Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-05-07076/USCOURTS-caDC-05-07076-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

---

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 12, 2006 Decided January 16, 2007

No. 05-7076

STEVEN R. PERLES, P.C. AND STEVEN R. PERLES, ESQUIRE,

APPELLANTS

v.

ANNE-MARIE KAGY,

APPELLEE

Consolidated with

05-7077, et al.

Appeals from the United States District Court

for the District of Columbia

(No. 01cv00105)

Steven M. Schneebaum argued the cause and filed the briefs

for appellants/cross-appellees Steven R. Perles, P.C. and Steven

R. Perles, Esquire. 

John W. Karr argued the cause and filed the briefs for

appellant Thomas Fortune Fay.

Mark D. Cummings argued the cause for appellees/crossappellants Anne-Marie Kagy. With him on the briefs was David

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 1 of 18
2

E. Sher.

Before: TATEL and KAVANAUGH, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge KAVANAUGH.

KAVANAUGH,Circuit Judge: Like a contentious corporate

merger or a sizable family inheritance, a large contingency fee

in a successful lawsuit sometimes leads to nasty controversy

over who gets what. This case is a fine example. 

From 1994 to 1999, recent law school graduate Anne-Marie

Kagy worked as an attorney for solo practitioner Steven Perles.

Among her other work, Kagy assisted Perles with two wrongful

death actions brought by Perles’s clients against the Government

of Iran (the Flatow and Eisenfeld cases). Perles’s clients

eventually obtained verdicts of more than $200 million in each

case. Congress used frozen Iranian assets to compensate the

victims for the compensatory portions of the damages awards

(more than $20 million in each case). As a result, attorney

Perles received millions of dollars in contingency fees. Perles

and Kagy had no written contract on how Kagy would be paid

for her work on these two cases, but Kagy claims they had an

oral contract entitling her to a one-third share of Perles’s fee in

each case. After a bench trial, the District Court concluded that

the parties had an express oral contract entitling Kagy to onethird of Perles’s ultimate fee with respect to the Flatow case

(meaning more than $1.3 million for Kagy for her work on that

case), but not with respect to the Eisenfeld case. We conclude

that Perles and Kagy did not enter into a contract with respect to

Kagy’s work on either case. 

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 2 of 18
3

I

1. During the period relevant to this case, Steven Perles, an

experienced attorney in private practice, owned and ran a solepractitioner law firm in the District of Columbia. While she was

in law school, Anne-Marie Kagy earned academic credit as an

unpaid clerk for Perles. After she graduated in 1994, Kagy

worked for Perles as a paid employee for about five years.

During that time, Perles and Kagy occasionally discussed the

terms of Kagy’s compensation. Notwithstanding numerous

conversations, however, they never put those terms in writing.

Before Kagy’s work on the two matters at issue here, her

compensation varied from case to case. If the client paid Perles

by retainer or based on attorney hours worked, Perles would pay

Kagy an hourly rate of up to $50 an hour. Kagy’s work on such

matters included, among other things, legal research, drafting

pleadings, and preparing exhibits. Kagy also assisted Perles

with about 20 administrative claims matters before the U.S.

Foreign Claims Settlement Commission. In those administrative

proceedings, Perles represented Jewish Americans enslaved by

the Nazis during World War II. Pursuant to statute, Perles’s

clients sought to recover certain compensation from a fund

administered by the Commission. The sums awarded in those

proceedings were modest; under federal law, moreover, Perles’s

maximum fee was only 10 percent of the award. See 22 U.S.C.

§ 1623(f). Perles in turn paid Kagy one-third of his fee in nine

successful claims, which earned Kagy about $20,000 from those

matters over a period of three years (or just over $2,000 per

successful case). 

2. Kagy also worked for Perles on a contingency fee case,

Flatow v. Islamic Republic of Iran. Beginning in 1996, Perles

represented Stephen Flatow in that matter under a typical

arrangement in which Perles would receive one-third of any

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 3 of 18
4

eventual recovery by Flatow. (Perles eventually was joined by

co-counsel Thomas Fay.) Flatow claimed that terrorists with

ties to the Iranian government murdered his daughter. In a tort

action filed under the Foreign Sovereign Immunities Act, 28

U.S.C. § 1605(a)(7), Flatow sought to recover compensatory and

punitive damages from the Government of Iran.

