Calling it “an unethical contingent,” a state appeals panel won’t let a Chicago law firm add $9.75 million to the legal bills of a man it represented in a divorce.
Grund & Leavitt sued its former client Richard Stephenson for breach of contract in October 2018, attempting to enforce a fee enhancement provision in the retainer dictating his hourly rate for representation in a 2015 divorce. Cook County Circuit Court Judge Margaret Brennan dismissed the complaint with prejudice, saying the provision violated the Illinois Rules of Professional Conduct.
The Illinois First District Appellate Court initially reversed that dismissal, ruling Judge Brennan didn’t fully consider all the factors to determine if the fees Grund & Leavitt sought were reasonable. On remand, Stephenson renewed his motion to dismiss under the Code of Civil Procedure. Brennan again agreed, finding the retainer was invalid because it lacked price specificity and she didn’t have a practical way to determine what was fair.
Bertina E. Lampkin
| illinoiscourts.gov
Brennan also ruled Grund & Leavitt was sufficiently compensated for its work by exercising her discretion under the Illinois Marriage and Dissolution of Marriage Act. Grund & Leavitt again challenged the dismissal before a First District panel, arguing Brennan incorrectly exercised discretion since the relevant Marriage Act section applies to legal fees connected to an underlying divorce action, meaning it didn’t factor into Grund’s common law breach of contract complaint, therefore raising a factual question for a jury.
Justice Bertina Lampkin wrote the decision on the firm’s second appeal, issued May 19; Justices Mary Rochford and LeRoy Martin concurred. The decision was issued as an unpublished order under Supreme Court Rule 23, which may restrict its use as precedent.
According to the panel, Stephenson’s retainer called for him to make advance payments in $100,000 increments. The firm would send bills with specified hourly rates for attorneys and paralegals, and he was to pay each time the total reached six figures. The agreement also said Grund & Leavitt would, at the end of its representation, send a final bill with a fee it would unilaterally set.
“In September 2017, the Circuit Court of McHenry County issued a decision resolving the Stephensons’ property, maintenance and fee disputes,” Lampkin wrote. “From August 2015 to April 2018, Grund billed defendant for 8,550 hours of professional time. The total amount of fees charged on an hourly basis was $3.74 million. Defendant paid all of Grund’s invoices issued prior to April 2018.”
Although Grund & Leavitt’s appeal mounted several arguments challenging Judge Brennan’s ruling and the validity of its request for $9.75 million, the panel said the guiding question was whether the fee enhancement provision itself was enforceable.
With “no price term and no practicable or objective method for determining that price,” Lampkin wrote, the provision was invalid. Grund & Leavitt said it alone would use factors the Rules of Professional Conduct enumerate to determine how much Stephenson owed, but such “factors are not useful or meaningful to the client in determining what price he will ultimately be required to pay because, other than the hours spent on the work, the factors are inherently subjective and pertain to a field of endeavor in which the client has no expertise. Moreover, there is no formula for weighing these subjective factors, and Grund unilaterally weighs the subjective factors.”
While judges can use such factors to determine reasonable fee awards, Stephenson had a written contract, which means the appeals panel had to determine if said contract could be enforced.
The parties, Lampkin wrote, “did not enter into an agreement regarding the fee enhancement provision because its open-ended terms were too indefinite to allow a meeting of the minds. Certainty is a fundamental contractual requirement; the minds of the parties must have met, and the terms must be sufficiently definite for a contract to come into existence. While the court may supply some contractual terms, it cannot make a contract.”
The panel affirmed Judge Brennan’s ruling.