Fired counsel only recovers value of services

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An attorney who was found to have been discharged for cause can only recover the value his services provided to the client.

J. Michael Riley, of Axley Brynelson LLP, who was the successor counsel in the case, called the resolution “appropriate,” and said, “I think the court got it right.”

Riley bemoaned that the case has been going on for 11 years.

However, the Aug. 14 opinion from the Court of Appeals may not be the end of the matter.

Howard B. Schoenfeld, of DeWitt Ross & Stevens SC, who represented the discharged attorney, called the holding “both disappointing and surprising.” Schoenfeld said he will be filing a petition for review in the Wisconsin Supreme Court.

In 1997, Leann Rabl retained Robert G. Lorge, and Lorge & Lorge Law Firm, to represent her in a premises liability case, with the retainer providing a 33-1/3 percent contingency fee.

In June 2001, Rabl terminated Lorge and hired Riley as her attorney. Rabl signed a contingency fee with Riley, and Riley was substituted as counsel pursuant to stipulation and court order.

In May 2002, the case settled for $100,000. Riley disbursed the settlement between himself and Rabl, without paying Lorge anything.

Lorge then sued Rabl, Riley, and Riley’s firm, alleging a variety of claims.

Dane County Circuit Court Judge Daniel R. Moeser granted summary judgment in favor of the defendants on most of the claims: conversion; breach of trust; and sec. 895.446 (based on theft). However, the court left for trial the determination of the value of Lorge’s claim.

Following trial, the court found that Lorge was discharged for cause, but awarded Lorge $5,000 as the value of legal services he performed.

Lorge appealed the legal rulings, but did not contest the factual findings. The Court of Appeals affirmed, in a decision by Judge Charles P. Dykman.

The court first held that the circuit court properly granted summary judgment in favor of Riley on the claims for breach of trust, conversion, and treble damages under sec. 895.446(3).

The court concluded that no enforceable lien existed at the time of the disbursement, and thus, the claims all must fail.

The court reasoned, “the trial court’s findings of fact following trial establish that Lorge cannot recover on these claims because he did not have a valid and enforceable lien on the settlement proceeds at the time Riley disbursed them. Thus, even assuming that neither party was entitled to summary judgment and the causes should have continued to trial, the result would be the same: Lorge cannot recover under theories of breach of trust, conversion, or Wis. Stat. sec. 895.446 damages.”

The court next held that the trial court properly exercised its discretion in awarding Lorge $5,000 as the quantum meruit value of his legal services.

The court distinguished the case of Tonn v. Reuter, 6 Wis.2d 498, 95 N.W.2d 261 1959).

In Tonn, the Wisconsin Supreme Court held that an attorney, hired pursuant to a contingency fee agreement, and discharged without cause, is entitled to his fee, less a fair allowance for the services expended by successor counsel.

The Court of Appeals found Tonn distinguishable, because the first attorney there was discharged without cause, while in the case at bar, the circuit court found that Lorge was dismissed for cause.

Therefore, he cannot recover under his contingency fee contract, but is only entitled to the value of the services he provided for the client.

Riley agreed that recovery in quantum meruit was an appropriate remedy, where an attorney is discharged for cause, but has spent time on the case. However, he called it “ludicrous” that opposing counsel argued theft as an underlying claim for seeking treble damages under sec. 895.446.