A federal appeals court in Chicago has cleared the way for an attorney to collect $87,500 in fees owed by a former client, who the lawyer said refused to pay him after helping him navigate the path to a six-figure settlement in a legal dispute over an allegedly defective hip implant.
Attorney George E. McLaughlin represented Dustan Dobbs in a hip implant liability claim against DePuy Orthopaedics Inc. After DePuy offered a settlement, Dobbs removed McLaughlin as his lawyer, only to accept the agreement a few months later. McLaughlin sued to collect the fees he and co-counsel, the late Anthony Argeros, say they were owed for their work on the case, as well as for their employer, John Gehlhausen P.C.
A previous appeal resulted in a vacated fee award because a panel of judges at the U.S. Seventh Circuit Court of Appeals said U.S. District Judge Sharon Johnson Coleman didn’t address all required factors to stake his claim.
On remand to Coleman, the federal judge again awarded McLaughlin $87,500, prompting Dobbs to again appeal.
This time, in a March 13 opinion authored by Seventh Circuit Judge Michael S. Kanne, the appeals panel said McLaughlin was owed the money.
According to the opinion, Dobbs hired McLaughlin and Argeros in August 2012 on a 35 percent contingency fee agreement. Two days later, the lawyers filed Dobbs’ complaint in a federal multi-district litigation in Ohio. In 2013, DePuy proposed a settlement that would give parties with lawyers by a certain date $250,000 and unrepresented parties $177,5000. The panel said Dobbs was “frustrated because he felt McLaughlin was trying to force him to settle” and filed to remove him as lawyer on Oct. 17, 2014. McLaughlin moved to withdraw on Dec. 30, 2014, a request granted Jan. 8, 2015.
Dobbs took the deal in February 2015, but DePuy considered him represented and awarded $250,000. Unable to collect on the contingency fee, McLaughlin put a lien on the settlement and sought fees under the legal theory of quantum meruit, essentially meaning money owed for services rendered. The dispute was transferred to federal court in Chicago, where McLaughlin got his 35 percent because he substantially rendered the full terms of the contract.
Although Dobbs prevailed in his appeal of the initial December 2016 ruling, Kanne said the panel made it clear the decision “did not address the substantive reasonableness of the award.” On remand, Coleman again awarded McLaughlin the sum, so Dobbs’ final appeal rested on an abuse of discretion argument.
Dobbs said McLaughlin was entitled to nothing because the lawyer breached his contract and fiduciary duty and the contingency fee contract violated ethics rules. However, Kanne noted, Dobbs raised the same points on his first appeal with no success and therefore was not entitled to have the appellate panel reconsider its own finding.
Kanne further explained Coleman’s logic in restoring the $87,500 — he and Argeros each put in about 25 hours on the case, while the firm’s staff logged another 102.6 hours. McLaughlin said complex products liability claims usually yield 40 percent contingency fees.
“All that remained for Dobbs to do to accept a $250,000 base settlement award, rather than the $177,500 awarded to unrepresented parties, at the time he terminated
McLaughlin as counsel was to complete the online enrollment form,” Kanne wrote. “He did so shortly after terminating McLaughlin.”
The panel said it was important for Coleman to fully consider all the relevant evidence because she was not the one who presided over the multi-district litigation regarding hip implants that led Dobbs to hire McLaughlin. Satisfied she had done so, he explained, the panel said it is appropriate for the fee to go forward.
Dobbs is represented by attorney Christopher Keleher, of Keleher Appellate Law Group, of Chicago.