Grund & Leavitt, P.C. v. Stephenson

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Appellate Court Date: 2021.12.20
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Grund & Leavitt, P.C. v. Stephenson, 2020 IL App (1st) 191074Appellate Court GRUND & LEAVITT, P.C., Plaintiff-Appellant, v. RICHARD
Caption STEPHENSON, Defendant-Appellee.
District & No. First District, Fourth Division
No. 1-19-1074
Filed July 16, 2020
Decision Under Appeal from the Circuit Court of Cook County, No. 18-L-11283; the
Review Hon. Margaret A. Brennan, Judge, presiding.
Judgment Reversed and remanded.
Counsel on David I. Grund and Marvin J. Leavitt, of Grund & Leavitt, P.C., of
Appeal Chicago, for appellant.
Chris Gair, Thomas R. Heisler, and Ryan P. Laurie, of Gair Eberhard
Nelson Dedinas Ltd., of Chicago, for appellee.
Donald C. Shiller, of Schiller DuCanto & Fleck, LLP, of Chicago, for
amicus curiae Illinois Chapter of the American Academy of
Matrimonial Lawyers.
Panel JUSTICE LAMPKIN delivered the judgment of the court, with
opinion.
Justices Reyes and Burke concurred in the judgment and opinion.
OPINION
¶1 In October 2018, plaintiff, Grund & Leavitt, P.C. (Grund), a law firm, filed a complaint
against defendant, Richard Stephenson, its former client, to recover under a written agreement
whereby plaintiff would provide legal representation and services for defendant and defendant
would pay plaintiff hourly attorney fees and costs as incurred and, additionally, a “final bill.”
Plaintiff’s complaint alleged it “has performed all the conditions of” the parties’ agreement
and defendant “has failed to perform” the parties’ agreement. In March 2019, the circuit court
of Cook County entered an order granting defendant’s motion to dismiss plaintiff’s complaint
on a ground not originally specified in defendant’s motion. In May 2019, the trial court denied
plaintiff’s motion to reconsider its order granting defendant’s motion to dismiss. Plaintiff
appealed.
¶2 For the following reasons, we reverse.
¶3 I. BACKGROUND
¶4 In August 2015, defendant, Stephenson, hired plaintiff, Grund, to represent him in his
dissolution proceedings in McHenry County, Illinois. Pursuant to Stephenson’s engagement of
Grund to represent him, the parties entered into a written agreement titled “Advance Payment
Retainer Agreement” (agreement). Grund attached the agreement to its complaint against
Stephenson and expressly made the agreement part of the complaint. The agreement contains
the following relevant provisions:
“This document is the Advance Payment Retainer Engagement Agreement between
GRUND & LEAVITT, P.C. (G&L), and you, Richard Stephenson, with respect to the
payment of your attorney fees and costs in connection with our family law proceedings.
***
***
You will be billed against the Advance Payment Retainer for the services and costs
set forth in this Agreement, that are rendered to you on a monthly basis as detailed on
your monthly invoice;
***
G&L agrees to represent you in connection with your family law action pursuant to
the terms and provisions set out below.
***
You, Richard Stephenson, retain and employ G&L, to act as your attorneys to
represent you in all aspects of your family law matter.
G&L’s representation of you shall commence upon the execution of this agreement
and the payment of the retainer in the amount of $100,000 which assures the availability
of the services of G&L to represent you in this case. All additional fees and costs
incurred on your behalf in connection with the handling of your case shall be
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subsequently determined and charged, including the costs and legal fees incurred in
any post-decree and/or appeal that you may authorize G&L to take on your behalf or
to defend based upon the hourly rate(s) hereinafter set forth and as determined by other
provisions herein. G&L will bill against this retainer at the hourly rates for all attorneys,
paralegals and clerks employed by G&L, or such other similar personnel as are
designated to render services on your case, as set forth in Exhibit A to this Agreement.
Specifically, you will receive an itemized bill each month, commencing the first full
month after the date of this Agreement, showing the time spent and services provided
by each attorney, paralegal or clerk who worked on your case during the prior month.
