Featured Chrome Extensions:

Casey IRACs are produced by an AI that analyzes the opinion’s content to construct its analysis. While we strive for accuracy, the output may not be flawless. For a complete and precise understanding, please refer to the linked opinions above.

Keywords

plaintiffdamagesattorneyfiduciarypunitive damagesfiduciary dutybreach of fiduciary duty
contractlawyerfiduciarywillfiduciary dutybreach of fiduciary duty

Related Cases

Felty v. Hartweg, 169 Ill.App.3d 406, 523 N.E.2d 555, 119 Ill.Dec. 799
View Case »
Khani v. Ford Motor Co., 215 Cal.App.4th 916, 155 Cal.Rptr.3d 532, 13 Cal. Daily Op. Serv. 4204, 2013 Daily Journal D.A.R. 5399
View Case »
Meighan v. Shore, 34 Cal.App.4th 1025, 40 Cal.Rptr.2d 744, 63 USLW 2755
View Case »
McNeary v. American Cyanamid Co., 105 Wash.2d 136, 712 P.2d 845
View Case »
Beets v. Scott, 65 F.3d 1258, 64 USLW 2287
View Case »
Justia Law Link
LexisNexis Link
Westlaw Link
CourtListener Link
Oyez Link

Phil Watson, P.C. v. Peterson, 650 N.W.2d 562

Facts

Gregory Peterson was an associate at the Watson law firm for twelve years before resigning to join Elverson, Vasey, and Peterson, L.L.P. (EVP). Prior to his departure, Peterson contacted clients he had represented at Watson and obtained their consent to transfer their cases to EVP. He took thirty cases, which later generated fees, and attempted to reimburse Watson based on the hours he worked on those cases while at the firm. Watson sued Peterson and EVP for various claims, including breach of fiduciary duty and conversion, leading to a complex legal battle over the division of fees.

Peterson was an associate in the Watson firm for twelve years before he resigned on May 1, 1996, to become a partner in EVP.

Issue

How should fees be determined when a law firm and an associate have no agreement for post-termination division of fees in cases originally handled by the firm?

When a law firm and an associate have no agreement for posttermination division of fees in cases originally handled by the firm, how shall the fees be determined: should they become the sole property of the firm, the departing lawyer, or both?

Rule

The court ruled that quantum meruit is the appropriate measure of recovery for the value of services rendered prior to termination, rather than a lost-profits theory.

We conclude quantum meruit is the appropriate measure of recovery for the reasons discussed.

Analysis

The court found that the attorney-client relationship between Watson and the clients terminated when the clients chose to follow Peterson to EVP. Therefore, the fees collected on those cases were not solely the property of Watson. The court determined that Watson was entitled to a percentage of the fees based on the time Peterson spent on the cases while at Watson, applying a quantum meruit approach to ensure fair compensation for services rendered.

The termination of that relationship, of course, was due in large part to Peterson's active encouragement and participation, an issue we will discuss later.

Conclusion

The Iowa Supreme Court modified and affirmed the lower court's judgment, awarding Watson $114,956 in lost profits but denying the request for punitive damages.

Judgment modified and affirmed; case remanded.

Who won?

The plaintiff law firm, Watson, prevailed in part by being awarded $114,956 in lost profits based on the quantum meruit principle.

The court found Peterson liable for breach of fiduciary duty and interference with a contract, but not for conversion.

You must be