Searcy, Denney, Scarola, Barnhart & Shipley, P.A. v. Poletz, 83375

• Decision Date: 16 March 1995
• Docket Number: No. 83375,83375
• Citation: 652 So.2d 366
• Court: Florida Supreme Court
• Parties: , 20 Fla. L. Weekly S126 SEARCY, DENNEY, SCAROLA, BARNHART & SHIPLEY, P.A., Petitioner, v. Paige N. POLETZ, etc., et al., Respondents.

Page 366

652 So.2d 366

63 USLW 2639, 20 Fla. L. Weekly S126

SEARCY, DENNEY, SCAROLA, BARNHART & SHIPLEY, P.A., Petitioner, v. Paige N. POLETZ, etc., et al., Respondents.

No. 83375.

Supreme Court of Florida.

March 16, 1995.

Searcy, Denney, Scarola, Barnhart & Shipley, P.A., West Palm Beach, and Joel D. Eaton of Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin, P.A., Miami, for petitioner.

F. Wallace Pope, Jr. of Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A., Clearwater, for respondents.

KOGAN, Justice.

We have for review Searcy, Denney, Scarola, Barnhart & Shipley, P.A., v. Poletz, 646 So.2d 209 (Fla.2d DCA 1994), which certified conflict with Stabinski, Funt & De Oliveira, P.A. v. Law Offices of Frank H. Alvarez, 490 So.2d 159 (Fla.3d DCA), review denied, 500 So.2d 545 (Fla.1986), and Faro v. Romani, 629 So.2d 872 (Fla. 4th DCA 1993), quashed on other grounds, 641 So.2d 69 (Fla.1994). ¹ We are asked to clarify the proper criteria for determining the quantum meruit recovery of an attorney discharged without cause prior to resolution of the client's case.

The issue comes to us in the following context. Paige Poletz was born with severe brain damage. Paige's parents hired the firm of Searcy, Denney, Scarola, Barnhart, & Shipley (the Searcy firm or Searcy) to bring a medical malpractice action against several health care providers, and executed a contingent fee agreement in which they agreed to pay Searcy forty percent of the recovery. The case was assigned to Phillip Taylor, an associate with the firm. After approximately three hundred and forty hours were spent preparing the Poletzes' case for trial, Taylor resigned from the Searcy firm and joined a new law firm. The Poletzes discharged the Searcy firm and hired Taylor's new firm to handle their case. Searcy filed a retaining lien for costs expended and a lien for attorney's fees and costs. Searcy refused to provide the new firm with a copy of the Poletzes' file and work product on the case. It also instructed its experts not to speak to substituted counsel about the case. When it was determined that Taylor acted improperly by encouraging the Poletzes to discharge Searcy, the firm was reinstated as counsel for a short period. Taylor then encouraged the Poletzes to dismiss the Searcy firm and retain a third law firm, which he later joined. Searcy again filed a lien for attorney's fees and a retaining lien for costs expended. The third firm effected a partial settlement with one of the defendants for $1,000,000.00.

In connection with its charging lien, Searcy maintained that because it had done substantially all of the work necessary to effect the settlement, its quantum meruit recovery should be all or a substantial portion of the forty percent contingency fee agreed upon. Alternatively, it argued that its fee should be determined by application of the factors set forth in this Court's decision in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985), modified, Standard Guar. Ins. Co. v. Quanstrom, 555 So.2d 828 (Fla.1990), including application of a "contingency risk multiplier." The Poletzes took the position the firm's fee should be determined by using the Rowe factors but no contingency risk multiplier should be applied.

The trial court accepted the Poletzes' position. Applying the Rowe criteria, the court came up with a reasonable hourly rate which it multiplied by the hours reasonably expended, for an award of $78,195.00. Prior to entry of the order on the charging lien, the successor firm settled the Poletzes' claim against the hospital ² and waived its claim for fees in connection with the partial settlement. The Searcy firm appealed.

The issue on appeal was whether the trial court erred in computing the firm's quantum meruit recovery as a straight hourly fee using the Rowe criteria. The firm urged the district court to recede from its prior decisions which hold that the Rowe "lodestar" method must be used to determine attorney fees recoverable under a quantum meruit theory. See Rood v. McMakin, 538 So.2d 125 (Fla.2d DCA 1989); Riesgo v. Weinstein, 523 So.2d 752 (Fla.2d DCA 1988); see also Barton v. McGovern, 504 So.2d 457 (Fla. 1st DCA 1987) (in determining the quantum meruit recovery to be awarded an attorney discharged without cause before conclusion of case the court must utilize the criteria set forth in Rowe); Boyette v. Martha White Foods, Inc., 528 So.2d 539 (Fla. 1st DCA), review denied, 538 So.2d 1255 (Fla.1988) (Rowe lodestar method, without contingency risk multiplier, should be applied to determine discharged attorney's quantum meruit recovery).

Relying on its prior decisions in Rood and Riesgo, the district court affirmed the trial court's calculation of the award. However, it certified conflict with the decisions of the Third and Fourth District Courts of Appeal that hold the Rowe method of assessing attorney's fees inapplicable to the determination of attorney's fees due as damages for breach of an agreement for payment of fees by a client or other contracting party. Stabinski, 490 So.2d at 160; Faro, 629 So.2d at 874. We accepted jurisdiction to resolve the conflict.

In Rosenberg v. Levin, 409 So.2d 1016 (Fla.1982), we addressed the proper basis for compensating an attorney discharged without cause after performing substantial legal services under a valid contract of employment. We held that under such circumstances, the attorney is entitled to the reasonable value of the services rendered on the basis of quantum meruit, but recovery is limited to the maximum fee set in the employment contract. 409 So.2d at 1017. We further held that in contingency fee cases, the discharged attorney's cause of action accrues upon the successful occurrence of the contingency. Id. at 1022. We explained that the totality of the circumstances surrounding the professional relationship should be considered in computing the reasonable value of the services and gave examples of relevant considerations:

In computing the reasonable value of the discharged attorney's services, the trial court can consider the totality of the circumstances surrounding the professional relationship between the attorney and client. Factors such as time, the recovery sought, the skill demanded, the results obtained, and the attorney-client contract itself will necessarily be relevant considerations.

Id.

We now are asked to decide whether the "lodestar" method of computing reasonable attorney fees as adopted by this Court in Rowe should be applied in this context. We agree with the Third and Fourth District Courts that it should not.

In Rowe, we adopted the "lodestar" method to establish a fair and reasonable attorney fee in those cases where the fee will be paid by someone other than the client who received the services. See In re Estate of Platt, 586 So.2d 328, 333 (Fla.1991); Rowe, 472 So.2d at 1150. Under this approach the court must first determine the number of hours reasonably expended in providing the service. Next, the court must determine a reasonable hourly rate for the services rendered. In establishing the hourly rate, the court must take into account all the factors for determining a reasonable fee set forth in the Code of Professional Responsibility, ³ except the "time and labor required," "the novelty and difficulty of the question involved," which will be considered in setting the number of hours reasonably expended, the "results obtained," and "whether the fee is fixed or contingent." The lodestar figure is produced by multiplying the number of hours reasonably expended by the reasonable hourly rate. Because a reasonable hourly rate is determined based on the assumption that the attorney will be paid regardless of result, the contingency risk "multiplier" was created to compensate attorneys for those cases where there was a risk of nonpayment. The Rowe approach was intended to...