Case Name: Reid, Johnson, Downes, Andrachik & Webster, Appellee, v. Lansberry, Appellant
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1994-03-30
Citations: 68 Ohio St. 3d 570
Docket Number: No. 92-2013
Parties: Reid, Johnson, Downes, Andrachik & Webster, Appellee, v. Lansberry, Appellant.
Judges: Moyer, C.J., A.W. Sweeney and Wright, JJ., concur.
Reporter: Ohio State Reports, Third Service
Volume: 68
Pages: 570–584

Head Matter:
Reid, Johnson, Downes, Andrachik & Webster, Appellee, v. Lansberry, Appellant.
[Cite as Reid, Johnson, Downes, Andrachik & Webster v. Lansberry (1994), 68 Ohio St.3d 570.]
(No. 92-2013
Submitted December 7, 1993
Decided March 30, 1994.)
Reid, Berry & Stanard and Timothy T. Reid, for appellee.
Kevin E. Broum, for appellant.

Opinion:
Alice Robie Resnick, J.
In Fox & Associates Co., L.P.A. v. Purdon (1989), 44 Ohio St.3d 69, 541 N.E.2d 448, syllabus, this court held: "When an attorney is discharged by a client with or without just cause, and whether the contract between the attorney and client is express or implied, the attorney is entitled to recover the reasonable value of services rendered the client prior to discharge on the basis of quantum meruit. (Scheinesohn v. Lemonek [1911], 84 Ohio St. 424, 95 N.E. 913, and Roberts v. Montgomery [1926], 115 Ohio St. 502, 154 N.E. 740, overruled.)" Thus, pursuant to Fox, even if an attorney is discharged without cause, and even if a contingent fee agreement is in effect at the time of the discharge, the discharged attorney recovers on the basis of quantum meruit, and not pursuant to the terms of the agreement.
Fox overruled several precedents, Scheinesohn, supra, and Roberts, supra, which had held that when a contingent-fee contract is breached by a client without just cause, the measure of damages is the full contract price, not the reasonable value of services rendered by the attorney prior to being discharged by the client. This court in Fox, by limiting a discharged attorney to a quantum meruit recovery, abandoned the so-called "traditional rule," now followed in a small minority of jurisdictions, in favor of a new emerging majority rule. See Sloan, Quantum Meruit: Residual Equity in Law (1992), 42 De Paul L.Rev. 399, 439 (rule in most jurisdictions today is that discharged attorney may recover "only on a quantum meruit basis" [emphasis sic ]). See, generally, Annotation, Limitation to Quantum Meruit Recovery, Where Attorney Employed Under Contingent Fee Contract Is Discharged Without Cause (1979), 92 A.L.R.3d 690.
The quantum meruit rule adopted by the court in Fox "strikes the proper balance by providing clients greater freedom in substituting counsel, and in promoting confidence in the legal profession while protecting the attorney's right to be compensated for services rendered." 44 Ohio St.3d at 72, 541 N.E.2d at 450. See Fracasse v. Brent (1972), 6 Cal.3d 784, 792, 100 Cal.Rptr. 385, 390, 494 P.2d 9, 14; Rosenberg v. Levin (Fla.1982), 409 So.2d 1016, 1020.
One of the central tenets of the Fox approach is that a client has an absolute right to discharge an attorney or law firm at any time, with or without cause, .subject to the obligation to compensate the attorney or firm for services rendered prior to the discharge. See 44 Ohio St.3d at 72, 541 N.E.2d at 450. Cf. Model Rules of Professional Conduct (1992), Rule 1.16, Comment at 57 ("A client has a right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyer's services."). See Rosenberg, supra, 409 So.2d at 1020 (<quantum meruit recovery limitation is necessary to avoid placing restrictions on client's right to discharge attorney). Once discharged, the attorney must withdraw from the case, and can no longer recover on the contingent-fee-representation agreement. The discharged attorney may then pursue a recovery on the basis of quantum meruit for the reasonable value of services rendered up to the time of discharge.
