Third District reverses $588K attorneys fee award in dispute between Chicago, Peoria firms; remands for recalculation

Jonathan Bilyk Feb. 18, 2015, 12:29pm

OTTAWA -- A state appeals panel has voided a Peoria County judge’s award of more than $588,000 in legal fees to a Peoria law firm after finding a contingency fee deal involving an attorney who left that firm to join a Chicago firm was improperly used to apportion legal fees.

In an unpublished order handed down earlier this month, the Third District Appellate Court overturned the ruling of Peoria County Circuit Judge Kevin W. Lyons, who determined the Peoria firm of Vonachen, Lawless, Trager & Slevin (VLTS) was owed roughly 30 percent of the legal fees awarded to the Chicago firm of Goldberg & Goldberg and attorney Katrina Taraska in the settlement of a medical malpractice case.

The panel said the lower court erred in relying on a contingency agreement between Taraska and Goldberg & Goldberg, which was superseded by an altered agreement after Taraska left VLTS in the midst of litigating the case against a Peoria area hospital and neurosurgeon.

With the new contingency agreement in place, the justices said, the circuit court should have instead based its apportionment of fees owed to VLTS on quantum meruit, or how much VLTS had reasonably earned before Taraska left it.

“Because the court did not analyze the reasonable value of services using the appropriate legal criteria, this case must be reversed and remanded for further proceedings,” Justice Tom M. Lytton wrote for the Third District panel, with justices Mary K. O’Brien and Vicki Wright concurring.

"We express no opinion regarding whether the attorney fee award should remain the same, be decreased or be increased by application of the appropriate factors."

The case arose in 2009, when Taraska notified leadership at VLTS she would be leaving Peoria to join the Goldberg firm in Chicago.

In 2006, Taraska, then a partner at VLTS, had been hired by Michael Grane to continue the litigation of his malpractice case against Methodist Medical Center in Peoria and neurosurgeon Julian Lin.

Grane had filed suit against the hospital and physician in 2002, after he claimed he suffered a spinal injury during surgery to repair injuries he suffered in a 2001 automobile crash.

In 2005, Grane’s attorneys attempted to voluntarily dismiss the suit, but Grane asked VLTS to take the case.

Taraska in 2008 enlisted Goldberg & Goldberg to assist her in the case under a contingency agreement that provided she would receive 30 percent of all fees awarded to the Chicago firm in the matter.

In August 2009, Taraska joined the Goldberg firm, prompting VLTS to slap a lien on the Grane case two weeks before she started her new gig.

Nearly three years later, in July 2012, Grane secured a settlement of $7.5 million, plus an attorney fee award of $2.5 million.

A month later, VLTS sued to enforce its lien and asked the court for 30 percent of the fees under the original contingency agreement – an amount Lyons, the trial judge and Peoria County's former state's attorney, granted despite the Goldberg firm's assertion the fees should be divided based on quantum meruit.

“The efforts made by [Grane] to ‘discharge’ VLTS after Taraska left VLTS do not extinguish VLTS’ claim for its share of the fee ultimately enjoyed by Goldberg,” Lyons wrote in awarding VLTS $588,750.

Taraska appealed, arguing again that the fees should be divided based on what VLTS earned while she worked on the case while still a partner there.

In its Feb. 5 order, the appellate justices agreed, noting the moment Taraska relocated to Goldberg & Goldberg and Grane discharged VLTS under the terms of a new contingency agreement between Taraska and Goldberg, the earlier contingency agreement involving VLTS “ceased to exist and VLTS was no longer entitled to recover under the contract.”

“Since the agreement no longer existed, the trial court was required, instead, to consider the quantum meruit factors to determine the reasonable value of the services VLTS provided,” Lytton wrote.

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