Commercial Division Blog

Posted: April 11, 2021 / Categories Commercial, Law Firms and Professional Ethics

Predecessor Counsel in Contingency Action Denied Any Share of Contingency Fee

On March 31, 2021, the Second Department issued a decision in Robinson & Yablon, P.C. v. Sacco & Fillas, LLP, 2021 NY Slip Op. 02003, denying predecessor counsel in a contingency action any share of a contingency fee, explaining:

On June 18, 2014, nonparty Carmen Ortiz allegedly sustained injuries when her left arm became stuck in a handrail as she fell down a flight of stairs. She initially retained nonparty attorney Andrew Jones of the Jones Law Group, LLC, to represent her in a personal injury action. Jones referred the case to Sacco & Fillas, LLP (hereinafter Sacco & Fillas), which commenced a personal injury action on Ortiz's behalf in Supreme Court, Westchester County. Thereafter, Ortiz retained Robinson & Yablon, P.C. (hereinafter Robinson & Yablon), to represent her. Robinson & Yablon discontinued the Westchester County action, commenced an action in the United States District Court for the Southern District of New York, and obtained a $550,000 settlement.

Following that settlement, Robinson & Yablon commenced this proceeding, seeking, inter alia, a hearing to determine the apportionment of the attorney's fees recoverable between it and Sacco & Fillas. Following a hearing, the Supreme Court awarded 100% of the net contingency fee to Robinson & Yablon. Sacco & Fillas appeals.

When there is a fee dispute between the current and discharged attorneys for the plaintiff in an action to which a contingent fee retainer agreement applies, the discharged attorney may elect to receive compensation immediately based on quantum meruit or on a contingent percentage fee based on his or her proportionate share of the work performed on the whole case. The issue of apportionment of an attorney's fee is controlled by the circumstances and equities of each particular case, and the trial court is in the best position to assess such factors. An award of reasonable attorney's fees is within the sound discretion of the Supreme Court based upon such factors as the time and labor required, the difficulty of the issues involved, the skill required to handle the matter, and the effectiveness of the legal work performed.

On appeal, Sacco & Fillas contends that it is entitled to 20% of the net contingency fee. However, the Supreme Court providently exercised its discretion in awarding 100% of the net contingency fee to Robinson & Yablon given the time and labor expended by each attorney in the action, the skill required for the various work performed, and the effectiveness of each counsel's legal work. Sacco & Fillas provided no time records or other evidence from which its time and labor could be ascertained, its contributions were minimal, and its efforts were ultimately of no value, as all of its work had to be duplicated by successor counsel.

(Internal quotations and citations omitted).

This is a surprising result, but perhaps there is more to the story than this decision explains. Contact us if you have questions regarding claims by or against law firms or relating to the business of law.

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