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State of New Jersey v. Mamchur

A-1220-05T2 (N.J. Super. App. Div. 2006) (Unpublished)

ATTORNEYS FEES—The most important factor in determining the amount to be recovered on a quantum meruit theory for an attorney hired on a contingency fee and discharged before the job is completed, is the attorney’s contribution to advancing the client’s cause.

The state initiated condemnation proceedings to acquire an owner’s property. The owner hired an attorney to represent him in the proceeding’s valuation stage. They agreed that the attorney would receive a one-third contingency fee based on any amount the owner recovered above the state’s initial offer.

The attorney created a theory that the property could be subdivided, increasing its property value, and located an expert and an appraiser to support that theory. After a revised appraisal, the state increased its offer to the owner. However, the owner was still dissatisfied with the appraisal. At a settlement conference, the state again increased its offer. The attorney recommended that the owner accept the revised offer, but the owner rejected it. The owner then discharged the attorney and retained new counsel. The new attorney used the previous attorney’s report, but modified it slightly, and found a new appraiser who opined to an even higher value for the property. Following trial, the owner obtained a judgment of approximately twice the initial offer.

When the owner refused to pay the original attorney’s counsel fee, the attorney filed a petition to establish an attorney’s lien on the recovery. He sought to recover counsel fees and costs on a quantum meruit basis, meaning that he sought reasonable compensation for his work. The lower court awarded counsel fees and costs, concluding that the attorney was entitled to them under the quantum meruit theory.

On appeal, the owner asserted that he received little or no benefit from the attorney’s services, and the lower court should have considered the value of the services rather than the reasonableness of the hourly rate and services performed when reviewing the request for counsel fees. He also argued that his potential legal malpractice claim should have been considered as an offset to the fees. The Appellate Division rejected the owner’s arguments and affirmed the lower court’s decision. It explained that the most important factor in determining the amount to be recovered on a quantum meruit theory for an attorney hired on a contingency fee and discharged before the job is completed, is the attorney’s contribution to advancing the client’s cause. The Court noted that the owner benefitted from the attorney’s subdivision theory, and the new counsel used the report obtained by the original attorney to obtain a result that was close to the value of the offer that the original attorney obtained. Therefore, the Court found that the attorney’s work contributed to the final result. In such a case, the ceding lawyer’s compensation should be based on a standard hourly rate. The Court concluded that the lower court had properly determined the amount of compensation to which the attorney was entitled. It found that the owner’s claim that the lower court did not consider his allegations of legal malpractice was without merit, as the court had given the owner express permission to pursue the claim in the future.


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