Opinion ID: 2524968
Heading Depth: 4
Heading Rank: 5

Heading: Encourage written fee agreements

Text: While they dispute the facts relating to their respective efforts, the parties each claim they took steps to obtain from the other a written agreement respecting attorney compensation in the FEHA litigation. At least to that extent, the Court of Appeal would appear correct in having opined that the problem in this case arises . . . because counsel failed to secure or retain a written fee agreement. Plaintiff contends our awarding her the disputed proceeds in this case would provide a strong incentive for attorneys to secure written fee agreements in FEHA cases and thus would further public policies generally favoring such agreements. Plaintiff correctly points out, also, that our construing section 12965 in her favor would not diminish defendants' right to enforce any compensation right in quantum meruit. (See, e.g., Elconin v. Yalen (1929) 208 Cal. 546, 549, 282 P. 791.) As the Court of Appeal noted, Business and Professions Code section 6147 requires a written fee agreement in most classes of cases where an attorney agrees to represent a client on a contingency fee basis. Plaintiff argues that, for us to require that attorneys secure written fee agreements as a prerequisite to receiving monies awarded under section 12965, would be reasonable and consistent with the legislative intent underlying Business and Professions Code section 6147. While this argument has some surface appeal, we reject it. Ordering that section 12965 fee awards be paid directly to plaintiffs whenever there exists no contrary agreement between plaintiffs and their counsel (such that plaintiffs realize a windfall at counsel's expense) could make sense only if the law treated attorneys who fail to secure fee agreements as deserving of such punishment. (See, e.g., Conservatorship of Chilton (1970) 8 Cal.App.3d 34, 43, 86 Cal. Rptr. 860 [attorney with conflict of interest not entitled to recover fee for services]; Hardy v. San Fernando Valley C. of C. (1950) 99 Cal.App.2d 572, 576, 222 P.2d 314 [same, regarding attorney who was not a member of the state bar].) But that is not the case. The well-established rule is, to the contrary, that, [i]n the absence of an agreement upon the subject, [the client] must be deemed to have promised to pay [the attorney] the reasonable value of the services performed in his behalf and with his consent and knowledge. ( Batcheller v. Whittier (1909) 12 Cal.App. 262, 266-267, 107 P. 141; see also Elconin v. Yalen, supra, 208 Cal. at p. 549; 282 P. 7911 Witkin, Cal. Procedure (4th ed. 1996) Attorneys, § 220, pp. 280-281.) Even in circumstances where the Legislature has required a written fee agreement (e.g., Bus. & Prof.Code, §§ 6147 [contingency fee agreements], 6148 [other agreements for fees exceeding $1,000]), it has provided that, while noncompliance renders the agreement voidable, the attorney nevertheless is entitled to collect a reasonable fee ( id., §§ 6147, subd. (b), 6148, subd. (c)). To that extent, the Legislature expressly has declined to sanction failure to obtain a written agreement as plaintiff proposes. Plaintiffs categorical assertion that an attorney can always obtain protection by complying with the Rules of Professional Conduct isas a matter of logicfalse in every noncontingency fee case where to obtain a writing is impractical (Bus. & Prof.Code, § 6148, subd. (d)(1)), as the requirement of obtaining a written agreement expressly does not apply in such cases. More broadly, because written fee agreements are not always required, our construing section 12965 as plaintiff requests would risk punishing lawyers who do not violate the Business and Professions Code, as well as those who do. Written fee agreements are not required for noncontingency fee representation when the client is a corporation (as will often be the case, presumably, with nonprofit and public interest groups), when the client for whatever reason is not obligated to pay anything, when an agreement can be implied from counsel's prior representation of the client, in an emergency situation when the attorney must act to avoid prejudice to the client, or, as noted, where a writing is otherwise impractical. (Bus. & Prof.Code, § 6148, subd. (d).) [17] For the foregoing reasons, we conclude that attorney fees awarded pursuant to section 12965 (exceeding fees already paid) belong, absent an enforceable agreement to the contrary, to the attorneys who labored to earn them. The preceding analysis, of course, may not be dispositive indeed, will not even come into play where the parties have made an enforceable agreement disposing of an award's proceeds. Whether an enforceable agreement exists, or what its terms may be in any given case, are of course questions of fact. The Court of Appeal, in holding (incorrectly, as we have explained) that a section 12965 award invariably belongs to the party rather than counsel in the first instance, remanded for further proceedings on the question of fact whether an agreement between Flannery and her counsel created in defendants an entitlement to the disputed proceeds. While, as explained, we disagree with the Court of Appeal's legal analysis regarding ownership of unassigned section 12965 proceeds, we agree summary judgment is not appropriate on this record, which contains conflicting evidence as to whether a controlling agreement exists or what the terms of any such may be. Accordingly, we affirm the judgment of the Court of Appeal.