Attorney Fees For Negligence Claim Against Former Attorneys Allowed by Legal Retainer Agreement.
I always enjoy reviewing the California Attorney Fees Blog. California has some attorney fee shifting statutes, and they enforce contracts providing for attorney fees. Whether this has helped or hurt the trial court case load is always a subject for debate.
In a recent case, Cardet v. Burlison, Case No. B198625 (2d Dist., Div. 2 Dec. 17, 2008), the court looked at a law firm's retainer agreement for support to award fees. One of the questions before the court was whether the law firm's retainer agreement provided for the recovery of attorney fees against the law firm in the event there was a successful negligence (tort) claim against the firm. It is certainly common for retainer agreements to provide for the recovery of attorney fees expended in recovering past due fees. The provision in question read:
"If legal action is required to enforce this Agreement or to collect any fees or costs earned or advanced pursuant thereto, the prevailing party shall be entitled to recover any and all costs of such action, including, but not limited to, the expenses and court costs of the action [and] a reasonable attorneys fee."
The case goes all the way back to the January 17, 1994, Northridge earthquake in the Los Angeles Area. Cardet was a contractor and was not paid for certain improvements to property. The Plaintiff's attorneys did a very poor job prosecuting a mechanic's lien, including their failure to name the property owners of the improved or repaired property.
Cardet ultimately won a malpractice claim against the defendant law firm for a net amount of $500,577.30. In February 2007, Cardet filed a memorandum of costs, seeking, inter alia, $272,492.50 in attorney fees. The court ultimately granted $269,492.50 in attorney fees.
What is the basis for awarding attorney fees? The retainer agreement!
California Civil Code section 1717 provides, in relevant part:
(a) In any action on a contract, where the contract specifically provides that attorneys fees and costs, which are incurred to enforce that contract, shall be awarded . . . to the prevailing party, then the party who is determined to be the party prevailing on the contract . . . shall be entitled to reasonable attorneys fees in addition to other costs. . . (b)(1) . . . [T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.
The court held the the retainer agreement contract language providing for attorney fees, "[i]f legal action is required to enforce this Agreement," was broad enough to cover both Tort and Contract claims.
I would guess that there are a lot of legal retainer agreements that have exactly the same language in them. A word to the wise: Check the language in your retainer agreements. Would the result have been the same if the agreement had specifically stated that the attorney fee provision only applied to fees incurred to collect legal fees?
