In Levine v. Haralson, Miller, Pitt, Feldman & McAnally, No. 1 CA-CV 16-0590 (January 25, 2018), the Arizona Court of Appeals addressed a contingent fee claim by an attorney. The attorney at one time had represented the plaintiff. Plaintiff and the attorney had a falling out, and the Plaintiff hired a second lawyer. The second lawyer settled the case. The first lawyer claimed he was entitled to a share of the fee based on the work he said he did. The first lawyer claimed that before the second lawyer took over the case, he was “associated” with another lawyer from a different firm working on the case and that he and this lawyer had a fee-sharing agreement.
The problem is that there was no written fee agreement. There was also no agreement stating the client agreed that any fee could be shared with the first lawyer. The Ethical Rules (ERs) governing lawyers in Arizona—Rules that are established by the Arizona Supreme Court-- require that all contingent fee agreements be in writing and signed by the client. The Rules also require that if a fee is to be shared by lawyers from different law firms, such an agreement has to be in writing and signed by the client.
The lawyer in question asserted that despite the lack of any written agreement, he did the work, and he deserved to be paid under a theory calledquantum meruit, which literally means “as much as he deserves”. Therefore, the lawyer argued that the absence of a written agreement did not defeat his case.
The Court of Appeals disagreed and ruled that quantum meruit could not be used to obtain recovery where the contract was void as against “public policy”. The public policy was set forth in the ERs. The ERs prohibit oral contingent fee and oral fee-splitting agreements. Thus, the Court of Appeals stated, “we will not disregard the clear and unambiguous direction of our supreme court, as promulgated through the ethical rules.” The Court of Appeals pointed out the ERs are designed to protect the public. Therefore, “an oral agreement for legal services may mislead, misinform, or confuse the client.”
This decision sets down a clear precedent in Arizona that no lawyer may collect a contingent fee and/or a shared fee unless the agreement is in writing and meets all the requirements the ERs. This is so even if the lawyer did the work and would otherwise be entitled to compensation.