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Court limits discharged attorney to fees equal to original contingent fee agreement

The Giles Law Firm represented Ruby & Associates in an accounting malpractice claim after Ruby's accountant failed to recognize fraud by an employee who embezzled more than a million dollars, rendering Ruby insolvent.  The case became complicated when Giles was dissatisfied with the expert it had retained and refused to pay him.  Ultimately the attorney-client relationship broke down and Ruby stopped communicating with Giles.  A third attorney took over the several pieces of related litigation and compromised them.  Giles attempted to persuade Ruby not to compromise, arguing that the settlement under discussion would not adequately compensate Giles for the work and expense he incurred.

Ultimately, the parties ended up in court fighting over what Giles' fees should be.  After hearing Ruby's complaints and Giles' arguments, the trial judge awarded Giles more than $200,000.00 in fees, even though the underlying settlement was only $210,000.00.  On appeal the Court of Appeals ruled that the judge did not err in holding that Giles was "wrongfully discharged" and compelled to withdraw from the original litigation.  Nevertheless, it did rule that the fees awarded to Giles should be limited to the original contingent recovery, even though many states would allow a wrongfully discharged attorney to recover fees based on the attorney's actual, reasonable efforts on the client's behalf.
Thompson O’Neil, P.C.
309 East Front Street
Traverse City, Michigan 49684
Toll Free: 1-800-678-1307
Fax: 231-929-7262