Kagy worked on the Flatow case for several years. Among

other things, she helped prepare the complaint; oversaw service

of process on Iran; wrote a comprehensive memo in which she

anticipated and analyzed possible defenses; and helped draft

proposed findings of fact and conclusions of law. 

 

As with other cases on which Kagy worked, she and Perles

never put the terms of her compensation for her work on Flatow

in writing. In March 1997, Kagy drafted a written agreement

that would have entitled her to one-third of Perles’s fee in the

Flatow case. As Kagy admits, Perles told her the draft was “all

wrong” and refused to sign it. District Court Op. at 5 n.6;

Kagy’s Br. at 9; J.A. 633-40 (trial transcript). After Perles

refused to sign Kagy’s proposal in March 1997, Kagy

“repeatedly” but unsuccessfully asked Perles to reduce their

alleged one-third fee arrangement to writing. District Court Op.

at 5 n.6; see also Kagy’s Br. at 13; J.A. 712, 723. According to

Kagy, she and Perles discussed the issue while speaking on the

telephone in May 1997. During that conversation, Kagy asked

to be paid more than one-third of Perles’s fee in the Holocaust

administrative matters. Kagy asserts that Perles responded that

a one-third share of his fee would “always be appropriate” in his

contingency fee cases, including Flatow. District Court Op. at

9. Perles claims that he said no such thing with respect to the

Flatow case; rather, he contends that he planned to pay Kagy an

elevated hourly rate (meaning more than $50 per hour) for her

work on Flatow if they won the case and received a fee. Kagy

testified that she did not try to prepare a writing to reflect the

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 4 of 18
5

May 1997 telephone conversation because she was concerned

that Perles would not sign it, just as he had refused to sign the

draft she composed in March 1997, and because she “did not

want to go through that experience again.” J.A. 713-14, 723.

Kagy nonetheless asserted that “on numerous occasions” after

the May 1997 exchange, she tried to persuade Perles to “sit

down and work it out,” but that Perles “always refused to do so.”

J.A. 723. 

Two subsequent developments in the Flatow litigation

brought Perles a huge pay-out. First, in March 1998, the trial

court entered a default judgment against Iran and its codefendants because the defendants did not enter an appearance

to contest the suit. The court awarded Flatow almost $250

million, including $23 million in compensatory damages and

$225 million in punitive damages. See Flatow v. Islamic

Republic of Iran, 999 F. Supp. 1 (D.D.C. 1998). Second, in

October 2000, Congress enacted legislation to use frozen Iranian

assets to pay the compensatory damages portion of the Flatow

judgment. See Victims of Trafficking and Violence Protection

Act of 2000, Pub. L. No. 106-386, § 2002, 114 Stat. 1464, 1541-

43. In January 2001, the U.S. Treasury paid Flatow $23 million,

of which Perles’s firm earned about $7 million in attorney’s fees

(which Perles in turn split evenly with his co-counsel Fay in the

case).

3. In 1998, Perles took on a new case, Eisenfeld v. Islamic

Republic of Iran. As in Flatow, the plaintiffs in Eisenfeld

sought damages from the Iranian government for terrorist

attacks against their family members. Kagy assisted Perles on

the Eisenfeld case. As with Flatow, Perles and Kagy did not

reach a written agreement for Kagy’s compensation on this case.

Kagy left the firm in 1999, before the Eisenfeld case was tried

or concluded, although she apparently continued to do some offsite work for Perles at a rate of $50 per hour. In July 2000, the

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 5 of 18
6

trial court found Iran liable and awarded damages in excess of

$327 million, including $27 million in compensatory damages

(meaning about $9 million in fees for Perles’s firm to be divided

with co-counsel Fay). See Eisenfeld v. Islamic Republic of Iran,

172 F. Supp. 2d 1 (D.D.C. 2000).

4. Upon learning that Perles would recover millions of

dollars in fees for his work (as a result of the legislation freeing

up frozen Iranian assets), Kagy contacted Perles’s co-counsel by

telephone in October 2000 to secure her share of the money.

The conversations did not go well (to put it mildly). Shortly

thereafter, Perles filed suit against Kagy in the District Court.

Perles sought a declaratory judgment that he should pay Kagy

on an hourly basis for her work on the Flatow and Eisenfeld

cases. Kagy filed a counterclaim in which she asserted that she

and Perles had an oral contract entitling her to one-third of

Perles’s fees in Flatow and Eisenfeld. Both parties agreed, as

they do on appeal, that District of Columbia law governs their

respective claims. 

