Levine v. Haralson, Miller, Pitt, Feldman & McNally, P.L.C. – 1/25/2018

February 15, 2018

Arizona Court of Appeals Division One holds that an attorney who does not have a written fee agreement with his client in a contingency fee case may not recover the value of legal services provided in quantum meruit.

An attorney undertook representation of clients in a personal injury matter with the apparent understanding that he would take over for the clients’ former counsel.  The attorney undertook the matter on a contingency-fee basis, but did not execute a written fee agreement with the clients.  Eventually, the attorney and the clients’ former counsel had a falling out, and the clients dismissed both of them.  The clients then hired a law firm to continue the representation, and the law firm entered into a settlement agreement terminating the case.  The attorney, claiming that he had spent hundreds of hours on the case, demanded payment from the law firm.  When the law firm refused, he brought suit seeking damages in quantum meruit.  The trial court granted the law firm’s motion to dismiss, reasoning that the lawyer had violated E.R. 1.5 in failing to obtain a written fee agreement in a contingency fee case, and that public policy barred his recovery of legal fees in quantum meruit.  The lawyer appealed.

The Court of Appeals upheld the trial court’s dismissal.  It explained that E.R. 1.5 was promulgated to protect the interests of the client, and that as a Rule of the Supreme Court, it had the full force of law, and established the public policy of the state just as a statute enacted by the legislature would.  Because quantum meruit sounds in equity, and because recovery in equity is forbidden when such a recovery would go against public policy, the Court reasoned that recovery in quantum meruit was improper.

Judge Jones delivered the unanimous opinion, in which Judges Thompson and Orozco joined.