The case of In Re Petition for Distribution of Attorney's Fees arose when the plaintiff represented a client under a contingency fee agreement. However, prior to the settlement of the case, the plaintiff withdrew and the defendant law firm substituted in as new counsel. The defendant successfully negotiated a settlement for the client. The plaintiff thereafter sought a portion of the contingency fee obtained by the defendant. The issue was whether the plaintiff was entitled to a portion of the fee for the value of the services rendered by the plaintiff before withdrawing from the case.

In re Petition for Distribution of Attorney's Fees,

870 N.W.2d 755 (Minn. 2015)

In July 2007 [Plaintiff] entered into a contingent-fee agreement to represent a client in a medical-malpractice claim against a doctor based on a one-third contingent fee, plus reimbursement for out-of-pocket expenses. The contingent-fee agreement ... permitted [Plaintiff] to "withdraw from representation of this agreement," if "after reasonable investigation of [the] claim" and notice to the client, it "determine[d] that it is not feasible to prosecute [the] claim." ... "If there is no recovery, by either settlement or verdict, [the client] shall not be indebted to said attorneys for services rendered, and there shall be no attorney's fees paid."

Over the next 2 years Plaintiff investigated the facts and reviewed the law to determine whether there was a basis for a medical-malpractice claim against the doctor. Plaintiff completed its investigation and decided to proceed with the case. To support its theory of the case [Plaintiff] retained expert witnesses to provide favorable testimony on liability and damages. [Plaintiff] did not file a lawsuit or conduct any formal discovery. [The parties did participate in mediation and after a settlement was not reached, the plaintiff withdrew as the attorney and the defendant was retained as counsel and the case was subsequently settled.]

We conclude that an attorney who withdraws for good cause from representation under a contingent-fee agreement may recover in quantum meruit [as much as deserved] for the reasonable value of services rendered prior to withdrawal, provided that the attorney's recovery in the event of withdrawal for good cause is not otherwise addressed in the contract and the attorney satisfies the ethical obligations governing withdrawal from representation....

On the other hand, when an attorney terminates the attorney-client relationship without good cause, the circumstances are materially different, because such an attorney demonstrates a willingness to forfeit a fee.

Absent some express contract language to the contrary, it is objectively unreasonable for an attorney in these circumstances to expect compensation for pre-withdrawal services. This is because the reasonable expectation of at least the client, if not both parties to a contingent-fee agreement, is that the attorney who voluntarily withdraws without good cause forfeits the right to recover a portion of a contingent fee later obtained by substitute counsel.

[The court found no good cause for withdrawal and affirmed the trial court's denial to the plaintiff of a portion of the contingency fee.]

Questions

1.What were the reasons the court used to justify its decision why a withdrawal without good cause should not allow the attorney to collect a fee?

2.What importance did the court attribute to the written agreement?

3.How might the agreement be written to ensure that the first attorney receives a portion of the fee?