After a bench trial, the District Court found that Perles and

Kagy had an express oral contract entitling Kagy to one-third of

Perles’s fee in Flatow, meaning Kagy would recover more than

$1.3 million for her work on that case. In the court’s judgment,

the oral contract did not cover Kagy’s work on Eisenfeld (nor

did the parties have any enforceable contract on Eisenfeld).

Instead, the court ruled that Kagy would receive only equitable

compensation for her work on the Eisenfeld case. The court

determined the amount of Kagy’s recovery for her work on

Eisenfeld by multiplying the number of hours Kagy worked on

the case by an hourly rate of $283 (which was Perles’s average

hourly rate). Applying this formula, the District Court awarded

Kagy about $47,000 for her work on Eisenfeld.

On appeal, Perles contends that the District Court erred in

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 6 of 18
7

concluding that the parties had an enforceable contract on the

Flatow case. Perles further argues that the District Court did not

apply a correct formula for assessing Kagy’s equitable recovery

for her work on Eisenfeld. For her part, Kagy seeks affirmance

of the District Court’s judgment in Flatow; and as to Eisenfeld,

Kagy claims that the District Court erred in concluding that the

parties did not have a contract entitling her to one-third of

Perles’s fee. 

II

We turn first to the question whether Perles and Kagy had

an enforceable contract for Kagy’s work on the Flatow case.

Relying on Kagy’s testimony about the parties’ May 1997

telephone conversation, the District Court found that the parties

entered into an oral contract entitling Kagy to one-third of

Perles’s fee in that case. We review de novo the legal question

whether the facts as found by the District Court demonstrate the

existence of an enforceable contract. See Hershon v. Gibraltar

Bldg. & Loan Ass’n, 864 F.2d 848, 852 (D.C. Cir. 1989). We

accept the factual findings underlying the District Court’s

contract determination unless they are clearly erroneous. Id.

Under District of Columbia law, a valid and enforceable

contract requires both: (1) intention of the parties to be bound;

and (2) agreement as to all material terms. See Simon v. Circle

Assocs., 753 A.2d 1006, 1012 (D.C. 2000); see also Jack Baker,

Inc. v. Office Space Dev. Corp., 664 A.2d 1236, 1238 (D.C.

1995); Georgetown Entm’t Co. v. District of Columbia, 496

A.2d 587, 590 (D.C. 1985). The party asserting the existence of

an oral contract has the burden of proving both requirements.

See New Econ. Capital, LLC v. New Mkts. Capital Group, 881

A.2d 1087, 1094 (D.C. 2005). 

Applying those principles to this case, we conclude for

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 7 of 18
8

either of two alternative reasons that Kagy failed to prove that

the parties entered into an enforceable oral contract as to Kagy’s

work on the Flatow case. First, even assuming that the District

Court properly credited Kagy’s testimony concerning the May

1997 telephone conversation, the evidence presented by Kagy

does not show that both parties intended to create an enforceable

oral contract. Second, again accepting Kagy’s own version of

the facts, the parties did not agree on two essential elements of

the contract: how long Kagy would have to work on the case and

what kind of work she would have to do. 

1. To create an enforceable oral contract, both parties must

intend to be bound by their oral representations alone. See New

Econ. Capital, 881 A.2d at 1094; Jack Baker, Inc., 664 A.2d at

1238. An otherwise valid oral agreement does not constitute a

contract if “either party knows or has reason to know that the

other party regards the agreement as incomplete and intends that

no obligation shall exist . . . until the whole has been reduced to

. . . written form.” RESTATEMENT (SECOND) OF CONTRACTS §

27 cmt. b (1981); cf. Osborne v. Howard Univ. Physicians, Inc.,

904 A.2d 335, 339 (D.C. 2006) (relying on RESTATEMENT OF

CONTRACTS); Stansel v. Am. Sec. Bank, 547 A.2d 990, 993

(D.C. 1988) (same). The fact that parties contemplate a writing

is evidence, therefore, that they do not intend to bind themselves

by an oral agreement. See Jack Baker, Inc., 664 A.2d at 1240;

Edmund J. Flynn Co. v. LaVay, 431 A.2d 543, 547 (D.C. 1981).