The record indicates that appellant informed appellee several times that LeFaiver, and not appellee, was his attorney. Appellant repeatedly asked appellee to send his file to LeFaiver. Although appellant did not explicitly discharge appellee as his attorney in the first two letters he sent the law firm (proposing that appellee participate in a sort of co-representation with LeFaiver), the third letter clearly conveys appellant's desire to discharge appellee. In that letter, appellant unequivocally told appellee to cease representing him. The record supports the observation made by the court of appeals that appellant discharged appellee as his attorney, and that application of the rule of Fox would limit appellee to a recovery in quantum meruit.
However, the record does not support the court of appeals' further determination that the guaranty contract subsequently signed by appellant with the law firm after he discharged it means that Fox does not control this case. DR 2-110(B)(4) requires that "a lawyer representing a client shall withdraw from employment if; [h]e is discharged by his client." (Emphasis added.) Along with the mandatory obligation to withdraw from a case when discharged, an attorney who is discharged must yield the case file. At the time appellant discharged the law firm, the firm was required to return his case file to him, and to cease any and all involvement in the case. Yet the record unquestionably reveals that appellee refused to give appellant the file and even took the additional step of conditioning release of the file upon appellant's execution of a guaranty modifying the prior contingent-fee agreement.
Although appellant was not actually under duress (as the term is strictly defined) when he signed the guaranty, for all practical purposes he was made to sign the guaranty to obtain the file. Since appellee should not have imposed that condition on appellant to obtain the file once discharged, the guaranty is not enforceable, and this case does come within the rule of Fox. As in Fox, "[t]he law firm was discharged, and the maximum reach of its right to fees, with regard to the client, is the reasonable value of the legal services actually rendered to the date of discharge." 44 Ohio St.3d at 72, 541 N.E.2d at 450.
Having determined that appellee's recovery from appellant should be determined according to the equitable doctrine of quantum meruit, we address how the amount of recovery should be measured.
As an initial matter, we join those jurisdictions which have held that when an attorney representing a client pursuant to a contingent-fee agreement is discharged, the attorney's cause of action for a fee recovery on the basis of quantum meruit arises upon the successful occurrence of the contingency. Under this approach, in most situations the discharged attorney is not compensated if the client recovers nothing.
The California Supreme Court, in Fracasse, supra, 6 Cal.3d at 792, 100 Cal.Rptr. at 390, 494 P.2d at 14, gave two reasons for adopting this holding. First, the amount involved and the result obtained, two significant considerations in deciding whether an attorney fee is reasonable, cannot be determined until the contingency occurs. Second, a client of limited means, for whom the contingent-fee agreement is the only real hope of recovering an award, would be improperly burdened by an absolute obligation to pay his or her former attorney if no award is ever won. "[S]ince the attorney agreed initially to take his chances on recovering any fee whatever, we believe that the fact that the success of the litigation is no longer under his control is insufficient to justify imposing a new and more onerous burden on the client." Id. See, also, Rosenberg, supra, 409 So.2d at 1022 (deferring the discharged attorney's cause of action supports the goal of preserving client's freedom to discharge; any resulting harm to attorney is minimized because the attorney fee under original contingent agreement depended on contingency's occurrence). We believe that the considerations behind this rule are consistent with the policies espoused in Fox. Because the contingency occurred in this case (appellant ultimately recovered approximately $94,000), appellee may recover in quantum meruit, pursuant to Fox.
As a further related matter, also consistent with the policies underlying the result in Fox, we find that the quantum meruit recovery of a discharged attorney should be limited' to the amount provided for in the disavowed contingent fee agreement. In Rosenberg, supra, 409 So.2d at 1020, the court explained the reason behind adopting such a rule: "This limitation is believed necessary to provide client freedom to substitute attorneys without economic penalty. Without such a limitation, a client's right to discharge an attorney may be illusory and the client may in effect be penalized for exercising a right." See Brickman, Setting the Fee When the Client Discharges a Contingent Fee Attorney (1992), 41 Emory L.J. 367, 369 (contending that the contingent fee amount should be the maximum recovery for a discharged attorney).
