Can law firms that handed off a case to a successor firm recover its fees from the successor firm under a quantum meruit theory, or does the initiating firm need to sue the client?
That question was squarely before the state Supreme Court Tuesday morning in Meyer, Darragh, Buckler, Bebenek & Eck v. Malone Middleman—a case that could open up quantum meruit liability against successor law firms.
According to Meyer Darragh Buckler Bebenek & Eck attorney Scott Millhouse, the answer is simple: If the successor firm benefited from the first firm’s work, the quantum meruit claim clearly lies with the successor firm.
“There’s no dispute that Meyer Darragh did the work on this case for the client that was material to the ultimate result,” Millhouse said. “Malone Middleman [the successor firm] knew when it took on attorney [William] Weiler [who originated the case while he worked at Meyer Darragh] that Meyer Darragh expected to be paid for the work we’d done on that case.”
However, Ray Middleman, former managing partner of Malone Middleman who is now with Eckert Seamans Cherin & Mellott, said the situation is more complicated.
The dispute stems from a motor vehicle litigation where Weiler represented an estate involved in the case. Weiler began working on the case while at Meyer Darragh, but later joined Malone Middleman. When he left Meyer Darragh, Weiler agreed the firm could receive two-thirds of the attorneys fees. The client, however, subsequently retained Weiler again, and, following the change in representation, Malone Middleman contested the fee agreement, arguing it was not bound by the agreement between Weiler and Meyer Darragh.
According to Middleman, the “Middleman firm had also agreed to take a lesser fee from the client because of Meyer Darragh’s prior involvement in the case. He argued that Meyer Darragh’s claim lay with the client, and that case law from the Superior Court clearly established that initiating firms cannot bring quantum meruit claims against successor firms.
However, at least three justices questioned the validity of that case law.
Early in the argument session, Justice David N. Wecht asked, ”Why do we rigidly follow that if it doesn’t follow equity? Why don’t we follow the money?” And later in the session, Justice Christine Donohue also asked, ”How does that make sense if a firm is unjustly enriched?”
Middleman maintained that the claim lies with the client, since the settlement is ultimately where the now-disputed money came from, and the initiating firm must protect its interest in the fees.
“We cut the fee in consideration of the client’s obligation to another firm,” Middleman said.
Justice Max Baer, however, questioned whether Middleman was raising that issue too late, and Chief Justice Thomas G. Saylor said Middleman should be more “worried” about the Supreme Court overruling any hard and fast rule saying successor firms can’t be sued on quantum meruit theories.
“There’s a holding of the intermediate court saying you can never sue a successor firm. Why is that good law?” Saylor asked.
Middleman replied again that the burden should be on the client.
“Putting the onus on a successor firm, I think is unreasonable,” he said, adding that disputes between the firms could also lead to burdensome discovery dispute.
Millhouse, however, argued that getting into questions about whether the successor firm reduced its fee should not have any impact on his firm’s ability to recover.
“To me, it’s a simple case. We did the work and we deserve to be paid for it,” Millhouse said. “The agreement was the agreement no matter who was handling the case. There’s no reason for us to pursue the client. The client paid the entire amount they were required to pay.”
Max Mitchell can be contacted at 215-557-2354 or firstname.lastname@example.org. Follow him on Twitter @MMitchellTLI.