Another factor in determining intent to be bound is the parties’

conduct after they reach an alleged oral agreement. See Duffy

v. Duffy, 881 A.2d 630, 637 (D.C. 2005); Edmund J. Flynn Co.,

431 A.2d at 547; see also Novecon, Ltd. v. Bulgarian-Am. Enter.

Fund, 967 F. Supp. 1382, 1388 (D.D.C. 1997). Under District

of Columbia law, courts determining whether parties intend to

be bound by oral representations consider other factors as well,

including “whether the amount involved is large or small.” Jack

Baker, Inc., 664 A.2d at 1240. 

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 8 of 18
9

Applying the above principles to this case, we conclude that

Kagy has not met her burden of proving that she and Perles

intended to create an oral contract in their May 1997 telephone

conversation. Three considerations support that conclusion: the

fact that the parties clearly contemplated a written agreement;

the conduct of the parties after their May 1997 telephone

conversation; and the potentially large amount of money at issue

in the alleged oral agreement.

First, the evidence establishes that Kagy and Perles

discussed and contemplated a written agreement. In March

1997, Kagy drafted a proposed written contract providing that

she would recover one-third of Perles’s fee in Flatow. By

Kagy’s own admission, Perles refused to sign Kagy’s proposal

on the ground that it was “all wrong.” District Court Op. at 5

n.6. Kagy testified that she repeatedly asked Perles to reduce

their alleged one-third fee arrangement to writing after Perles

refused to sign Kagy’s proposal in March 1997. About a month

after their May 1997 telephone exchange, moreover, the parties

had a serious “altercation” arising out of “Kagy’s frustration at

not having a written fee agreement in place.” Id. at 9-10. The

evidence indisputably establishes, therefore, that the parties at

various points contemplated a written contract. Under settled

principles of District of Columbia contract law – principles that

were not addressed by the District Court in its opinion – the fact

that the parties contemplated a written agreement suggests that

the parties did not intend to be bound by oral representations

alone. New Econ. Capital, 881 A.2d at 1094; see Jack Baker,

Inc., 664 A.2d at 1240 (no oral contract found where “[i]t was

unquestioned that a written contract was contemplated as part of

the transaction”); Edmund J. Flynn Co., 431 A.2d at 547 (parties

did not intend to be bound by preliminary oral representations

where, among other things, a “written contract embodying the

completed contract was contemplated”); 1 ARTHUR LINTON

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 9 of 18
10

CORBIN, CORBIN ON CONTRACTS § 2.9 (Joseph M. Perillo ed.,

rev. ed. 1993) (“The fact that the parties contemplate the

execution of a document is some evidence, not in itself

conclusive, that they intend not to be bound until it is

executed.”). 

Second, the parties’ conduct after the May 1997 telephone

conversation is a separate factor suggesting that the parties did

not intend to create an oral contract. Perhaps most telling, the

trial evidence does not reveal any conduct of the parties after the

May 1997 conversation that supports Kagy’s assertion that they

created a binding contract in that conversation. In fact, Kagy

testified that she did not draft a written agreement reflecting the

terms of the May 1997 telephone conversation because she was

concerned that Perles would not sign it. Kagy also testified that

“on numerous occasions” after the May 1997 exchange, she

tried to persuade Perles to “sit down and work it out,” but Perles

“always refused to do so.” J.A. 723. The context of Kagy’s

statement makes clear that what had to be “worked out” was

Kagy’s compensation in Flatow, which suggests that no final

agreement had been reached in the May 1997 telephone

conversation. In short, the evidence of the parties’s conduct

after the May 1997 conversation does not indicate that the

parties intended to be bound by the conversation. See Duffy,

881 A.2d at 637 (assessing intention to be bound by letter

agreement by considering appellant’s actions during the year

and a half after the parties signed the letter); Edmund J. Flynn

Co., 431 A.2d at 547 (“subsequent negotiations about drafts of

a written sales commission agreement reflect the parties’

intention not to be bound until a formal writing was executed”);

see also Novecon, 967 F. Supp. at 1388 (noting that “the

subsequent actions taken by both parties is relevant” and

“should be taken into consideration to determine whether a

binding contract existed”). 