This bill will also show how much of your Advanced Retainer payment has been used
through the date of the bill. Each time the retainer is exhausted, you will be required to
replenish it. You will continue to receive monthly bills (which must be paid upon
receipt), showing the work done and fees charged for the prior month.
***
The hourly rates set out on Exhibit A shall remain in effect through December 31
of the year in which this Agreement is dated. G&L reserves the right to increase those
hourly rates at any time thereafter. You will be provided at least thirty (30) days notice
of the increased rates. Absent a subsequent written agreement to the contrary, you agree
to pay those increased hour rate. (sic)
Upon final resolution of the case, G&L shall tender a final bill to you, such final
bill taking into account various factors, in addition to the hourly rates, as delineated in
the Illinois Rules of Professional Conduct (adopted by the Illinois Supreme Court) as
being relevant considerations to be included in arriving at a fair and reasonable charge.
Such factors include the time and labor required, the novelty and difficulty of the
questions involved, the skill requisite to perform the legal services properly, and
whether unique expertise of any G&L attorney was utilized; whether acceptance of the
particular employment precluded other employment by the firm; the amounts involved
and the results obtained; the time limitations imposed by the Client or by the
circumstances (including unique time demands); and the experience, reputation, and
ability of the lawyer or lawyers performing the services. The final bill will be tendered
prior to the entry of a final order or judgment or soon thereafter; and payment thereon
shall be due on the entry of judgment or by such date as is otherwise agreed upon in
writing. (Any payments to third parties processed subsequent to the final bill—e.g., a
court reporters [sic] charge for the final hearing—will be covered in a supplemental
statement relative to final costs, or alternatively, bill(s) relative thereto will be sent to
you for payment.)
Your case may be resolved by way of settlement. If, however, your case does not
settle and trial is requested or required, you agree to provide G&L with a trial retainer
sufficient to cover the costs of legal representation to include anticipated attorney fees,
costs of experts, court reporting transcripts and other fees and costs usually and
reasonably incurred in the preparation and presentation of your case for trial. It is
understood that the trial advance payment retainer will be based on your attorney’s
good-faith estimate as to the amount required as and for fees and costs. If the trial
advance payment retainer is insufficient to cover expenses of a trial, you will be
responsible for the payment of any additional fees and costs. ***.
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***
It is agreed G&L shall utilize a team approach to handling your case, which
ordinarily involves the utilization of more than one attorney in the firm. G&L attorneys
discuss issues and work together to develop strategies and litigation plans, as necessary.
The team approach is further employed for trial, hearings, motions, petitions,
depositions, settlement conferences and meetings. The client understands that all
attorneys’ time used in this process will be chargeable to the client.”
¶5 In September 2017, the dissolution proceedings concluded with a supplemental judgment
addressing property, maintenance, and attorney fees and a written memorandum decision.
Grund’s complaint alleges that “on or about November 28, 2017, *** Plaintiff contacted
Defendant with regard to determining a fair and reasonable ‘final bill’ under said written
agreement.” The complaint alleges Stephenson “rebuffed” Grund “and thereafter refused to
engage Plaintiff further on his matter.” Finally, in pertinent part, the complaint alleges that
Stephenson “has failed to perform the [agreement] in that he rebuffed Plaintiff’s attempt to
discuss a fair and reasonable ‘final bill’ and pay the same in accord with the agreement.” The
complaint seeks “judgment in [Grund’s] favor against *** Stephenson in an amount to be
determined at trial, but not less than $50,000, together with costs, interest and attorney fees,
and all such other relief as the Court may deem just, equitable, or appropriate under the
circumstances.”
¶6 In December 2018, Stephenson filed a motion pursuant to section 619.1 of the Code of
Civil Procedure (Code) (735 ILCS 5/2-619.1 (West 2018)) to dismiss Grund’s complaint.
Stephenson’s motion to dismiss argues Grund’s complaint should be dismissed pursuant to
section 2-615 of the Code (id. § 2-615) because
“1. the agreement is unenforceable as a matter of law, because it does not state a
definite and certain price or provide any practical method of determining a price for the
final bill;
2. on its face the agreement gives Grund unmitigated discretion to charge any fee
it wants over and above its stated hourly rates, and thus requires the payment of an
unreasonable fee in violation of Illinois Rule of Professional Conduct 1.5; and
3. the complaint fails to allege facts sufficient to support its cause of action: namely
how the Plaintiffs performance and the results it obtained for Defendant warranted
payment of a bonus above the hourly fees charged.”
