In re Waller, 86-774.

• Decision Date: 22 April 1987
• Docket Number: No. 86-774.,86-774.
• Citation: 524 A.2d 748
• Parties: In re John WALLER, Respondent.
• Court: D.C. Court of Appeals

524 A.2d 748 In re John WALLER, Respondent. No. 86-774. District of Columbia Court of Appeals. Argued January 29, 1987. Decided April 22, 1987.

John Waller, Washington, D.C., pro se.

Elizabeth J. Branda, Asst. Bar Counsel, with whom Thomas H. Henderson, Jr., Bar Counsel, and Elizabeth A. Kohlman, Asst.

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Bar Counsel, Washington, D.C., were on the brief, for the Office of Bar Counsel. Before NEWMAN, BELSON and TERRY, Associate Judges.

NEWMAN, Associate Judge:

In its Report and Recommendation dated May 12, 1986, the Board on Professional Responsibility (hereinafter "the Board") found that John Waller had violated three disciplinary rules of the Code on Professional Responsibility: DR2-110(B)(4) (failing to withdraw from employment after being discharged), DR2-106(A) (charging a clearly excessive fee), and DR9-103(B)(4) (failing to deliver to a client papers which the client was entitled to receive). The Board recommended a sanction of 30 days' suspension. Waller challenges the Board's decision as to each of these violations, as well as the recommended sanction. We conclude that the Board's findings are supported by substantial evidence of record, and that the recommended sanction is not inconsistent with other dispositions for comparable conduct, or otherwise unwarranted. D.C. Bar R. XI § 7(3). We accordingly adopt the Report and Recommendation of the Board, which is appended to this opinion. However, we consider Waller's contentions as to the excessive fee violation to merit discussion, particularly in light of the dissenting opinion by a minority of the Board.¹

Waller entered into a one-third contingency fee agreement with Beverly Houston to represent her in a personal injury action against her employer. Several months later, Houston discharged Waller. The Board assumed, without deciding, that the discharge was without cause; so do we. Up to that point, Waller had done negligible work on the case. Despite his discharge, Waller continued to work on Houston's case, requesting information from her physicians, and attempting to negotiate a settlement with her employer's insurance carrier. He succeeded in obtaining a settlement offer of $3500 from the insurance carrier, but did not relay the offer to Houston. Houston, meanwhile, had secured the services of another attorney.

Waller subsequently sent letters to Houston claiming fees of one-third of the insurance company's offer. He later explained at his disciplinary hearing that he thought he had substantially performed under his contract by negotiating a settlement with the insurance company, and that under this court's holding in Kaushiva v. Hutter, 454 A.2d 1373 (D.C.), cert. denied, 464 U.S. 820, 104 S.Ct. 83, 78 L.Ed.2d 93 (1983), his substantial performance entitled him to his contingency fee.² The Board disagreed, finding that although he had performed the services that he should have prior to his discharge, "the services were not substantial in furtherance of securing benefits for the client" as specified in Kaushiva. The contingency fee claimed by Waller was therefore, clearly excessive. Report, infra p. 754.

A minority of the Board dissented. The dissent argued that the majority had used a test of quantitative substantiality, or substantiality in absolute terms, which was not the meaning of "substantial performance" specified in Kaushiva. The dissent felt that by doing all he should have done up to

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the time of discharge, Waller had "substantially performed," so that he could legitimately claim one-third of the settlement proffered shortly after his discharge, or any other settlement offer made within a reasonable period after his discharge and attributable to his efforts. Dissenting Opinion, infra p. 756-57.

