Opinion ID: 2823820
Heading Depth: 2
Heading Rank: 1

Heading: Quantum Meruit in Fee Dispute Cases

Text: Â¶21Â Â Â Â Â Â Â Quantum meruit is an equitable doctrine that invokes an implied contract where the parties either have no express contract or have abrogated it. See Dudding v. Norton Frickey & Assocs., 11 P.3d 441, 444 (Colo. 2000). The doctrine does not depend on the existence of a contract, either express or implied in fact, but rather applies where a need arises to avoid unjust enrichment to a party in the absence of an actual agreement to pay for the services rendered. See id. That is, the equitable doctrine of quantum meruit âseeks to restore fairness when a contract failsâ by âensuring that the party receiving the benefit of the bargain pays a reasonable sum for that benefit.â Id. at 445. To recover in quantum meruit, a plaintiff must demonstrate that: (1) the defendant received a benefit, (2) at the plaintiffâs expense, and (3) it would be unjust for the defendant to retain that benefit without paying for it. Melat, Pressman & Higbie, L.L.P. v. Hannon Law Firm, L.L.C., 2012 CO 61, Â¶ 19, 287 P.3d 842, 847; Dudding, 11 P.3d at 445. Â¶22Â Â Â Â Â Â Â In the legal services context, courts applying the doctrine of quantum meruit have recognized that when a client discharges his or her attorney, the client remainsÂ obligated to pay the reasonable value of the services rendered, barring conduct by the attorney that would forfeit the attorneyâs right to receive a fee. Dudding, 11 P.3d at 445; see also Olsen & Brown v. City of Englewood, 889 P.2d 673, 675 (Colo. 1995) (âThere is no question that an attorney who withdraws for a justifiable reason or is terminated by a client without cause is entitled to compensation for services rendered.â). At the same time, we have recognized that the trust and confidence that underlies the attorney-client relationship distinguishes this relationship from other business relationships. Dudding, 11 P.3d at 445. By allowing an attorney to recover the reasonable value of services provided, the doctrine of quantum meruit operates to preserve the clientâs right to discharge an attorney while preventing clients from unfairly benefiting at their attorneyâs expense where the parties have no express contract or have abrogated it. SeeÂ LaFond v. Sweeney, 2015 CO 3, Â¶ 27, 343 P.3d 939, 947; Melat, Â¶ 19, 287 P.3d at 847; Dudding, 11 P.3d at 447; see also Colo. RPC 1.16 cmt. 4 (âA client has a right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyerâs services.â). Â¶23Â Â Â Â Â Â Â In cases involving fee disputes, we have recognized that quantum meruit is an appropriate measure of recovery for the reasonable value of work performed by an attorney who is discharged without cause. In Olsen & Brown, for example, we held that an attorney who was discharged without cause could not recover damages for services not performed before his discharge based on the clientâs breach of the partiesâ noncontingent attorney-client contract. 889 P.2d at 677. Rather, we held that theÂ discharged attorneyâs remedy was to recover the reasonable value of services actually performed on the basis of quantum meruit. Id. 7 Â¶24Â Â Â Â Â Â Â We have applied the doctrine of quantum meruit differently to contingent fee arrangements. Given the unique nature of contingent fee agreements, we have held that an attorney who is discharged or withdraws may seek quantum meruit recovery for the reasonable value of the work performed before discharge or withdrawal, but only where the written contingent fee agreement contemplates the availability of such recovery. See Dudding, 11 P.3d at 446; Elliott v. Joyce, 889 P.2d 43, 46 (Colo. 1994). In Elliott, we observed that contingent fee agreements in Colorado are limited by this courtâs rules governing contingent fees, as set forth in C.R.C.P. Chapter 23.3. See 889 P.2d at 45. Chapter 23.3 requires a contingent fee agreement to be in writing and to contain certain specific information. Id.; see also C.R.C.P. Ch. 23.3, Rule 5. Importantly, Rule 5(d) expressly requires that the written contingent fee agreement include âa statement of the contingency upon which the client is to be liable to pay compensation otherwise than from amounts collected for him by the attorney.â Elliott, 889 P.2d at 45; see also C.R.C.P. Ch. 23.3, Rule 5(d). And Rule 6 provides that no contingent fee agreement shall be enforceable by the involved attorney unless the agreement substantially complies with the rules. Elliott, 889 P.2d at 45; see also C.R.C.P. Ch. 23.3, Rule 6. Given our specific rules under Chapter 23.3 governing the content of contingentÂ fee agreements, we held in Elliott that an attorney who withdraws before completion of the case may seek quantum meruit recovery only where âthe contingent fee agreement specifically sets forth the circumstances under which the client will be liable.â 889 P.2d at 46. This result is admittedly somewhat counterintuitive, given that the very purpose of the equitable doctrine of quantum meruit is to assure fairness in situations where the parties have no express agreement. Â¶25Â Â Â Â Â Â Â Six years later, in Duddingâanother contingent fee caseâwe acknowledged that the doctrine of quantum meruit has arisen âprecisely to address the absence of a written agreement.â 11 P.3d at 448. Nevertheless, we felt compelled to honor both our prior case law and our rules governing contingent fee agreements by reaffirming that, to seek quantum meruit recovery, the attorney must provide some notice to the client in the fee agreement of the possibility that the attorney may seek equitable recovery in quantum meruit if the contract fails. Id. at 448, 449. 8 Importantly, Dudding concerned a contingent fee agreement, and nothing in our discussion in that case expressly extended its holding to other types of fee agreements. Â¶26Â Â Â Â Â Â Â Soon thereafter, we made clear in Mullens v. Hansel-Henderson, 65 P.3d 992, 998 (Colo. 2002), that our holding in Dudding does not apply to situations where theÂ attorney has successfully completed the agreed-upon legal services in a contingent fee agreement. In reaching that conclusion, we reasoned that Rule 5(b) requires a contingent fee agreement to give a client notice of the possibility of quantum meruit recovery because, absent such notice, a contingent fee client has âno expectation to payâ if the attorney withdraws prematurely. Id. at 997. However, where the attorney has successfully completed the agreed-upon legal services, the very nature of the contingent fee agreement gives rise to the clientâs expectation that she must pay the attorney from the funds the attorney has recovered for the client. Id. at 998â99. Because the attorney in Mullens had completed the legal services for which he was retained under the contingent fee arrangement and had obtained a substantial settlement for the client, we held that he properly retained fees in quantum meruit for the reasonable value of the legal services he provided, even though the partiesâ contingent fee agreement was unenforceable because it was not in writing. Id. at 999.