Attorney Contigent Fees: BAKER V. SHAPERO (SC 10/19/2006)

BAKER V. SHAPERO
ATTORNEYS:  CONTINGENT FEES AND DISCHARGE

2004-SC-000639-DG.pdf
PUBLISHED: REVERSING AND REMANDING (GRAVES)
DATE RENDERED: 10/19/2006

The Supreme Court reverses and remands.

Appellant Chiu’s sister retained attorney Shapero to represent Chiu in personal injury claims stemming from an auto collision. Chiu signed an employment agreement with Shapero "or one of his designees" for a 40% contingency fee. Shapero immediately transferred the case to attorney Frederick, who began working on the case with an associate.

Approximately 5 weeks after the agreement was signed, Chiu discharged Shapero and Frederick and hired new counsel; about 4 days later, Chiu rehired Shapero and Frederick. Finally, about 10 weeks after the agreement was signed Chiu discharged Shapero and Frederick permanently and hired attorney/appellant Baker.  With Baker, Chiu ultimately received a total settlement of $175,000. Shapero and Frederick immediately filed an attorney’s lien against the settlement.

The TC initially determined that Shapero and Frederick were entitled to the fee under LaBach v. Hampton, because they were discharged without cause. The CA affirmed, but vacated and remanded to recalculate the fee. The SC granted discretionary review.

The SC now overrules LaBach v. Hampton and reverses the TC and CA.

Most jurisdictions only allow discharged attorneys their fees on a quantum meruit basis.   

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