Opinion ID: 853798
Heading Depth: 2
Heading Rank: 1

Heading: A Discharged Lawyer is Entitled to the Reasonable Value of Services Rendered

Text: 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. Indiana Professional Conduct Rule 1.16 comment; see Matter of Lansky, 678 N.E.2d 1114, 1116 (Ind.1997); see also 7 AM.JUR.2D Attorneys at Law § 181 (1997). We assume that an agreement calling for a reasonable method of compensating a discharged lawyer may be enforceable according to its terms. Cf. RESTATEMENT (SECOND) OF CONTRACTS § 3777 (1981). Here, however, Lyons and Brown had reached no explicit agreement as to whether or how much Lyons was to be compensated if the firm was discharged before a result was known. The conventional rule is that [a]n attorney who is employed under a contingent fee contract and discharged prior to the occurrence of the contingency is limited to quantum meruit recovery for the reasonable value of the services rendered to the client, and may not recover the full amount of the agreed contingent fee. 7 AM.JUR.2D Attorneys at Law § 181 (1997); accord Matter of Lansky, 678 N.E.2d at 1116; Kelly v. Smith, 611 N.E.2d 118, 122 (Ind.1993). As the Court of Appeals observed, this rule strikes the proper balance by providing clients freedom in substituting counsel, prohibiting clients from being held responsible for attorney's fees not previously agreed to, and protecting an attorney's right to be compensated for services rendered. Galanis v. Lyons & Truitt, 698 N.E.2d 368, 372 (Ind.Ct.App.1998). A corollary of the client's right to discharge a lawyer is that a contract between the client and the lawyer that unduly impairs that right is invalid. 1 GEOFFREY C. HAZARD, JR. & W. WILLIAM HODES, THE LAW OF LAWYERING § 1.16:201-1 (1990 & Supp.1998). Accordingly, even if an agreement calls for a full contingent fee in the event of discharge, it is likely to be unenforceable. If a client is required to pay the discharged lawyer the fee for the completed project, especially if this is a percentage contingent fee, and then pay a second fee for its completion, the client's right to discharge the lawyer may be too costly to assert. Id. at § 1.16:602 n. 2.1 (a client's right to discharge is not much of a right if it would be too costly to assert); AFLAC, Inc. v. Williams, 264 Ga. 351, 444 S.E.2d 314, 317 (1994) (A client should not be deterred from exercising his or her legal right because of economic coercion.). Otherwise stated, holding a client responsible for the entire amount of a contract would chill a client's exercise of the right to discharge a lawyer. Estate of Forrester, 562 N.E.2d at 1317; see also Saucier v. Hayes Dairy Prod., Inc., 373 So.2d 102, 116 (La.1978) (the client's absolute right to discharge a lawyer is stripped of effect if the exercise of that right is conditioned upon payment of the full amount specified in the contract). The requirement of Professional Conduct Rule 1.5 that a lawyer's fee be reasonable is also relevant. A full contingency for partial completion overcompensates the discharged lawyer by giving a full contingent fee for less than a full work load. Similarly, however, allowing a full contingency to a successor may be unreasonable. If the former lawyer has contributed significantly to the result but the successor receives a full contingent fee, either the first lawyer remains uncompensated for that contribution or the client pays more than a full contingent fee. In either case, the successor gets a windfall in the form of being relieved of the effort contributed by the first lawyer but nonetheless receives a full contingent fee. None of these results is the desired default setting the law should provide in the absence of a contract spelling out exactly who pays how much under these circumstances.