Stephenson’s motion to dismiss argues that Grund’s complaint should be dismissed pursuant
to section 2-619 of the Code (id. § 2-619) because Grund is seeking an unreasonable fee of
$9.75 million—a multiplier of 2.61 times the fees actually billed during the course of the
engagement—and because seeking to recover fees under such a multiplier in a divorce case is
unreasonable, impermissible, and unethical as a matter of law. Stephenson filed a
memorandum of law in support of his combined motion to dismiss in which Stephenson asserts
that he paid Grund $3.74 million in hourly fees for 8551 hours of professional services, plus
costs, and that the final bill requested an additional $9.75 million. Stephenson’s attorney also
filed a declaration in December 2018, averring (1) that based on billing records attached to
Stephenson’s motion to dismiss, Grund billed Stephenson $3,737,053.04 in legal fees for an
average hourly rate of $437 and (2) that in April 2019, Grund “issued an invoice for $9,775,000
composed of $25,000 in hourly fees and a $9,750,000 line-item that simply said ‘Pursuant to
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Advance Payment Retainer Engagement Agreement dated August 2, 2015.’ That $9.75 million
demand is 2.61 times the hourly fees billed.”
¶7 In January 2019, Grund filed an answer and memorandum of law in opposition to
Stephenson’s motion to dismiss. Grund’s memorandum of law asserts that, in November 2017,
Grund sent Stephenson a letter with “a request to meet to discuss a fee that is fair and
reasonable under the circumstances,” to solicit Stephenson’s input, and to “arrive at a fair,
reasonable resolution of this matter rather than send a bill” as agreed to in the agreement. The
memorandum asserts that Grund’s attempts to discuss the matter with Stephenson were
rebuffed for five months and in April 2018 Grund sent Stephenson a “final bill.” The “final
bill” was for $9.75 million. Stephenson paid Grund $3.74 million in hourly fees over the course
of Grund’s representation. After Grund sent the “final bill,” Stephenson fired Grund. Grund’s
memorandum argues, in part, that the “enhancement Provision,” [the portion of the agreement
under which Grund seeks the amount stated in the “final bill,”] “provided for a reasonable
enhancement, taking into account various factors ‘delineated in the Illinois Rules of
Professional Conduct’ [(Ill. R. Prof’l Conduct R. 1.5 (eff. Jan. 1, 2010))] and [this court’s
decision] in [In re Marriage of Malec, 205 Ill. App. 3d 273 (1990)].”
¶8 In January 2019, Stephenson filed a reply in support of his combined motion to dismiss.
Stephenson’s reply argues, in part, that
“in a situation in which the base fee is determined by the hours worked and the rates
charged, the other Rule 1.5 factors [listed in the provision in the agreement at issue in
this appeal] are necessarily already taken into account, and there is no place for an
enhancement based on those same considerations.”
Stephenson argues in his reply that Grund does not contest “that the fee determined by the
hours worked and the hourly rates in this case already takes all of these factors into account.”
¶9 In March 2019, the trial court issued a written order on Stephenson’s motion to dismiss,
stating, “Defendant’s Motion to Dismiss pursuant to 735 ILCS 5/2-619.1 is GRANTED and
Defendant’s Complaint is DISMISSED with prejudice.” The court’s written order
acknowledges Stephenson’s separate grounds for dismissal under section 2-615 and 2-619 and
the parties’ arguments in support and opposition thereto. The court’s opinion cited Illinois Rule
of Professional Conduct 1.5(d)(1) of 2010 (eff. Jan. 1, 2010), which states that “[a] lawyer
shall not enter into an arrangement for, charge, or collect *** any fee in a domestic relations
matter, the payment or amount of which is contingent upon the securing of a divorce or upon
the amount of alimony or support, or property settlement in lieu thereof.” The court’s opinion
holds as follows:
“The Enhancement Provision is contrary to public policy and Illinois’s Rules of
Professional Conduct because it contains a contingency fee in addition to the hourly-
rate fees. The Agreement states ‘such final bill taking into account varies factors ***
the amounts involved and the results obtained.’ The enhancement to the hourly-rate
based fee was thus, at least partially, contingent on the on the outcome of the divorce
proceeding in McHenry County. Contingent fees are prohibited in domestic relations
cases, pursuant to Illinois Supreme Court Rule of Professional Conduct 1.5(d)(1).
