No Pennsylvania appellate court has ever awarded a proportionate share of a contingency fee to a firm discharged by the client well prior to the occurrence of the contingency, for the simple reason that a client may discharge an attorney at any time, for any reason. Once the contractual relationship has been severed, any recovery must necessarily be based on the work performed pursuant to the contract up to that point. Where the contingency has not occurred, the fee has not been earned.13
¶ 29 An attorney, contrary to the argument urged upon us by ML & W, does not acquire a vested interest in a client‘s action. To rule otherwise would make fiction of the oft-repeated rule that a client always has a right to discharge his attorney, for any reason or for no reason, Richette v. Pennsylvania Railroad, 410 Pa. 6, 19, 187 A.2d 910, 917 (1963); Dorsett v. Hughes, 353 Pa.Super. 129, 509 A.2d 369, 373 (1986). Surely, to accept the argument of appellant would be to impose a penalty on the exercise of that right.14
¶ 30 While ML & W may claim they are seeking a ”quantum meruit” recovery based on the relative contributions of the attorneys,15 they are in fact seeking a recovery based on a non-existent contingency fee agreement. See: Provanzano v. National Auto Credit, Inc., 10 F.Supp.2d 44, 52 (D.Mass.1998); Campbell v. Bozeman, Investors of Duluth, 290 Mont. 374, 964 P.2d 41, 44 (1998); Anderson v. Anchor Organization for Health Maintenance, 274 Ill.App.3d 1001, 211 Ill.Dec. 213, 654 N.E.2d 675 (1st Dist.1995). Thus, the verdict must be vacated and the case remanded for the entry of a judgment based on quantum meruit in conformity with Pennsylvania law, namely, the number of hours devoted by ML & W to the cause of Mr. Bultena.
¶ 31 Appeal at No. 2445 EDA 2000 quashed.
¶ 32 Judgment vacated. Case remanded. Jurisdiction relinquished.
¶ 33 JOYCE, J., files a concurring opinion.
JOYCE, J., concurring.
¶ 1 I concur with my esteemed colleague‘s decision to remand this case for the entry of judgment on the quantum meruit claim. However, I write to separate myself from the majority‘s pronouncement that the law in Pennsylvania requires that a quantum meruit claim sought by a discharged attorney is to be decided based on the computation of the number of hours multiplied by an hourly rate.
¶ 2 It is well-settled that “a client may terminate his relation with an attorney at any time, notwithstanding a contract for fees, but if he does so, thus making the
¶ 3 The Majority holds that when an attorney‘s representation is terminated, thereby breaching a contingency fee contract, the attorney‘s quantum meruit claim is to be computed by multiplying the hourly rate by the number of hours worked. To support this position, the Majority relies on Hiscott and Robinson v. King, 426 Pa.Super. 338, 626 A.2d 1235 (1993). In Hiscott, the appellants represented a client in a personal injury action. A contingent fee agreement was entered into; however, the client discharged the appellants prior to the occurrence of the contingency. With the aid of his subsequent attorney, the client negotiated a settlement for $105,000.00. His attorney received $35,000.00 and set aside $6,000.00 in anticipation of a claim by the appellants. The appellants chose to reject this amount, instead filing suit to recover “a fair and equitable fee based upon the relative value of services performed.” Hiscott, 626 A.2d at 1235 (emphasis added).16 A jury trial ensued and a directed verdict was entered for the client since the contingency upon which the fee agreement relied had not yet occurred when representation was terminated. Thus, the trial court concluded, nothing was due to the appellants.17 However, following post-trial motions the court “resolve[d] the issue of the nature and amount of compensation to be afforded to [the appellants] outside the scope and terms of the contingent fee agreement“, id. at 1236, by entering a verdict in the appellant‘s favor in the amount of $1,199.15. This represented 8.27 hours of work multiplied by an hourly rate of $145.00.
¶ 4 On appeal, this Court noted that our standard of review was whether the trial court committed an abuse of discretion in entering the directed verdict. In addressing the appellant‘s contention that the relative value of services rendered by each attorney should have been submitted to the jury, we stated that since no case law was cited to support this contention, it was without merit.18 Instead, we held that the
¶ 5 My reading of Hiscott does not set forth a bright line rule that quantum meruit actions instituted by discharged attorneys are only to be determined by a mathematical equation. Hiscott simply affirmed the method of calculation used by the trial court to determine what reasonable attorney fees were. This was a proper disposition due to our limited standard of review.
¶ 6 Compare with Hiscott the case of Dorsett v. Hughes, 353 Pa.Super. 129, 509 A.2d 369 (1986). In that case, Mr. Dorsett was hired as the attorney for an estate. A fee agreement was entered into that Mr. Dorsett would receive 7% of the estate. After Mr. Dorsett was dismissed as counsel for the estate, new counsel was retained, and the estate was settled, he commenced an action in assumpsit and was awarded $18,175.43 by a board of arbitrators. This figure represented 7% of the gross value of the estate. The matter was appealed to the court of common pleas and a motion for summary judgment was granted in favor of the estate without prejudice to Mr. Dorsett to present a claim for services at the accounting audit of the estate‘s executor.
