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Millicent Somuah v. Jeremy Flachs - No. 9, 1998 Term ATTORNEY/CLIENT -- When an attorney is retained under a contingent fee contract and later discharged by the client the following rules apply to quantum meruit recovery: If the attorney is guilty of serious misconduct, the attorney is not entitled to any fee; if the client has a good faith basis for no longer wishing to be represented by the attorney, the recovery of any fee must await the occurrences of the contingency; if the client had no good faith reason to discharge the attorney the attorney may recover the reasonable value of the legal services even if the contingency has not occurred.

Circuit Court for Prince George's County Case # CAL 93-20475

IN THE COURT OF APPEALS OF MARYLAND No. 9 September Term, 1998 ________________________________________

MILLICENT SOMUAH v. JEREMY FLACHS

________________________________________

Bell, C. J. Eldridge Rodowsky Chasanow Raker Wilner Cathell JJ. _______________________________________ Opinion by Chasanow, J. Rodowsky, and Wilner, JJ., dissent. ________________________________________ Filed: December 18, 1998

This appeal arises out of a suit filed by Jeremy Flachs (Respondent) in the Circuit Court for Prince George's County against Millicent Somuah (Petitioner) to recover compensation for the legal services Respondent provided to Petitioner. Petitioner presents two issues for our review, which we have rephrased as follows: 1. Whether an attorney's failure to inform a prospective client at the time of retention that he was not licensed to practice in Maryland, where the client's lawsuit would likely be filed, constitutes cause for the attorney's discharge? 2. Whether an attorney, who was retained on a contingent fee agreement and discharged for cause prior to the fulfillment of the contingency, may recover from his client the reasonable value of the services rendered prior to his discharge? We hold that, under the circumstances of this case, a client has a good faith basis for being dissatisfied with her attorney when she discovers the attorney failed to inform her that he is not licensed to practice in Maryland, the state where the attorney visited the client and where the cause of action arose. We further hold that where an attorney is discharged because the client has a good faith basis to no longer wish to be represented by the attorney and where the attorney has not engaged in serious misconduct, the attorney may recover compensation from the client for the reasonable value of the services rendered by the attorney prior to his discharge. The attorney's compensation is to be measured in light of the benefits obtained by the client as a result of the attorney's services and the nature and gravity of the cause that led to the discharge. In a contingent fee contract the attorney's cause of action, however, does not accrue until the contingency is fulfilled.

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I. The underlying dispute arises out of an automobile accident involving a taxicab in which Petitioner and her daughter were severely injured. The accident occurred on March 8, 1992, in Prince George's County, Maryland. At the time of the accident, it appears that Petitioner resided in Virginia with her husband.1 Sometime after the accident, Petitioner's brother contacted Respondent regarding the possibility of representing Petitioner. On April 3, 1992, while Petitioner was still recovering at Prince George's Community Hospital, Respondent visited and interviewed Petitioner. That same day, Petitioner retained

Respondent to represent her regarding a possible personal injury claim as a result of this accident. During the initial interview on April 3, Respondent did not notify Petitioner that Respondent is not licensed to practice law in Maryland. The retainer agreement entered into by the parties provided, inter alia, for a one-third contingency fee to be deducted before the payment of expenses; that Petitioner agreed to pay all costs of investigation, preparation, and trial of the case;2 and that Respondent had the right to cancel the agreement if, upon

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Petitioner also had a home in Maryland where she went to recuperate on June 5,

1992. Investigative costs, etc., were apparently also contingent on Petitioner's recovery. The Respondent never made any demand for investigative costs prior to discharge as the fee agreement had crossed out a provision that provided: "CLIENT agrees that he will ... reimburse costs incurred by the Attorney within thirty day of receipt of a statement...." The fee agreement further provided: "CLIENT agrees that he will be responsible for actual court costs if a suit is filed, and that in the event of a settlement of his claim before or after suit is filed, that the fee provided for herein and such actual costs as may have been incurred shall be a lien upon any money received or recovered in this case." (Emphasis added). Respondent was discharged before suit was filed. The issue of costs, however, is not before
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investigation, Petitioner's claim did not appear to have merit. After the initial interview with Petitioner, Respondent began investigating Petitioner's claim, expending considerable effort, as well as a substantial amount of money as he took steps to collect and preserve evidence. Petitioner moved to Maryland on June 5, 1992, after her release from the hospital. Shortly thereafter, Respondent began to explore the possibility of a lawsuit in Maryland state courts. In July 1992, Respondent asked a Maryland attorney, Gregory Wells, to assist him in a Maryland lawsuit, and Wells accompanied him to Petitioner's home to discuss this possibility. During this meeting, Respondent notified Petitioner for the first time that he was not licensed to practice in Maryland. After the meeting, Wells declined to accept the case. Before Respondent could arrange a meeting with Petitioner and another local attorney, Petitioner discharged Respondent as her attorney by letter dated August 20, 1992. After his termination, Respondent sent Petitioner a letter requesting payment for the time spent and expenses incurred in investigating Petitioner's claim. Petitioner refused this request. In the Circuit Court for Prince George's County, Respondent filed suit against Petitioner seeking to recover the reasonable value of services rendered and expenses paid during the course of his representation of Petitioner. Specifically, Respondent requested $11,324.66 for expenses paid and $8,685.00 for time spent investigating Petitioner's claim.

