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Keywords

settlementtortplaintiffattorneyappealhearing
tortplaintiffattorneyappealhearingplaintiff's attorney

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Teichner by Teichner v. W & J Holsteins, Inc., 64 N.Y.2d 977, 478 N.E.2d 177, 489 N.Y.S.2d 36

Facts

The case arose from a settlement of $1,200,000 in an infant's personal injury action. After the settlement was agreed upon but before it was approved, a dispute developed between the plaintiffs and their attorney, Aaron J. Broder, from the first law firm. Broder sought to discharge the attorneys of record due to alleged conflicts of interest and demanded an increase in his fees. The plaintiffs countered by alleging that Broder had been discharged for cause due to misconduct and extortionate demands. The Supreme Court approved the settlement and awarded Broder a portion of the fees, leading to the appeal.

Plaintiffs' moving papers allege that they attempted to discharge Broder on April 15, 1981, prior to the judicial approval of the compromise order—a necessary part of plaintiff's attorney's duties in an action brought on behalf of an infant ( Judiciary Law § 474; 22 NYCRR 603.8)—and that they did so because of his personal misconduct and extortionate conduct.

Issue

Was the attorney, Aaron J. Broder, discharged for cause, and if not, what is the appropriate fee to be awarded to him on a quantum meruit basis?

A hearing is required to determine if he was discharged for cause or, if he was discharged without cause before completion of the services, for a determination of his fee on the quantum meruit basis ( Crowley v. Wolf, 281 N.Y., at pp. 64–65, 22 N.E.2d 234; Marschke v. Cross, 82 A.D.2d 944, 440 N.Y.S.2d 740, supra).

Rule

A client has an absolute right to discharge an attorney at any time. If the discharge is with cause, the attorney has no right to compensation. If the discharge is without cause before the completion of services, the attorney's compensation must be determined on a quantum meruit basis.

If the discharge is with cause, the attorney has no right to compensation or to a retaining lien ( Matter of Weitling, 266 N.Y. 184, 194 N.E. 401; Marschke v. Cross, 82 A.D.2d 944, 440 N.Y.S.2d 740; 7 N.Y.Jur.2d, Attorneys at Law, § 144, at 43–44). If the discharge is without cause before the completion of services, then the amount of the attorney's compensation must be determined on a quantum meruit basis ( Crowley v. Wolf, 281 N.Y. 59, 64–65, 22 N.E.2d 234; Matter of Shaad, 59 A.D.2d 1061, 399 N.Y.S.2d 822).

Analysis

The court analyzed the circumstances surrounding Broder's discharge and the allegations made by the plaintiffs regarding his misconduct. It noted that a hearing was necessary to determine whether Broder was indeed discharged for cause or if he was discharged without cause, which would affect the determination of his fees. The court emphasized the importance of resolving these factual disputes before making a final decision on the fee entitlement.

The record does not contain any denial of these allegations by Broder.

Conclusion

The Court of Appeals reversed the order of the Appellate Division and remitted the matter to the Supreme Court for a hearing to determine Broder's entitlement to fees and the amount due.

Order reversed, with costs, and matter remitted to Supreme Court, New York County, for further proceedings in accordance with the memorandum herein.

Who won?

The plaintiffs prevailed in the appeal as the Court of Appeals reversed the previous order and mandated a hearing regarding Broder's entitlement to fees.

The Court of Appeals held that a hearing was required to determine whether the attorney from the first law firm was discharged for cause or, if he was discharged without cause before completion of services, for determination of his fee on quantum meruit basis.

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