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 10 of 18
11

Third, the potentially large fee award in the Flatow case

further suggests that Perles and Kagy did not intend to be bound

by their oral conversation. Perles’s client in Flatow was

eventually awarded more than $200 million in damages from the

Iranian Government. Perles has received several million dollars

so far in fees (and could receive far more in the future if

additional assets become available to cover the punitive

damages awards). It strains credulity to suggest that Perles and

Kagy, both of whom are attorneys, intended a single,

undocumented telephone conversation to give rise to a mutually

binding agreement giving a junior attorney the potential right to

millions of dollars in compensation for her work. See Jack

Baker, Inc., 664 A.2d at 1240 (“whether the amount involved is

large or small” is one factor to consider in determining whether

parties entered into an enforceable oral agreement; oral

representations did not create binding contract where subject of

the alleged agreement “was a major project, involving a

considerable amount of money”); see also RESTATEMENT

(SECOND) OF CONTRACTS § 27 cmt. c (“whether the amount

involved is large or small” is factor “which may be helpful in

determining whether a contract has been concluded”); 1CORBIN

ON CONTRACTS § 2.9 (“The greater the . . . importance of the

transaction, the more likely it is that the informal

communications are intended to be preliminary only.”).

To recap, three considerations support the conclusion that

the parties did not intend to be bound by the terms of their May

1997 telephone conversation: the fact that the parties clearly

contemplated a written contract; the parties’ post-conversation

conduct evincing lack of agreement; and the large amount of

money at stake. Kagy does not cite other relevant factors under

District of Columbia law that support her claim; and she does

not point to any concrete evidence establishing or even

suggesting that both parties intended the May 1997 telephone

conversation to give rise to a binding agreement. See Jack

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 11 of 18
12

Baker, Inc., 664 A.2d at 1240 (dismissing breach of contract

claim where party asserting oral contract failed “to put forth

sufficient evidence” of intention to be bound); Edmund J. Flynn

Co., 431 A.2d at 547 (no oral contract where “there [was]

substantial evidence in the record that a binding written sales

commission contract did not exist and that only preliminary

negotiations were underway.”). Given this record, Kagy plainly

did not meet her burden under District of Columbia law to show

the existence of an oral contract. See New Econ. Capital, 881

A.2d at 1094; Jack Baker, Inc., 664 A.2d at 1239 (“[P]arties will

not be bound to a preliminary agreement unless the evidence

presented clearly indicates that they intended to be bound at that

point.”).

2. Even if Perles and Kagy intended to be bound by the

terms of their May 1997 conversation, Kagy’s contract claim

still would fail. Under District of Columbia law, “[t]o be final,

contract negotiations must include all of the terms which the

parties intended to resolve; material terms cannot be left to

future settlement.” Edmund J. Flynn Co., 431 A.2d at 547.

Agreement on the work to be done is a material term of a

services contract. See, e.g., New Econ. Capital, 881 A.2d at

1096 (parties “did not enter into an enforceable oral contract”

where they “did not agree on . . . whether consulting services

should be rendered” as well as fundraising services); Stansel,

547 A.2d at 993 (no oral contract existed because the parties

failed to offer “evidence of any specific terms of the alleged

agreement, such as the . . . manner of performance”). Even

assuming that the District Court properly credited Kagy’s

testimony, Perles and Kagy did not agree on two essential

elements of a services contract – how long Kagy would have to

work on the case to obtain one-third of Perles’s fee, and what

kind of work she would have to do to earn such a potentially

massive payment. 

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 12 of 18
13

First, even though the parties knew that the Flatow

litigation would likely take many years and could not yield any

fee until the “quite distant future,” they did not address how long

Kagy would have to work on Flatow to recover a one-third share

of Perles’s fee. See District Court Op. at 4; see also id. at 3

(“years in the future”). The Flatow litigation had just started

when the parties discussed Kagy’s compensation in May 1997.

Indeed, Perles initially “was reluctant to engage [Kagy] fully in

the preparation and presentation of the case” because he thought

Kagy might “depart for another firm at a critical stage.” District

Court Op. at 4. Perles affirmatively “anticipat[ed] her departure

before Flatow had borne fruit.” Id. Under these circumstances,

the parties could not reach a complete agreement without

deciding how long Kagy would have to work on the case in

order to secure a third of Perles’s fee. See Edmund J. Flynn Co.,

431 A.2d at 547 (“[N]o sales commission contract was created

because there never was any agreement on the material terms of

compensation and termination.”) (emphasis added). The parties

made no such decision. Indeed, at trial, Kagy admitted that she

and Perles did not reach any meeting of the minds as to the

scope of her duties in Flatow. She was asked: “Was there any

agreed definition of what it meant to work on a case?” And she

responded: “No.” J.A. 705. 