this Court as the question in the petition for certiorari is whether the Petitioner is "liable to the [discharged] attorney for any compensation for his services." (Emphasis added). If the fee agreement provided for immediate reimbursement for expenses, Petitioner would be liable for reasonable expenses actually incurred.

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The automobile accident case for which the Petitioner retained Respondent was still pending. Both parties filed motions for summary judgment and moved for judgment at trial; all were denied. The jury subsequently returned a verdict in favor of Respondent and awarded compensation in the amount of $19,946.01. Petitioner then filed a motion for judgment notwithstanding the verdict or, in the alternative, for a new trial, which the trial court denied. On appeal, the Court of Special Appeals in a reported opinion affirmed the judgment against Petitioner, holding that Respondent's failure to inform Petitioner that he was not licensed in Maryland did not constitute good cause to discharge Respondent so as to preclude his right to immediate compensation for the reasonable value of services rendered prior to Respondent's discharge. Somuah v. Flachs, 118 Md. App. 303, 315, 702 A.2d 788, 794 (1997). Petitioner timely filed a petition for writ of certiorari which was granted by this Court.

II. We must first address Respondent's argument that we should dismiss this appeal because Petitioner waived the issue of whether Respondent's lack of a Maryland license to practice law is cause as a matter of law for his termination. Respondent contends that Petitioner failed to raise this issue before the trial court for determination and notes that "[t]he issue of what constitutes cause for termination of a contract for legal representation is different from the issue of what constitutes the illegal practice of law in Maryland. These issues also differ from the issue of what activities a non-Maryland attorney can do in

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Maryland and be compensated." Although this Court has some discretion to decide an issue raised for the first time on appeal, we generally will not decide any issue that was "not raised in and decided by the trial court." Maryland Rule 8-131; see also Lerman v. Heeman, 347 Md. 439, 450, 701 A.2d 426, 432 (1997). In her motion for summary judgment and motion for judgment, Petitioner asserted that she was entitled to judgment as a matter of law because the fact that Respondent lacked a Maryland license constituted cause for his termination, thereby precluding Respondent from collecting any compensation. We conclude that Petitioner adequately presented to the trial court the issue before this Court and thus has not waived the issue.

III. Turning now to the substantive issues before this Court, Petitioner alleges that she had cause to terminate Respondent as a matter of law because he failed to disclose at their initial meeting the fact that he was not licensed to practice law in Maryland, and thus Respondent is precluded from recovering any compensation. The Court of Special Appeals in this case limited what constitutes cause for terminating an attorney's representation, holding that "a client has cause for discharging a lawyer if the contract between the lawyer and the client is invalid, or if the lawyer's representation is in violation of the rules of professional responsibility, in violation of other law, or in violation of the agreement between the attorney and the client." Somuah, 118 Md. App. at 314, 702 A.2d at 794. The intermediate appellate court concluded that "a lawyer's failure to tell a prospective client that he is not licensed to

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practice in the jurisdiction where suit likely will be brought does not constitute the kind of fraud or other undue influence necessary to invalidate a lawyer-client contract." Somuah, 118 Md. App. at 315, 702 A.2d at 794. As we shall explain, a client's right to terminate an attorney-client relationship is not as limited as the Court of Special Appeals concluded. It is a well-settled rule in this State that a client has great latitude in discharging his or her attorney. An attorney's authority to act for a client is freely revocable by the client. See Skeens v. Miller, 331 Md. 331, 335, 628 A.2d 185, 187 (1993); Palmer v. Brown, 184 Md. 309, 316, 40 A.2d 514, 517 (1945); Boyd v. Johnson, 145 Md. 385, 389, 125 A. 697, 698-99 (1924). The client's right to terminate the attorney-client relationship is necessary given the confidential nature of such a relationship and "the evil that would be engendered by friction or distrust." Skeens, 331 Md. at 335, 628 A.2d at 187. Because the power of the client to discharge his or her attorney is an "implied term of the retainer contract," the client does not breach the contract when he or she terminates the attorney-client relationship based on a reasonable subjective dissatisfaction with the attorney's services, even if the client does not have "good cause." Id.3 Furthermore, the fact that an attorney has been retained under a contingent fee agreement does not affect the client's absolute right to discharge an attorney. ROBERT L. ROSSI, ATTORNEYS' FEES

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