Matter of Ginsburg  2016 NY Slip Op 07733 [144 AD3d 1357]  November 17, 2016  Appellate Division, Third Department is a sad story of despair overlaid with a sordid story of attorney fee grasping.  In the end, not a lot was accomplice.  The decision gives some practical advice on settlements and attorney retention.

“On February 17, 2010, Bradley Marc Ginsburg (hereinafter decedent), then a freshman at respondent Cornell University in Tompkins County, jumped to his death from the Thurston Avenue Bridge—one of several bridges extending across the gorges located on or near Cornell’s campus. The bridge in question, which spans Falls Creek Gorge and connects two portions of Cornell’s campus, is owned by respondent City of Ithaca. Petitioner, who is both decedent’s father and an attorney licensed to practice in this state, was granted letters of administration in May 2011 and thereafter retained respondent Leland T. Williams as counsel for the estate. In late 2011, Williams commenced an action upon petitioner’s behalf against, among others, Cornell and [*2]the City of Ithaca in the United States District Court for the Northern District of New York. The complaint set forth 14 causes of action sounding in, among other things, wrongful death and premises liability and sought damages in the amount of $180 million, including $12 million in punitive damages.

After District Court dismissed the punitive damages claim and all claims against those Cornell representatives or employees named in their individual capacities, petitioner terminated Williams’ representation and retained respondent McCallion & Associates, LLP (hereinafter the firm) as counsel.[FN1] Thereafter, Kenneth F. McCallion (hereinafter McCallion)—a principal therein—entered into settlement negotiations with Cornell and the City of Ithaca upon petitioner’s behalf. After much discussion, the parties devised a proposed settlement of the wrongful death claim—specifically, that petitioner would accept a monetary sum from the City of Ithaca and, as to Cornell, would agree that a scholarship would be established in decedent’s name.[FN2] While McCallion was not opposed to this resolution, he advised petitioner via email that, “[b]efore [he] sign[ed] onto any settlement proposal,” petitioner and the firm would need to “reach an understanding as to the allocation of any settlement funds”—namely, that “the balance of the net cash component of the settlement,” then anticipated to be $200,000, would be allocated to the firm as counsel fees. In response, petitioner advised District Court that he, in his capacity as co-counsel, would be handling all further negotiations, and McCallion was excluded from the settlement conferences that followed.

In September 2014, petitioner entered into stipulations of settlement with Cornell and the City of Ithaca resolving the wrongful death claim. Specifically, the City of Ithaca agreed to pay $100,000 in settlement of the District Court action against it, and Cornell agreed to establish a perpetual scholarship in memory of decedent. Although documentation in the record reflects that such scholarship, if funded by a private donor, would have required an endowment of approximately $1.6 million, the stipulation of settlement provided that the scholarship would be established “using existing financial aid funds” and, inasmuch as Cornell was neither “allocating any new money” to the scholarship nor otherwise making any payment to petitioner, the scholarship itself had “no monetary value”—except to the student recipients thereof. District Court thereafter signed off on the respective stipulations of settlement.”

“There is no question that a client “may at any time before judgment, if acting in good faith, compromise, settle, or adjust his [or her] cause of action out of court without [counsel’s] intervention, knowledge, or consent, notwithstanding any contingent fee agreement and even though he [or she] has agreed with [counsel] not to do so” (Dagny Mgt. Corp. v Oppenheim & Meltzer, 199 AD2d 711, 713 [1993] [internal quotation marks and citation omitted]; see Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.2 [a]). Similarly, “notwithstanding the terms of the agreement between them, a client has an absolute right, at any time, with or without cause, to terminate the attorney-client relationship by discharging the attorney” (Campagnola v Mulholland, Minion & Roe, 76 NY2d 38, 43 [1990]; see Doviak v Lowe’s Home Ctrs., Inc., 134 AD3d 1324, 1326 [2015], lv denied 27 NY3d 904 [2016]). Finally, “Surrogate’s Court is vested with broad discretion to fix the reasonable compensation of an attorney who renders legal services to a fiduciary of an estate, subject to modification only where that discretion has been abused” (Matter of Benware, 121 AD3d 1331, 1332 [2014] [citations omitted]). Notably, such authority is “independent of the terms of a retainer agreement or the consent of interested parties to the requested compensation” (Matter of Elenidis, 120 AD3d 1229, 1231 [2014], lvs denied 24 NY3d 910 [2014], 25 NY3d 904 [2015]; see Matter of Greenfield, 127 AD3d 1189, 1191 [2015], lv denied 26 NY3d 904 [2015]).

Contrary to respondents’ assertion, we discern no basis upon which to disturb the determination of Surrogate’s Court that petitioner, a licensed and experienced real estate attorney, exercised due diligence in the performance of his fiduciary duties relative to decedent’s estate, including giving careful consideration to the settlement offers at issue. Nor are we persuaded that petitioner’s ultimate decision to compromise and settle the wrongful death claim against Cornell and the City of Ithaca in exchange for $100,000 and the establishment of a perpetual scholarship in decedent’s memory evidenced bad faith or otherwise called into doubt the performance of his fiduciary duties. Hence, as to the award of counsel fees, the issue primarily distills to whether Surrogate’s Court abused its discretion in concluding that the subject scholarship had no monetary value to decedent’s estate.”