Second, the parties also failed to spell out the kind of work

Kagy would have to perform in order to receive a third of

Perles’s fee. For example, was Kagy expected to perform

standard junior attorney work? Or was she instead required to

take on a more substantial role in the litigation? We do not

know because the parties did not specify the kind of work Kagy

would have to do. Again, Kagy herself testified that the parties

did not have any “agreed definition of what it meant to work on

a case.” J.A. 705. 

Kagy argues that the parties’ prior course of dealing

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 13 of 18
14

supplied a reasonably certain definition of what it meant for her

to “work on” a case – including both the required length of her

service and the kind of work she would have to do. Cf. Rinck v.

Ass’n of Reserve City Bankers, 676 A.2d 12, 16 (D.C. 1996)

(oral agreement to continue employment “involved the

continuation of [the employee’s] existing employment and there

was no reason for [the parties] to deal with the material terms

that would remain the same”). As to length of service, Kagy has

asserted with notable lack of precision that she would have to

work “just as she had in the Holocaust Claims.” Kagy’s Br. at

23. And as to the kind of work, Kagy would simply do what she

did in past cases: “perform legal and factual research, draft

briefs and pleadings, and provide general litigation support.”

Kagy’s Br. at 22. 

The parties’ prior course of dealing in other cases does not

shed light on the length and scope of Kagy’s duties in Flatow

because Flatow is not at all comparable to the other matters on

which Kagy worked. In particular, Kagy makes far too much of

the fact that she received one-third of Perles’s fee in the

“Holocaust Claims.” Unlike Flatow, the Holocaust claims

involved relatively straightforward and short administrative

proceedings, not terrorism-related litigation against a foreign

sovereign requiring years of evidence-gathering, research, and

preparation. Compare District Court Op. at 7 (explaining that

Perles’s firm worked on Flatow for more than five years) with

id. at 4 n.4 (noting that the firm handled about 20 Holocaust

claims over a period of three years). Indeed, Kagy earned only

$20,000 over a period of three years for her work on the

Holocaust administrative claims matters even though Perles paid

her one-third of his fee in nine successful claims. Given those

substantial differences, the administrative matters are plainly

insufficient to demonstrate a course of dealing that would

support Kagy’s claim to one-third of Perles’s fee in Flatow.

See, e.g., Ginberg v. Tauber, 678 A.2d 543, 546-47, 552 (D.C.

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 14 of 18
15

1996) (attorney’s “‘course of dealing’ with his client provided

no guidance in determining a reasonable fee for the . . .

litigation” where attorney sought $3.75 million for his work on

the case at issue but had charged the same client between $1000

and $45,000 for prior representations). 

In sum, Kagy’s own version of the facts establishes that the

parties did not agree on two material terms of their alleged oral

agreement: how long Kagy would have to work on Flatow and

what kind of work Kagy would have to do in that case. Because

Flatow differed from Kagy’s other work in significant ways, no

prior course of dealing fills those critical gaps. As a result, and

for that independent reason as well, Perles and Kagy did not

enter into an enforceable contract as to Flatow. 

III 

Kagy argues that she had an enforceable contract with

Perles for one-third of Perles’s fee not just for her work on

Flatow but also for her work on Eisenfeld. As Kagy has claimed

throughout the litigation, however, she and Perles had the

“same” deal in Eisenfeld that they had in Flatow. Kagy’s Br. at

10, 33; J.A. 863-64. Because the parties had no enforceable

contract for Kagy’s work on Flatow, they likewise had no

enforceable contract for her work on Eisenfeld. We therefore

affirm the District Court’s judgment that Kagy does not have a

contractual right to one-third of Perles’s fee in the Eisenfeld

matter.