A trial court called upon to determine the reasonable value of a discharged contingent-fee attorney's services in quantum meruit should consider the totality of the circumstances involved in the situation. The number of hours worked by the attorney before the discharge is only one factor to be considered. Additional relevant considerations include the recovery sought, the skill demanded, the results obtained, and the attorney-client relationship itself. See Rosenberg, supra, 409 So.2d at 1022. Other factors to be considered will vary, depending on the facts of each case. As Fox, 44 Ohio St.3d at 71, 541 N.E.2d at 449-450, mentioned, the Code of Professional Responsibility, DR 2-106, gives guidelines for determining the reasonableness of attorney fees. Because the factors to be considered are based on the equities of the situation, those factors, as well as the ultimate amount oí .quantum, meruit recovery by a discharged attorney, are matters to be resolved by the trial court within the exercise of its discretion.
In this case, it is not clear from the record, or from the trial court's order, whether the trial court considered all the facts and circumstances surrounding the matter in computing appellee's $2,500 recovery. In particular, the referee appears not to have complied with the trial court's directions to utilize quantum meruit in determining the amount of damages. Instead, the referee heard evidence which focused on whether the guaranty signed by appellant was enforceable, leading to the recommendation that quantum meruit was not the proper measure of recovery.
It appears that the parties at trial presented very little evidence going to what a proper quantum meruit recovery should be, beyond the hours worked on the matter. Because the referee gave only limited consideration to a determination of appellee's quantum meruit damages, and because the trial court relied on evidence presented at trial to set the amount of the quantum meruit recovery, we are not convinced the trial court had sufficient information before it to conduct a thorough consideration of all relevant factors. We remand this cause to allow the trial court to specifically address the amount of appellee's recovery in quantum meruit, in light of the principles delineated in Fox and in this opinion.
Judgment reversed and cause remanded.
Moyer, C.J., A.W. Sweeney and Wright, JJ., concur.
Douglas, F.E. Sweeney and Pfeifer, JJ., concur in part and dissent in part.
. "Quantum meruit" means literally "as much as deserved." See Black's Law Dictionary (6 Ed.1990) 1243 (The equitable doctrine of quantum meruit is based on an implied "promise on the part of the defendant to pay the plaintiff as much as he reasonably deserved to have for his labor." [Emphasis sic.]).
. Appellee argues that since Fox was decided alter the contingent-lee agreement and the guaranty modifying that agreement were signed, Fox should not control the result here. However, this court stated in Fox that "[e]ven prior to today's holding, Purdon had the absolute right to discharge Fox & Associates without proving just cause." 44 Ohio St.3d at 72, 541 N.E.2d at 450. The Fox court also observed that "[t]he fact that the contract is contingent does not vest the attorney with an interest in the case or affect the right to discharge." Id. Hence, even prior to the Fox decision, appellant had a right to discharge appellee and an accompanying right to control his case file; and appellee had no vested right to recover on the contingency agreement. Furthermore, we have concluded that the guaranty modifying that agreement is unenforceable and cannot have the effect appellee intended it to have. Therefore, the quantum meruit recovery rule of Fox may properly be applied.
. DR 2-106(B) provides, in pertinent part:
" Factors to be considered as guides 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, if apparent to the client, 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 services.
"(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.
"(8) Whether the fee is fixed or contingent."
We recognize that attorneys operating under contingent-fee-representation agreements sometimes do not maintain detailed records concerning hours worked and certáin expenses incurred. By the very nature of the contingent agreement, the attorney receives a fixed amount following successful completion of the representation without regard to the number of hours worked. The lack of accurate recordkeeping sometimes makes it difficult to establish what a reasonable value of services rendered should be. However, despite this possible difficulty of proof, the principles set forth in Fox and in this case require the discharged attorney to establish the reasonable value of services rendered, and the number of hours worked is an important factor to be considered by a trial court in determining that value. An attorney operating under even a contingent-fee contract should keep an accurate record of time and resources expended. "Every attorney [including one operating under a contingent fee agreement] runs the risk of being discharged and needing proof of effort in order to recover any fee." Sloan, supra, 42 De Paul L.Rev. at 446.