Law firm fee dispute; Whether Quantum Meruit Theory May be Asserted Against Successor Law Firm or Only Against Client
Meyer Darragh. v. Law Firm of Middleman, 95 A.3d 893 (Pa. Super. 2014), allocatur granted, 6 and 7 WAP 2017
This case addresses whether, in a law firm fee dispute, the predecessor law firm may recover against the successor law firm under a theory of quantum meruit, or whether quantum meruit is available only against the client.
Trial court ruled that the predecessor firm was entitled to recover against the successor law firm under a theory of quantum meruit, rejecting the alternative contract theory, and also rejecting the defendant successor law firm’s claim that quantum meruit could only be maintained against the client, not the successor law firm. Cross appeals followed, with the successor law firm challenging the quantum meruit judgment and the predecessor firm challenging the rejection of its contract theory. Superior Court reversed the quantum meruit judgment, holding:
There is no Pennsylvania appellate court case holding that an attorney who initially represents a client and is dismissed can maintain a quantum meruit action against the attorney who ultimately settles the case. Rather, the initial attorney has to proceed against the client…. Until our supreme court holds otherwise, we will not recognize a claim for quantum meruit by a former attorney against a subsequent attorney.
95 A.3d at 897-98.
As to the predecessor firm’s contract claim, which was based on an employment contract between the predecessor firm and the departing lawyer who joined the successor firm, and to which the successor firm was not a party, Superior Court ruled that although the successor firm was not a party to the contract, its share of the attorney fee was limited by the terms of the existing agreement between the predecessor firm and the departing lawyer. Superior Court thus remanded for entry of judgment in the predecessor firm’s favor for contract damages, an award greater than the quantum meruit claim trial court awarded.
The successor firm sought and was granted allowance of appeal on the contract issue, but the predecessor firm did not cross petition for allowance or raise in any other way the Superior Court’s reversal of its quantum meruit victory. The Supreme Court, in Meyer Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C., 137 A.3d 1247 (Pa. 2016), reversed Superior Court and held that the predecessor law firm’s only opportunity for recovery was the quantum meruit claim it prevailed on in trial court. Supreme Court vacated Superior Court’s contract judgment, but did not reinstate the trial court’s quantum meruit judgment because the predecessor law firm had not filed a cross-petition for allowance of appeal from the Superior Court order. Chief Justice Saylor and Justice Todd concurred, and would have permitted Meyer Darragh to file a petition for allowance of appeal nunc pro tunc to address the quantum meruit issue.
Meyer Darragh thereafter filed a cross-petition for allowance of appeal nunc pro tunc, which Supreme Court granted, leading to the present appeal to determine the issue, as stated by the predecessor law firm:
Whether the Superior Court erred in vacating the Judgment of the Court of Common Pleas with respect to Meyer Darragh’s quantum meruit claim when Meyer Darragh performed legal work and incurred expenses on behalf of the client and doing so would force Meyer Darragh to engage that client, who has already paid its legal fees in full, in litigation or allow Malone Middleman to be unjustly enriched.
Chief Justice Saylor, in his concurring opinion, expressed reservations about the possibility of holding the client liable for quantum meruit in this situation, and observed that in other jurisdictions quantum meruit is a basis for recovery against the successor law firm, not the client:
The difficulty, as I see it, is that this puts the client in an untenable position where, as here, the client has already paid the attorney fee in full to the successor law firm. In this regard, and as the majority notes, quantum meruit is an equitable doctrine. See Majority Opinion, at 1250 n. 4. As such, I would be particularly cautious about a quantum meruit framework under which an excessive payment obligation was ultimately imposed upon the client.
Notably, a number of other jurisdictions have applied the quantum meruit principle to disputes between successive attorneys in contingency-fee cases. See, e.g., Melat, Pressman & Higbie, L.L.P. v. Hannon Law Firm, L.L.C., 287 P.3d 842, 847 (Colo.2012); Searcy, Denney, Scarola, Barnhart & Shipley, P.A. v. Poletz, 652 So.2d 366, 368 (Fla.1995); Nunn Law Office v. Rosenthal, 905 N.E.2d 513, 519 (Ind.Ct.App.2009); Somuah v. Flachs, 352 Md. 241, 721 A.2d 680, 688 (1998); Reynolds v. Polen, 222 Mich.App. 20, 564 N.W.2d 467, 471 (1997).
For more information, contact Kevin McKeon or Dennis Whitaker.