¶ 7 On appeal, this Court noted that upon termination of his services and the breach of the contract for fees, Mr. Dorsett had a right to recover in quantum meruit. The fee for a percentage of the gross value of the estate was found not to be legally enforceable. Instead, the fees were to be based on the “reasonable value of the services rendered and subject to the approval of the Orphan‘s Court.” Id. at 371. We stated, in order to determine the reasonableness of counsel‘s fees the court must consider:
the amount of work performed; the character of the services rendered; the difficulty of the problems involved; the importance of the litigation; the amount of money or value of the property in question; the degree of responsibility incurred; whether the fund involved was “created” by the attorney; the professional skill and standing of the attorney in his profession; the results he was able to obtain; the ability of the client to pay a reasonable fee for the services rendered; and, very importantly, the amount of money or the value of the property in question.
Id., citing In re Trust Estate of LaRocca, 431 Pa. 542, 246 A.2d 337 (1968) (citations omitted). Affirming the trial court‘s entry of summary judgment, we found that the executor was entitled to judgment as a matter of law of the discharged attorney‘s claim for a percentage of the estate since the attorney was entitled only to a reasonable value of services rendered. Id., at 372-73. Compare also Robbins v. Weinstein, 143 Pa.Super. 307, 17 A.2d 629 (1941). In Robbins, an attorney performed legal work for a client without reaching an agreement on the legal fee to be paid. After the matter for which he was retained was resolved, the client refused to tender any further payment to the attorney. Suit was filed and the attorney argued that the reasonable value of his services was $500.00. The chancellor determined that the reasonable value of services for the attorney‘s work was $300.00. On appeal, this court affirmed, stating:
in the absence of a special agreement, an attorney is entitled to be paid the reasonable value of his services. In addition to the labor and time involved, other factors must be taken into consid-
eration, such as the character of services rendered, the importance of the litigation, the skill necessary, the standing of the attorney, the benefit derived from the services rendered and the ability of the client to pay, as well as the amount of money involved. The question of reasonableness is within the sound discretion of the trial court.
Id. at 633.
¶ 8 In Mulholland v. Kerns, 822 F.Supp. 1161 (1993), the federal district court had the occasion to decide a quantum meruit claim made by a discharged attorney who had been operating under a contingent fee agreement. The district court noted that “Pennsylvania does not have a specific method for determining attorney‘s fees quantum meruit, per se, but it does have a standard for determining reasonable attorney‘s fees.” Mulholland, 822 F.Supp. at 1169.19 The court then cited to cases where a set of factors was used to determine the reasonable value of an attorney‘s services. The district court concluded that to determine what constitutes a reasonable attorney‘s fee, a court should apply the principles set forth the In re Trust Estate of LaRocca, supra, and take into consideration the particular circumstances of the case before it. Id., at 1169. While we are not bound by the decisions of a federal court, I find the analysis in Mulholland persuasive, especially in light of my reading of Hiscott and the plethora of case law that exists detailing the method of determining reasonable attorney‘s fees. Thus, it is my opinion that restricting a discharged attorney‘s quantum meruit claim where a contingent fee agreement was breached to the number of hours worked multiplied by the hourly rate is too narrow. It is my opinion that a more reason-
¶ 9 Moreover, there are many other occasions where courts are called upon to decide the reasonable value of an attorney‘s services where the court enlists a case-by-case analysis to evaluate the equities of the case‘s circumstance. See In re Estate of Brockerman, 332 Pa.Super. 88, 480 A.2d 1199 (1984) (factors to be considered in calculating fees of estate‘s attorney‘s quantum meruit claim are size of estate, novelty and difficulty of questions involved, the extent of counsel‘s labor on the case and the time the labor required). See Gilmore v. Dondero, 399 Pa.Super. 599, 582 A.2d 1106 (1990) (reducing attorney‘s contingency fee in minor‘s personal injury case from one-third to one-quarter). The reasonableness of attorney‘s fees has been limited in certain contexts by way of statute, although ultimately decided by a fact-finder. See Eugenie v. Workmen‘s Compensation Appeal Board (Sheltered Employment Service), 140 Pa.Cmwlth. 51, 592 A.2d 358 (1991) (attorney‘s fees against employer for unreasonable contests is limited to “reasonable sum“,
¶ 10 Since a quantum meruit action sounds in equity, fairness should prevail. While the remedy in some cases may properly be determined by multiplying the hourly rate by the number of hours worked, other cases may warrant a more comprehensive, fact-specific approach. In fact, in cases where a contingent fee agreement was entered into and then breached, the exact number of hours devoted by the dismissed attorney may not be readily available. Indeed, the trial court found this very dilemma in the case sub judice since it made a credibility determination that Mr. Salmanson had not recorded time spent on the case while still ML & W‘s employee.20
¶ 11 The case sub judice presents only one example of a problem in calculating a quantum meruit claim based on hours and hourly rate. Other possibilities for inequitable results are endless. For example, attorneys may be reluctant to take cases on a contingency basis, thereby preventing indigent persons from access to the legal system. Or, clauses may be added to contingent fee agreements that require the client to pay an exorbitant hourly rate if representation is terminated. What happens if the client is not awarded anything? Under the terms of the original contingent fee agreement, the predecessor attorney would receive nothing; however, under the Majority‘s theory a quantum meruit claim would nonetheless result in the client owing the attorney for the hours devoted to the case. Another example might be when a litigation savvy client discharges his attorney just before a settlement is reached, knowing that the hourly rate bill would be lower than the contingency fee, and then either settles the case pro se or hires a subsequent attorney solely to settle the case, paying a hourly wage or a significantly reduced contingent fee. By giving the trial court discretion to consider the equities of the particular case before it, many such problems may be avoided and fairness can prevail.
