Opinion
154317/1993.
Decided July 9, 2004.
Plaintiff's former attorney, Andrew F. Plasse, P.C., moves for charging and retaining liens against the settlement plaintiff obtained in this action after Andrew Plasse no longer represented her. NY Jud. Law § 475. Upon oral argument May 14, 2004, for the reasons explained below, the court grants the motion to the extent of finding the attorney entitled to a charging lien on the settlement proceeds. The court orders a hearing on (1) whether entitlement to a fee is to be based on any factors in addition to quantum meruit, such as a proportionate share of the settlement, and (2) the amount of the fee and lien.
I. FACTUAL ALLEGATIONS
Andrew Plasse was the second attorney to represent plaintiff in this action. After other counsel represented plaintiff from 1991 to 1995, she retained Plasse in September 1995. Although Plasse presents no written retainer agreement, he alleges that their agreed fee was one third of any recovery after deducting expenses. Before Plasse was relieved as counsel in 2003, he obtained a $15,000.00 settlement offer, which plaintiff rejected, and incurred $638.20 in expenses. Since then plaintiff, without counsel, obtained a $30,000.00 settlement. Based on these facts, Plasse claims entitlement to a charging lien of $638.20 plus a fee equal to one third of the net recovery he obtained for plaintiff: ($15,000.00-638.20) × 1/3 = $4,787.27.
II. THE ISSUES
A. Entitlement to a Lien
If Plasse was discharged without cause, he is entitled to both a charging lien and a retaining lien. Wankel v. Spodek, 1 A.D.3d 260, 261 (1st Dep't 2003); Schneider, Kleinick, Weitz, Damashek Shoot v. City of New York, 302 AD2d 183, 186 (1st Dep't 2002); Butler, Fitzgerald Potter v. Gelman, 235 AD2d 218, 219 (1st Dep't 1997). Discharge for cause, on the other hand, would void his right to any compensation. Klein v. Eubank, 87 NY2d 459, 464 (1996); Campagnola v. Mulholland, Minion Roe, 76 NY2d 38, 45 (1990); EMC Iron Works v. Regal Constr. Corp., ___ A.D.3d ___, 2004 WL 1068092 at *1 (1st Dep't May 13, 2004); Costello v. Kiaer, 278 AD2d 50 (1st Dep't 2000).
The order granting Plasse's motion to withdraw is based on "irreconcilable differences" between the attorney and his client. Order (Nov. 10, 2003) at 1 (Padilla, J.). Conflicts, misunderstandings, or other differences do not implicate any impropriety by the attorney; thus Plasse's discharge is without cause. Klein v. Eubank, 87 NY2d at 464; Costello v. Kiaer, 278 AD2d 50; Braider v. 194 Riverside Owners Corp., 237 AD2d 147 (1st Dep't 1997). Because the order also required Plasse to release his file of plaintiff's case to her, however, his entitlement to a retaining lien on the file is moot. Costello v. Kiaer, 278 AD2d 50; Braider v. 194 Riverside Owners Corp., 237 AD2d 147; Kats v. Missry, 272 AD2d 378, 379 (2d Dep't 2000). See Eighteen Assoc. v. Nanjim Leasing Corp., 297 AD2d 558, 559 (2d Dep't 2002). Having been discharged without cause, he still is entitled to a charging lien against any settlement his former client obtains in this action where he previously represented her, for the reasonable value of his services. NY Jud. Law § 475; Wankel v. Spodek, 1 A.D.3d at 261; Schneider, Kleinick, Weitz, Damashek Shoot v. City of New York, 302 AD2d at 187; Costello v. Kiaer, 278 AD2d at 51; Braider v. 194 Riverside Owners Corp., 237 AD2d 147.
B. Factors Bearing on Assessment of the Lien
Since this lien may be fixed upon the attorney's discharge, before the outcome of the action, albeit subject to payment contingent on an outcome favorable to the former client, Butler, Fitzgerald Potter v. Gelman, 235 AD2d at 219, the lien is determined on a quantum meruit basis. Matter of Cooperman, 83 NY2d 465, 473 (1994); Cohen v. Tesoriero Bell, 81 NY2d 655, 658 (1993); Lai Ling Cheng v. Modansky Leasing Co., 73 NY2d 454, 457 (1989). That reasonable value may exceed the contingent percentage fee provided in the original retainer agreement. Id. at 457-58; Shalom Toy v. Each Every One of Members of NY Prop. Ins. Underwriting Assn., 239 AD2d 196, 198 (1st Dep't 1997); Meyer, Suozzi, English Klein v. Albin Richman, 196 Misc 2d 159, 162 (Dist.Ct. Nassau Co. 2003). Although the attorney and client may reach another agreement for a contingent percentage fee upon the attorney's discharge, the current record here reveals no such evidence. Cohen v. Tesoriero Bell, 81 NY2d at 658. See Lai Ling Cheng v. Modansky Leasing Co., 73 NY2d at 458.
