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Legal Memorandum: Entitlement to Fees of Expelled Partner

Issue: Whether a law firm in which an attorney was a partner and from which he was expelled, is entitled to a percentage of the fees earned by the expelled attorney on the files of clients who followed the attorney when he left the firm under Nebraska law and other jurisdictions.

Area of Law: Ethics & Professional Responsibility, Litigation & Procedure
Keywords: Fee agreement with law firm; Employment terminated or expelled; Attorney
Jurisdiction: Multistate, Nebraska
Cited Cases: 234 N.J. Super. 534; 524 N.W.2d 500; 473 S.E.2d 910; 196 W. Va. 489; 608 N.W.2d 808; 125 N.W.2d 715; 679 So. 2d 637; 561 A.2d 275
Cited Statutes: None
Date: 05/01/2004

Nebraska Law

The two relevant Nebraska cases that were located suggest that the firm is entitled only to the amount specified in the fee agreements in the event the employment is terminated.  In Baker v. Zikas, 176 Neb. 290, 125 N.W.2d 715 (1964), the original agreement with the law firm provided for a 40% contingent fee.  When the firm attorney who was working on the client’s case left the firm, the client discharged the firm and followed the attorney.  The court noted that “a client has the absolute power and right to discharge an attorney in his case, with or without cause, subject only to the liability to compensate the attorney for the reasonable value of his services actually rendered up to the date of the termination of the employment.”  125 N.W.2f at 717.  According to the court, “[t]he fact that the contract for services is contingent does not vest the attorney with an interest in the case or affect the right to discharge.”  Id.  Because the original contingent fee agreement was no longer in effect, “the maximum reach of [the firm’s] right to fees is the reasonable value of its services actually rendered to date of discharge.”  Thus, the trial court erred when it enforced the original fee contract and divided the sum due under the contract according the employment contract between the firm and the attorney who departed.

In a more recent case, Byrne v. Hauptman, O’Brian, Wold & Lathrop, 9 Neb. App. 77, 608 […]

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