¶ 12 The trial court concluded ML & W should be compensated by using the same fee agreement that Mr. Salmanson negotiated for himself in his own fee agreement with the client: the greater of either the regular hourly rate for all time expended or a pro rata share of calculations, total hours worked which included hours that [Mr.] Salmanson had already worked. Trial Court Opinion, 11/08/00, at 3. Since this determination is inconsistent with what I view as the law on computing a quantum meruit claim, I, like the Majority, would also reverse and remand for the trial court to recompute the quantum meruit claim. However, I would direct the trial court to utilize those factors as set forth, supra, to determine the reasonable value of services that ML & W is entitled to.
Notes
The
The agreement provided in relevant part:
I [Mr. Salmanson] expect that I will be the attorney directing most of the time to this matter .... My hourly rate is currently $200.00; Carol‘s [Carol Mager] is $300.00 .... Our billings will include, as a separate charge, any costs which we have incurred on your behalf. These will include out-of-pocket costs, as well as costs for certain services such as long-distance telephone calls, special mailings, messenger and shipping, facsimile, duplicating, extraordinary secretarial costs when required by the client or the matter‘s timing, computer research facilities (LEXIS and Westlaw), court reporters, filing fees, and other costs and expenses incurred on your behalf. Large disbursement billings (such as experts’ fees, witness fees and court reporter charges) may be forwarded by us to you for direct payment by you to the providers ....
U.S. ex rel. Atkins v. EEOC, 1993 U.S. Dist. Lexis 21268.
Counsel for ML & W argued as follows:
THE COURT: In fact, you‘re saying Mr. Salmanson really didn‘t do that much.
MR. FOX: I don‘t think, with all due respect, that any of the lawyers here did that much.
THE COURT: Including your client?
MR. FOX: That‘s correct. We heard from Mr. Bultena. He was the one who did the bulk of the work on the complaint. The question is if you‘re going to evaluate quantum meruit here in a situation where Mr. Salmanson walks away with $868,000 ...
THE COURT: If Mr. Bultena did everything, maybe he should get all the money.
MR. FOX: There‘s allocation and Mager, Liebenberg & White getting $2,800 and Mr. Salmanson getting $864,000 in a contingent fee case that involves an associate leaving a law firm and a case that involves a qui tam underlying case is inequitable. It quantum meruitly [sic] must require that Ms. White get a significant percentage of that money because most of the work that was required to be done because it was a qui tam case took place before the case left Mager, Liebenberg & White.
The letter provided:
Dear Ms. Mager:
Before undertaking certain legal actions against Pennsylvania Blue Shield, I sought referrals from other attorneys whom I knew. I received a very strong and favorable recommendation of Mike Salmanson, and elected to use his services because of that recommendation. The recommendation was not for the law firm of Mager Liebenberg and White. When I agreed to legal representation, the agreement was specifically with the intent that Mike Salmanson would be my attorney.
It is my intent to continue as I had always originally intended, that Mike Salmanson would be the attorney to represent me in these matters. Since you have elected to terminate your relationship with Mike Salmanson, you have also effectively terminated your relationship with me. I therefore request that you transfer my file, to include all correspondence, computer files, computer disks, documents I furnished to Mike Salmanson, etc., to Mike Salmanson at the following address:
Mike Salmanson
SALMANSON & FALCAO
1429 Walnut Street, Suite 900
Philadelphia, PA 19102
Your expeditious handling of this request would be appreciated. Thank you for your cooperation.
Finding of Fact #22 is incorrect since there is no dispute that there is a total of 136 hours of attorney time recorded in the qui tam case as follows:
At ML & W by Mr. Salmanson:
- 17.25 hours prior to the filing of the complaint.
- 13.25 hours after the filing of the complaint.
At Salmanson & Falcao, LLC by Mr. Salmanson: 78.80 hours
At Salmanson & Falcao by Linda Falcao: 26.70 hours.
The trial court disbelieved Mr. Salmanson‘s testimony regarding the number of hours he spent on the case and his explanation of why he had not recorded some of the time, finding his testimony to be incredible.
Trial Court Opinion, 11/08/00, at 5. Because there is evidence of record that Mr. Salmanson did work without recording it, I, unlike the Majority, would not disturb this credibility determination made by the finder of fact.