The Illinois Supreme Court has sided with lawyers who sought fees for their work amid a long-running family dispute, even though the clients had not signed off in writing on payment terms.
Justice David Overstreet wrote the 7-0 opinion, filed Sept. 19, ruling in favor of Andrew W. Levenfeld Associates and Stephen J. Schlegel in the firms’ legal battle with Maureen O’Brien and Daniel O’Brien.
Although the underlying litigation began in 2017, the relevant issue was an amended complaint filed in December 2020. But the original issue goes back further, as the attorneys point to an October 2015 retainer regarding estate assets of the late Daniel and Mary O’Brien.
Under the terms of that deal, the firms would charge the larger of two sums: either 15% of the first $10 million and 10% of any additionally recovered assets or the firms’ billable hours. They say they worked for 19 months in various courts in Illinois and Michigan, dedicating more than 3,100 hours of attorney and paralegal time attempting to liquidate their clients’ interests in the estate’s assets.
However, in late May 2017, after what the attorneys say was a substantial closing of gaps in settlement negotiations, and “without cause,” Overstreet wrote, “defendants terminated the attorney-client agreement by e-mailing a termination letter" to their lawyers.
Although the agreement did not contain explicit provisions, the firms asked a Cook County Circuit Court judge to agree the retainer essentially guarantees them compensation for time worked before they were fired. They requested at least $2.43 million in legal fees and costs of $7,390.
In response, the O’Briens argued the firms violated the Rules of Professional Conduct by never formalizing how they would divide the fee, which prevented them from supplying a written disclosure of those terms and, allegedly, should bar the firms from any financial recovery.
“The circuit court found that plaintiffs had proven all the elements of a quantum meruit claim,” Overstreet wrote, invoking the Latin term used to describe the legal principle of calculating compensation for informal contractual relationships. “Although the attorney-client agreement was not effective after it was terminated by defendants, its very existence proves that plaintiffs intended to perform legal services nongratuitously.”
The judge rejected the O’Briens’ argument the firms harmed them because they didn’t hire a professional asset evaluator noting the lack of evidence surrounding the last settlement offer before they terminated the agreement and pointing out they accepted the actual settlement only a short time after the termination, lending credence to the value of the firms’ work.
After disposing of the O’Briens’ affirmative defenses, the judge ruled the firms were entitled to $2.185 million based on the percentage formula and the ultimate settlement. After deducting $500,000 paid to the attorneys who completed the settlement, and adding the itemized costs, Levenfeld and Schlegel were in line to split nearly $1.7 million.
Although a state appeals court agreed the firms were entitled to be paid for their work, the appellate justices reversed the fee determination because using a contingency fee structure from a voided contract would’ve allowed the firms to sidestep court rules. Both parties appealed to the Supreme Court, as the O’Briens sought to challenge the appellate court’s affirmation of the circuit court’s quantum meruit determination.
“The circuit court outlined its findings of fact with regard to the benefit plaintiffs conferred on defendants, finding that the extensive litigation plaintiffs conducted provided nearly all the leverage that consummated defendants’ settlement with the O’Brien Estates,” Overstreet wrote, adding that the justices agreed the evidence supports that initial finding.
Turning to the specific payment amount, Overstreet said it is essential to assess the “distinction between an attorney-client agreement that is unenforceable because it contains an illegal term or fails to include a legally required term, on the one hand, and one that is void as against public policy because the subject of the agreement is prohibited by law, on the other.”
The Supreme Court found nothing in the attorney-client agreement that ran contrary to public policy, but said the appellate panel determined the “absence of a concurrent fee-splitting agreement” and the resulting lack of written disclosure did void the agreement on public policy grounds.
However, Overstreet wrote, the agreement made it clear both firms would represent the plaintiffs and “both would be fully responsible for their case.” Further, nothing in the rule the O’Briens cited requires the allegedly absent provisions to be included in the agreement itself. At best, a fee-splitting agreement can be unenforceable if it isn’t set forth in writing, but that wouldn’t make the terms between client and lawyers unenforceable.
“The plaintiffs are not seeking to enforce a contract between themselves and did not seek to have the circuit court divide the money judgment it entered jointly in plaintiffs’ favor,” Overstreet wrote. “Nor does this court condone any violation of the Rules of Professional Conduct, which attorneys must follow or face disciplinary action and risk forfeiture of related attorney fees, where the equities require such forfeiture in the discretion of the circuit court.”
Based on those findings, the Supreme Court said it was bound to defer to the circuit court conclusion on the size of the financial award, unless the record was manifestly against such a result. But Overstreet said “the record supports the value determination” and the court affirmed the decision.
The O’Briens were represented by attorneys witht the firm ofTabet Divito & Rothstein, of Chicago. Attorney John Fitzgerald, who represented the O'Briens declined to comment on the decision.
The law firms were represented by Tribler, Orpett & Meyer, of Chicago. The firm did not respond to a request for comment.