Urging upon us the view of the dissenting members of the Board, Waller would have us interpret "substantial performance" to mean only that the attorney has made the efforts which could be expected of him in the time before discharge, even if these efforts were negligible, and regardless of whether they benefited the client by contributing to the result finally obtained. Taking this view to its extreme, an attorney who entered into a contingency fee agreement, made a preliminary phone call for the client, then was discharged without cause immediately thereafter, would be entitled to his full fee if a settlement later resulted. We recognize that there are jurisdictions which have taken this position. See, e.g., Dombey, Tyler, Richards, & Grieser v. Detroit, Toledo & Ironton Railroad Co., 351 F.2d 121, 127 (6th Cir. 1965) (under Ohio law, discharged attorney may recover full contingency fee though he has done nothing whatever to earn his fee); Goldberg v. Perlmutter, 308 Ill.App. 84, 31 N.E.2d 333 (1941) (same). However, guided by our precedent and principles of equity, as well the usual meaning of "substantial performance" in other areas of contract law, we are led to a different conclusion.

In Kaushiva, we held that "an attorney who enters into a contingency fee agreement with his client, substantially performs, and is then prevented by his client from completing performance is entitled to the full amount specified in the fee agreement. Only where an attorney renders less than substantial performance will quantum meruit be the appropriate measure of damages." Id. at 1374.

In Kaushiva, the attorney, engaged in connection with an arbitration matter, did, in fact, represent his client at three arbitration hearings before being discharged. In Mackie v. Howland, 3 App. D.C. 461 (1894), cited by us in Kaushiva, the attorneys had performed substantial services over several years in an attempt to collect amounts due on certain bonds, but were discharged shortly before payments were received, whereupon substitute counsel completed the transaction. In both of these cases then, the attorneys had performed extensive services in pursuit of the client's objective, services which contributed to the client's actual recovery. As the facts of these cases indicate, our use of the term "substantial performance" in Kaushiva in the context of contingency fee agreements between attorney and client, meant that the attorney must have performed valuable services contributing to the results finally obtained by the client. Where an attorney, before discharge, has performed only inconsequential services of little benefit to the client, even if these services were all that could have been expected of him, he may recover only in quantum meruit. Friedman v. Harris, 81 U.S.App. D.C. 317, 318, 158 F.2d 187, 188 (1946) (attorney who had merely filed suit entitled only to quantum meruit).³

This interpretation accords with the meaning of "substantial performance" in other areas of contract law, where the use of the term presupposes not only that the promisor has substantially performed his part of the bargain, but that the promisee has received substantial benefits from the performance. "[T]he right to recover on such theory depends on whether or not the adverse party has received, to all intents and purposes, all the benefits which he could reasonably anticipate receiving under the contract." 17A C.J.S. Contracts § 508, at 816 (1963) (citations omitted). See Newcomb v. Schaeffler, 131 Colo. 56, 279 P.2d 409 (1955) (en banc) (construction contract; substantial performance means that party "has received substantially the benefit he expected"); Joray Mason Contractors v. Four J's Construction Corp., 61 Ill.App.3d 410, 18 Ill.Dec. 864, 378 N.E.2d 328 (1978)

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(construction contract; whether there has been receipt and enjoyment of the benefits is important factor); In Re Kinney Aluminum Co., 78 F.Supp. 565 (S.D.Cal. 1948) (employment contract; same).

Our view also finds support in the law of other jurisdictions. Although courts vary widely on the issue of the compensation due an attorney after discharge without cause, recovery of the full contingency fee is most likely in cases in which the attorney has, before discharge, fully performed,⁴ substantially performed,⁵ or contributed substantially to the results finally obtained by the client.⁶ Contra, Dombey, supra; Goldberg, supra.

For these reasons, we subscribe to the view, implicit in Kaushiva, that unless the attorney has performed valuable services contributing to the benefit finally obtained by the client, he has not "substantially performed," and is only entitled to quantum meruit recovery. This was essentially the standard applied by the Board, which found, based upon substantial evidence of record, that the services performed by Waller were "not substantial in furtherance of securing benefits for the client."

We note that the Board did not base its conclusion on the Kaushiva rationale alone; neither do we. This is not a case where there was an honest and reasonable dispute as to "substantial performance" under Kaushiva. As the Board points out at pages 753-54 of the attached Report, Waller's shifting fee demands demonstrates that he was not in good faith in his assertion that he was entitled to his...