Wiggins v Kopko   2013 NY Slip Op 02312  Decided on April 4, 2013   Appellate Division, Third Department  is a primer on attorney fees, contingent fees and what happens when the firm breaks up with the client and with itself.
 

"Kopko contends that plaintiff was discharged for cause due to alleged misconduct in his call to the client. However, without regard to whether the call constituted misconduct — which we do not decide — we agree with Supreme Court that the relevant inquiry is whether the partnership was discharged for cause. The client originally retained Wiggins & Masson — not plaintiff individually — and when Kopko later assumed primary responsibility for the malpractice litigation, he did so on behalf of the partnership or its predecessors, which continued to act as counsel of record in the malpractice action until Kopko was substituted shortly before the trial. Plaintiff was not counsel of record in the malpractice action, and so could not be discharged from that role (see generally Rodriguez v City of New York, 66 NY2d 825, 827-828 [1985])[FN3]. Further, we find no reason to disturb Supreme Court’s determination that neither the partnership nor Wiggins & Masson was discharged for cause. Essentially, the client testified that he had discharged plaintiff because he was angry about plaintiff’s "distasteful" telephone call. However, from the balance of the testimony, it is clear that the client was pleased with the prior services he had received from the partnership and its predecessors (see De Luccia v Village of Monroe, 180 AD2d at 899), specifically including those services rendered by Kopko prior to the substitution.

We therefore agree with Supreme Court that plaintiff is entitled to share in the fee obtained in the malpractice action on the partnership’s behalf. However, we disagree with the further conclusion that the amount should be determined on the basis of quantum meruit. As against a client, a discharged attorney is entitled to a fee determined on a quantum meruit basis at the time of discharge, but different rules apply where, as here, the fee dispute is between attorneys (see Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454, 457-458 [1989]). In such circumstances, an outgoing attorney may choose to receive immediate compensation on a quantum meruit basis at discharge or to receive a share of a contingent fee based on a proportionate share of the work he or she performed; if no such election is made at the time of discharge, the attorney is presumed to have elected a contingent fee (see Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d 655, 658-660 [1993]; Matter of Benjamin E. Setareh, P.C. v Cammarasana & Bilello Esqs., 35 AD3d 600, 601 [2006]; Connelly v Motor Veh. Acc. Indem. Corp., 292 AD2d 332, 333 [2002]; see also Buchta v Union-Endicott Cent. School Dist., 296 AD2d 688, 689 [2002]). Here, Supreme Court found that plaintiff elected quantum meruit compensation in a July 2011 memorandum of law. Even assuming that an election could be made in this manner, it would have been untimely, as the discharge had occurred more than a year earlier. Nothing in the record reveals that an election as to payment of fees was made at or near the time of discharge. Accordingly, as counsel of record, the partnership is presumed to have elected a contingent fee computed according to the proportionate share of work that was performed on its behalf and that of its predecessor firms before the June 2010 substitution of Kopko, to be divided as appropriate between the partners (see Grant v Heit, 10 AD3d 539, 540 [2004], lv denied 4 NY3d 701 [2004]).

Finally, we reject Kopko’s contention that plaintiff and the partnership waived a fee by failing to petition the court for a lien pursuant to Judiciary Law § 475. Such a lien attaches by operation of law for the attorney of record when an action is commenced, even if that attorney is no longer counsel of record upon the action’s conclusion (see Klein v Eubank, 87 NY2d 459, 462-463 [1996]; Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d at 657-658). An outgoing attorney’s failure to seek statutory enforcement does not defeat his or her entitlement to [*4]a fee (see Lai Ling Cheng v Modansky Leasing Co., 73 NY2d at 458-459; Ruta & Soulios, LLP v Litman & Litman, P.C., 27 AD3d 236, 236 [2006]). "