Opinion ID: 2625921
Heading Depth: 2
Heading Rank: 3

Heading: Quantum Meruit When the Legal Services are Completed

Text: We have never before examined whether the Rule 5(d) notice requirement applies to situations where the agreed upon legal services, such as a settlement or judgment, have been completed. However, the court of appeals explored such a situation in Beeson v. Indus. Claim Appeals Office, 942 P.2d 1314 (Colo.App.1997). In Beeson, the contested fees arose from an oral contingent fee agreement where attorney Fogel had obtained a settlement for client Beeson, thereby completing the contingency of the contract. Beeson, 942 P.2d at 1315. Two years after accepting the distribution of funds, Beeson sought to retrieve her payment of attorney's fees because the fee agreement failed to comply with Chapter 23.3, and hence the contract was unenforceable. Id. at 1315-16. Under the unenforceable contract, Beeson reasoned, Fogel should not have received the bargained-for amount. Id. at 1315. In Beeson, the court of appeals agreed that the underlying contingent fee agreement was unenforceable, however, the court allowed Fogel to be compensated for his services under a quantum meruit analysis. Id. at 1316. The Beeson court determined that fees may be recovered on the basis of quantum meruit so long as the attorney shows that a benefit was conferred, appreciated, and accepted by the client under such circumstances that it would be inequitable for the benefit to be retained without payment of its value. Id. Because the services agreed upon in the unenforceable oral agreement were completed, the Rule 5(d) notice requirement was not applicable. Id. Specifically, the Beeson court reasoned that because Fogel was not seeking fees after having been terminated by the client; because Fogel had not unilaterally withdrawn while the claim was pending; and because he had fully performed the requested services, completely resolving the matter, he was entitled to reasonable compensation for his work. Id. We agree with the analysis of the court of appeals in Beeson in light of the nature of contingent fee agreements and the function the Rule 5(d) notice requirement serves. The notice requirement fulfills an important function. The purpose of Rule 5(d) is to assure that the client knows whether she will be liable for attorney's fees under quantum meruit when there is not already an expectation to pay. In a contingent fee relationship, the client is put on notice by the nature of the contingent fee agreement itself that should the attorney fulfill his end of the bargain to the benefit of the client, the client will be required to pay the attorney from the funds the attorney receives for the client. Hence, where the agreed upon legal services are completed, the client has the expectation that she must pay the attorney. This expectation exists even if the fee agreement is later found unenforceable because it is not in writing. Since the client already has an expectation that she must pay the attorney from the monies the attorney recovers for her, requiring a statement expressing such does not advance the essential function of Rule 5(d) of giving the client notice as to her potential liability. In contrast, if the agreed upon legal services are not completed, the client will have no notice that she may be expected to pay the attorney. The expectation to pay for services that have not been completed will arise only if there is express notice of such an obligation. Only in situations where the attorney fails to complete the agreed upon services, and the client therefore has no expectation of needing to pay, is the presence of the notice statement meaningful. When an attorney completes the legal services for which he was retained, the fact that the underlying fee agreement was unenforceable does not in itself preclude the attorney from being paid the reasonable value of his services. When a contract fails, equity steps in to prevent one party from taking advantage of another. Quantum meruit, founded upon the principle of equity, exists to prevent unjust enrichment. D. Dobbs, Handbook on the Law of Remedies, § 4.2 (1973); 1 D. Dobbs, Law of Remedies § 4.2(3) (2d ed.1993). Not allowing an attorney to receive reasonable payment for completing legal services agreed to by both the attorney and client to the benefit of the client, under a good faith belief that he would receive an agreed upon compensation for his services, solely because the contract was not in writing is inequitable and unjustly enriches the client. In her complaint Hansel asserts a claim for money had and received, under which she argues that all fees retained by Mullens should be returned to her. [12] Under this principle, a party will not be allowed to keep money which in equity and good conscience should be returned to another. D. Dobbs, Handbook on the Law of Remedies, § 4.2 (1973). Under the claim money had and received the task of the court is not to determine whether something was taken away from the client but whether the attorney was unjustly enriched by wronging the client, such as accepting payment he was not entitled to. Recovery Based on Tortfeasor's Profits in Action for Procuring Breach of Contract, 5 A.L.R.4th 1276 (2002); D. Dobbs, Handbook on the Law of Remedies, § 4.2 (1973). Money had and received, like quantum meruit, exists to prevent unjust enrichment. In the circumstances before us, money had and received operates to return funds to a client from an attorney who has been unjustly enriched. Quantum meruit, on the other hand, assists the attorney in obtaining fees from the client to prevent unjust enrichment of the client. The difference between the two doctrines in the circumstances before us is merely whether the fees have been received by the attorney. Both doctrines seek to prevent unjust enrichment in the attorney-client relationship, and to determine the reasonable value of the legal services rendered. For this reason, our discussion of quantum meruit completely resolves the claim for money had and received. Neither the Rules Governing Contingency Fees under Chapter 23.3 nor our prior cases maintain that equity is unavailable to the attorney who completes the agreed upon legal services solely because the agreement was not in writing. Further, the client has notice that she must pay for legal services because she agreed to do so from the monies recovered by the attorney on her behalf. Here, Hansel agreed to pay for legal services from the monies her attorney recovered. Mullens completed the agreed upon legal services, thereby obtaining a substantial settlement for Hansel. While it is true that Mullens may not enforce the terms of the contingent fee agreement, we find that he may be compensated under quantum meruit for the reasonable worth of the legal services he provided to Hansel.