Here, the court previously left the determination of Plasse's fee and lien until the outcome of the action, Order (Nov. 10, 2003) at 2, perhaps in anticipation that plaintiff would retain substitute counsel, requiring the court to apportion a contingent percentage fee according to the attorneys' relative contributions at the litigation's conclusion. Cohen v. Tesoriero Bell, 81 NY2d at 658; Lai Ling Cheng v. Modansky Leasing Co., 73 NY2d at 458. Because plaintiff never retained substitute counsel after Plasse, however, he was never required to demand a fee based on quantum meruit as against the new attorney upon substitution. See Schneider, Kleinick, Weitz, Damashek Shoot v. City of New York, 302 AD2d at 188. That requirement, moreover, is to guard against the inequity in permitting the former attorney to wait until an unfavorable outcome and, when he has lost his gamble, then demand a fee on other than a contingency basis. Cohen v. Tesoriero Bell, 81 NY2d at 660. Here, the outcome is favorable, and Plasse seeks a fee based on that outcome. The single issue is whether the fee is based on quantum meruit only or limited to a percentage of the recovery.
At this juncture, while the court already has determined the reason for Plasse's discharge, entitling Plasse to a charging lien, he has not presented any accounting regarding his representation of plaintiff over an eight year period. Without those facts, the court cannot determine whether the reasonable value of his services even approaches the $4,787.27 he requests. Therefore, although Plasse performed his services pursuant to a contingency fee retainer agreement, a hearing is required to assess the reasonable value of his services. Costello v. Kiaer, 278 AD2d 50; Shalom Toy v. Each Every One of Members of NY Prop. Ins. Underwriting Assn., 239 AD2d at 198; Carbonara v. Brennan, 300 AD2d 528, 529 (2d Dep't 2002); Smith v. Bocov's Dept. Store, 192 AD2d 949, 950 (3d Dep't 1993). See Braider v. 194 Riverside Owners Corp., 237 AD2d 147. Simply awarding one third of the rejected settlement based on the contingent fee agreement is impermissible. Smith v. Bocov's Dept. Store, 192 AD2d at 950. See Lai Ling Cheng v. Modansky Leasing Co., 73 NY2d at 457-58; Shalom Toy v. Each Every One of Members of NY Prop. Ins. Underwriting Assn., 239 AD2d at 198; Meyer, Suozzi, English Klein v. Albin Richman, 196 Misc 2d at 162.
Thus, if the reasonable value of Plasse's services is less than the percentage fee of $4,787.27 he requests, the court must award that lesser amount based on quantum meruit. If, however, the reasonable value of his services is more than the requested percentage fee, may the court in this instance award that greater amount? While the percentage agreement is not dispositive, it is a factor the court may consider. Smith v. Bocov's Dept. Store, 192 AD2d at 950-51. Since the lien may be fixed before the outcome of the action, however, the court may not consider the $30,000.00 plaintiff ultimately recovered. Lai Ling Cheng v. Modansky Leasing Co., 73 NY2d at 459. Had plaintiff retained counsel on the same percentage fee basis after Plasse, he would be required to share the one third of the net recovery with the substitute counsel, proportionate to their contributions to the result achieved, on a quantum meruit basis. Cohen v. Tesoriero Bell, 81 NY2d at 658; Lai Ling Cheng v. Modansky Leasing Co., 73 NY2d at 458. Certainly Plasse is not entitled to more under the current circumstances, where plaintiff herself achieved the ultimate result. Therefore, even if the reasonable value of the outgoing attorney's services amounts to the full one third of the net recovery, under no circumstances may he receive that much, in this case $9,787.27: ($30,000.00-638.20) × 1/3.
If the reasonable value of the outgoing attorney's services is less than one third of the ultimate recovery, but more than one third of the recovery the outgoing attorney obtained, then the court is not strictly limited by the latter amount. This flexibility would accommodate the situation where an incoming attorney, for example, capitalizes on the groundwork the predecessor laid and by doing little obtains a settlement offer two or three times greater than the offer to the predecessor.
In this case, however, the court is guided by at least three factors that would limit the fee to no more than one third of the net recovery Plasse obtained. First, his percentage agreement with plaintiff, a factor the court may consider, Smith v. Bocov's Dept. Store, 192 AD2d at 950-51, would have limited him to that amount had she accepted the $15,000.00 offer. Second, the reasonable value of an attorney's services also is based in part on the results the attorney obtains. E.g., Matter of Freeman, 34 NY2d 1, 9 (1974); Schneider, Kleinick, Weitz, Damashek Shoot v. City of New York, 302 AD2d at 189; Blumert v. Nanny Hagen Leasing Ltd., 283 AD2d 642, 643 (2d Dep't 2001); Smith v. Bocov's Dept. Store, 192 AD2d at 951. Third, the attorney in this case requested only the agreed percentage of the result he obtained and in making his motion provided no basis for the court to assess a higher fee. See Braider v. 194 Riverside Owners Corp., 237 AD2d 147.
III. CONCLUSION
At the hearing, as set forth above, the court may consider both the factors it will use to assess the attorney's fee based on quantum meruit, such as the result he obtained, and whether, under the circumstances, entitlement to a fee is to be based on any factors in addition to quantum meruit, and determine the amount of the fee and lien on those bases. Attorney Andrew F. Plasse shall requisition the court file, including this order, and deliver the file to the clerk of Special Term Part II, who shall notify the parties of the time and place of the hearing to fix the amount of the attorney's charging lien against plaintiff's recovery. When defendant is to pay that amount to Andrew F. Plasse. P.C., is left to the court's determination after the hearing. See Schneider, Kleinick, Weitz, Damashek Shoot v. City of New York, 302 AD2d at 187-88.
This decision constitutes the court's order. The court will mail copies to plaintiff, to the moving party, and to defendant's attorney.