IV

Although the parties had no contract, Kagy is of course

entitled to recover equitable compensation for her work on the

Flatow and Eisenfeld cases. See Ginberg v. Tauber, 678 A.2d

543, 551 (D.C. 1996) (under District of Columbia law, when

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 15 of 18
16

“there is no agreement concerning how the amount of [an

attorney’s] fees is to be calculated,” the trial court “determines

the amount of the fee”). Many attorney’s fees cases involve

either (i) a dispute between a client and the client’s attorney or

(ii) a dispute between the opposing parties in litigation – not a

dispute such as the one here between two attorneys in the same

firm. Cases involving the more typical disputes nonetheless

provide basic guidance that informs the fees analysis in this

case. Cf. Frazier v. Franklin Inv. Co., 468 A.2d 1338, 1341 n.2

(D.C. 1983) (standards governing reasonableness of fee award

“apply to the assessment of attorney fees in general”). 

 Under District of Columbia law, an attorney seeking

equitable compensation must present proof of the reasonable

value of the services rendered. See Ginberg, 678 A.2d at 551-

52; Jonathan Woodner Co. v. Laufer, 531 A.2d 280, 287 (D.C.

1987). The ordinary measure of reasonable value is the market

price of the services performed. Sastry v. Coale, 585 A.2d 1324,

1329 (D.C. 1991). District of Columbia courts generally

compute an attorney’s equitable compensation by multiplying

the total number of hours reasonably expended on the case by

the attorney’s reasonable hourly rate. Ginberg, 678 A.2d at 551-

52 & nn.11-12. 

Applying those principles, we reach the following

conclusions: We affirm the District Court’s factual finding as

to the number of hours Kagy worked on the Eisenfeld case

(167.23 hours). We remand for the District Court to assess the

total number of hours Kagy reasonably worked on the Flatow

case. That leaves the question of Kagy’s reasonable hourly rate.

The District Court determined that Kagy should be paid an

hourly rate of $283 for her work in Eisenfeld. The court reached

that result by using Perles’s hourly rate (not Kagy’s hourly rate)

as the starting point of its analysis. Because Kagy seeks

compensation for her own work, her own hourly rate ($50 per

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 16 of 18
17

hour) is a more appropriate starting point for valuation of her

services. Perles has represented to this Court, however, that he

would pay Kagy $150 per hour for her work on the two cases.

Perles’s Reply Br. at 18; Tr. of Oral Arg. at 12-13. We therefore

accept $150 as the floor for Kagy’s reasonable hourly rate and

remand to the District Court to determine whether District of

Columbia law authorizes an equitable adjustment that could

yield a rate higher than $150 per hour. On remand, the District

Court may also consider the availability under District of

Columbia law of pre-judgment interest in a case of this kind, a

question we do not decide here. See D.C. Code § 15-109;

Edmund J. Flynn Co. v. LaVay, 431 A.2d 543, 550 n.6 (D.C.

1981).

Finally, we dismiss as moot the appeal by Thomas Fay

(Perles’s co-counsel in the Flatow and Eisenfeld cases) of the

District Court’s denial of Fay’s motion to intervene. As Fay

acknowledges, he moved to intervene in the District Court “for

the limited purpose of challenging the proposed use by [Perles]

. . . of money in a trust fund to which Mr. Fay claimed

ownership.” Fay’s Br. at 2; see also J.A. 69 (District Court:

“Fay seeks to intervene solely for the limited purpose of

opposing [Perles’s] motion to waive the supersedeas bond.”);

J.A. 224 (Fay’s motion to intervene). Perles posted a bond using

money from that trust fund “as security for the judgment

pending appeal.” J.A. 79. As a result of our decision today, that

judgment is vacated. The bond that was the basis for Fay’s

attempted intervention will now be released, and Fay’s appeal

of the District Court’s denial of his motion to intervene is

therefore moot. We note that Fay’s reply brief did not dispute

Perles’s suggestion that Fay’s appeal would be moot if the

judgment in favor of Kagy were vacated by this Court. See

Perles’s Reply Br. at 47 n.36.

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 17 of 18
18

 V

As a matter of law, Perles and Kagy did not have an

enforceable contract with respect to Kagy’s work on the Flatow

or Eisenfeld cases. We therefore reverse the District Court’s

decision that there was a contract in the Flatow case; we affirm

the District Court’s decision that there was no contract in the

Eisenfeld case. We vacate the District Court’s judgment with

respect to compensation as to Flatow and Eisenfeld and remand

for the District Court to calculate Kagy’s appropriate equitable

compensation for her work on the two cases. 

So ordered.

USCA Case #05-7076 Document #1016399 Filed: 01/16/2007 Page 18 of 18