Written by attorney Richard Joseph Schroeder

Termination of a Contingency Fee Agreement with an Attorney

Under Illinois law, a client may terminate the services of his attorney at any time, with or without cause. Rhoades v. Norfolk & Western Ry. Co., 78 Ill. 2d 217, 227-28 (1979). A client has a right to dismiss his suit at will, even if he had a contingent-fee agreement with his attorney and the attorney had served notice of his attorney’s lien. Id., In re Estate of Simmons, 362 Ill. App. 3d 944, 947 (5th Dist. 2005). Where a client fires an attorney retained under a contingent fee contract, the contract becomes void, the agreement is held to no longer exist, and the contingency term is no longer enforceable. In re Estate of Callahan, 144 Ill. 2d 32, 40 (1991); McGill v. Garcia, 378 Ill. App. 3d 73, 75 (1st Dist. 2007). Consequently, an attorney cannot seek compensation under the terms of the nonexistent contract. Callahan, 144 Ill. 2d at 40.

However, the Illinois Supreme Court has determined that an attorney who enters into a contingent fee contract with a client and is discharged without just cause is entitled to be paid a reasonable fee for the services rendered on a quantum meruit basis. Callahan, 144 Ill. 2d at 40; Rhoades, 78 Ill. 2d at 230. The Supreme Court’s holding is grounded on the public policy concern that if an attorney could recover his full contract fee, a client’s right to discharge his attorney would be meaningless since, even though he had discharged his attorney, his financial responsibility to his former attorney would be unchanged. Rhoades, 78 Ill. 2d at 229.

The Supreme Court also has determined that an attorney’s claim for compensation under a quantum meruit theory accrues immediately after his services are terminated. Callahan, 144 Ill. 2d at 40. In reaching this conclusion, the Court recognized that it was possible for a client to receive legal services and yet not be enriched in a tangible way. Id.

In making a determination about what constitutes a reasonable attorney’s fee, a trial court assesses several factors, including the time and labor required, the attorney’s skill and standing, the nature of the case, the novelty and difficulty of the subject matter, the attorney’s degree of responsibility in managing the case, the usual and customary charge for that type of work in the community, and the benefits resulting to the client. Id. at 44. In rare cases where an attorney who has done a substantial amount of work is fired immediately before a settlement is reached, the aforementioned factors in determining a reasonable fee "would justify a finding that the entire contract fee is the reasonable value of services rendered." Will v. Northwestern University, 378 Ill. App. 3d 280, 304 (1st Dist. 2007), citing Wegner v. Arnold, 305 Ill. App. 3d 689, 693 (2nd Dist. 1999).

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