The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge
This is the latest chapter in the unhappy saga of the conflicts between Edward C. King and attorneys who have represented him. The current dispute arises out of Mr. King's decision to terminate the firm that had been representing him in this action, Curtis & Associates, P.C. ("Curtis & Associates"). Curtis & Associates contends that Mr. King still owes the firm more than $82,000. in fees and expenses, and it has applied for an award in quantum meruit. Mr. King contends that the firm was terminated for cause and therefore is disentitled from recovering any fees. In the alternative, Mr. King argues that the fees sought are significantly overstated and should be reduced accordingly. For the reasons set forth below, I find that Curtis & Associates was not discharged for cause but that a reasonable fee award is less than that which is sought by the firm.
The underlying action concerns a dispute over fees between Mr. King and another former attorney, Lawrence A. Fox. Mr. King had been a member of the rock and roll band Lynyrd Skynyrd and had written and performed songs including the hit "Sweet Home Alabama." Mr. King, believing that he had been deprived of artist's royalties to which he was entitled, engaged Mr. Fox in 1975 to initiate litigation on his behalf. The two entered into a contingency fee agreement pursuant to which Mr. Fox would receive one-third of Mr. King's royalties. Mr. Fox contends that he explained that he would be entitled to one-third of all future royalties as well as one-third of the royalties past due. By contrast, Mr. King understood that he would pay one-third of any recovery arising out of his claim for accumulated royalties but would have no obligation to Mr. Fox with respect to future royalties.
The royalty dispute ended with a settlement in 1978, and Mr. King and Mr. Fox did not discuss the fee arrangement again until 1986. In the meantime, Mr. Fox continued to collect one-third of both Mr. King's artist's royalties and his writer's royalties, although the latter had not been at issue in the original litigation. In addition, Mr. Fox represented Mr. King on other matters during this period. In 1987, Mr. King complained about Mr. Fox retaining a portion of the writer's royalties, and Mr. Fox ceased doing so, though he did not return the $55,000 in writer's royalties he had already collected. Beginning in 1995, royalties were sent directly to Mr. King, as a result of which Mr. Fox was no longer able to retain a one-third share. Between 1978 and 1995, Mr. Fox had collected from Mr. King $104,000 as a contingency on the settlement of specific claims, $368,000 in ongoing artist's royalties, and $55,000 in writer's royalties, for a total of $527,000. In 1997, Mr. Fox contacted Mr. King to demand his share of the royalties for the prior two years. Mr. King then sought legal advice elsewhere.
Ultimately, he contacted the firm of Curtis & Riese-Curtis, P.C. ("Curtis & Riess-Curtis"), which initiated the instant case on his behalf. In the complaint filed on June 4, 1997, Mr. King asserted claims of breach of fiduciary duty, unjust enrichment, undue influence, conversion, and attorney misconduct against Mr. Fox and alleged that the original retainer agreement was unconscionable. Mr. Fox counterclaimed, seeking his share of the artist's royalties that Mr. King had withheld since 1995.
The counterclaim was severed, and the parties consented to try it before me pursuant to 28 U.S.C. § 636(c). At trial, a jury determined that Mr. Fox had failed to prove that the fee arrangement was not unconscionable, and on that basis, judgment was entered dismissing the counterclaim. Although Mr. Fox appealed, that appeal was later withdrawn.
Meanwhile, the Honorable Robert W. Sweet, U.S.D.J., granted summary judgment dismissing Mr. King's claims on the ground that they were barred by the statute of limitations. On appeal, the Second Circuit vacated that determination, finding that there was evidence from which it could be found that Mr. Fox continued to represent Mr. King through April 1995. Subsequent discovery demonstrated that Mr. Fox did act as Mr. King's attorney at least through 1991, thus undermining the limitations defense. However, Judge Sweet again granted summary judgment in favor of Mr. Fox, holding that Mr. King had ratified the fee agreement and that his claim was barred by laches. He also found that the contingency agreement was not unconscionable and that Mr. Fox was not barred by collateral estoppel from arguing otherwise, notwithstanding the jury verdict on his counterclaim.
Mr. King appealed, and the Second Circuit affirmed Judge Sweet's determination with respect to collateral estoppel. However, it certified to the New York Court of Appeals three state law questions central to a determination of the issues of ratification and unconscionability:
1. Is it possible for a client to ratify an attorney's fee agreement during a period of continuous representation?
2. Is it possible for a client to ratify an attorney's fee agreement during a period of continuous representation if attorney misconduct has occurred during this period? If so, can ratification occur before the attorney has committed the misconduct?
3. Is it possible for a client to ratify an unconscionable attorney's fee agreement?
The appeal remains pending awaiting the Court of Appeals' determination of the certified questions.
As noted above, Mr. King retained the firm of Curtis & Riess-Curtis to conduct this litigation. He entered into an engagement contract dated March 19, 1997, that provided, among other things, that he would be billed $225.00 per hour for the services of partners and $75.00 per hour for work performed by paralegals. (Exh. 2).*fn2 The agreement further provided that monthly statements would be submitted to Mr. King, that he would pay a $5,000 retainer and replenish it upon receipt of each monthly statement, that he would pay for all actual disbursements, that the minimum hourly charge billed would be one-tenth of an hour, and that Curtis & Riess-Curtis retained the right to charge interest of one percent on unpaid charges that were 30 days overdue. (Exh. 2). At the time the agreement was executed, the partners in the firm were W. Robert Curtis and his wife, Cheryl Riess-Curtis. Ms. Riess-Curtis was primarily responsible for Mr. King's case from the inception.
Initially, the relationship ran smoothly. Mr. King voiced no complaints about the firm's representation of him nor its billings through the year 2000, though by January 31, 2001, he owed Curtis & Riess-Curtis almost $14,000, much of which was attributable to the costs of conducting the trial on the counterclaim. (Exh. 2). In the spring of 2001, things changed. Ms. Riess-Curtis left the firm, and notice of this event was sent to Mr. King by letter dated May 9, 2001. Ultimately, she and Mr. Curtis also divorced. The firm name was changed to Curtis & Associates, and Mr. Curtis remained as the only principal.
Apparently because the firm was in transition, no bill was sent to Mr. King between January 31, 2001 and June 30, 2001. (Exh. 2). Nevertheless, during this period, he paid a $10,000 retainer for appeal of the first summary judgment decision and an additional $3,000 against the outstanding charges. (Exh. 2). When the appeal was decided and the case remanded to the district court, the costs began to mount. As will be discussed in detail below, substantial time was expended in discovery, including new depositions of Mr. King and Mr. Fox. Mr. Curtis continued to be primarily responsible for the case, and he was assisted by paralegals whose time was billed at $100 per hour and by associates or contract attorneys whose rates ranged from $100 to $225 per hour.
During the year 2003, the balance owed by Mr. King for legal fees and costs increased from approximately $24,600 to more than $79,000, with the largest single bill including charges of more than $28,000 for the month of September. (Exh. 2). During this period, Mr. King made three payments of $7,000 each. (Exh. 2).
The relationship between Mr. King and Mr. Curtis ruptured around the end of 2003. On December 3, Curtis & Associates sent Mr. King the billing statement for July. On December 12, the firm sent him the bill for August. And, on December 17, it sent him the bill for September. Apparently, Mr. Curtis also called Mr. King and left a message concerning the outstanding balance, because Mr. King responded by telefaxing a letter that stated in full:
I received your phone message today.
This is the 2nd Christmas in a row that's been ruined because of you ...