Accordingly, Defendant’s Motion to Dismiss Plaintiff’s Complaint is granted, and
Plaintiffs Complaint is dismissed with prejudice.
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Pursuant to this Court’s and counsel’s ethical obligations, due to the violation of
Illinois Supreme Court Rule 1.5, this Order will also be sent to the Attorney
Registration & Disciplinary Commission.”
¶ 10 In April 2019, Grund filed a motion to reconsider, and Stephenson filed a response in
opposition to Grund’s motion to reconsider. In May 2019, Grund filed a reply in support of its
motion to reconsider. On May 22, 2019, the trial court heard argument on the motion to
reconsider. Following argument, the court orally ruled as follows:
“I have reconsidered and my ruling will stand, but I will explain to you additionally,
perhaps to flesh out a little bit more of the meat of the bones of the decision, as to why
the ruling will stand. In this case, there was a set fee arrangement for $750 an hour; that
was paid, for approximately $3.6 million or so from a period of 2015 to the end of the
case. The language that was contained in the retainer agreement is the language that is
contained in Ethical Rule 1.5 as to how you can assess fees. That assumes that when
those fees are being calculated that you take into account those matters and that’s why
you would charge the $750 an hour, and there was nothing to prevent Mr. Grund from
setting up a retainer agreement. The man had a stepped-up schedule to acknowledge
that, okay, if this litigation goes on a year, then we’re at this rate; if it goes on two
years, then it’s taking a lot of time away from other cases and we’re going to increase
the rate, and that’s how the parties can contract.
What you can’t do is charge a fee and then turn around and say, ‘I’m going to use
the exact same basis that I used to calculate what’s supposed to be a reasonable fee and
now I’m going to have an enhancement,’ as you’re calling it, which I have found is
contingency and is incremental.
I am not, you know, as well-versed as someone who’s practiced in domestic
relations for 30-plus years, but I am aware that Domestic Relations started in Chancery,
and the reason that there is absolutely no contingency fees in Chancery or Domestic
Relations is because you are to look at the equities of the parties, and you cannot have
contingency fees with equities of the parties, and I find that this is a contingency fee; it
is not permissible.
I do not find your citing to Malec as actually on point here. I think this case is
distinguishable and I have found it to be distinguishable, and for that reason I have
reconsidered and my ruling stands.”
¶ 11 The trial court issued a written order on the motion to reconsider, stating only that “the
motion for reconsideration is denied and the court’s ruling of [March 25, 2019,] of dismissal
with prejudice and without costs stands.”
¶ 12 This appeal followed.
¶ 13 II. ANALYSIS
¶ 14 On appeal, Grund argues that its attorney fee agreement is not a contingency agreement,
and therefore, the trial court erred as a matter of law in dismissing its complaint in
contravention of established case law and Rule 1.5 of the Illinois Rules of Professional Conduct
of 2010. Grund argues that “enhancement fees and contingent fees [are] distinguished under
the Illinois Appellate Court’s seminal and controlling opinion of In re Marriage of Malec.”
Grund further argues that, under Malec, “hourly-rate fees may ‘be “enhanced” in consideration
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of the circumstances involved’ ” (quoting Malec, 205 Ill. App. 3d at 287) and that “an
enhancement fee *** can cross the line and become a barred contingent fee by linking that
enhancement fee to ‘certain, particularized results’ ” (quoting id. at 288), but the fee provision
at issue in this case does not suffer from that infirmity. Stephenson responds that the trial court
“correctly dismissed the complaint on the basis that the final-bill bonus fee amounted to an
unlawful contingency” under Rule 1.5(d) by correctly deciding that
“1) the final bill provision stated that the bonus fee was based in part on the ‘amounts
involved and the results obtained,’ and 2) *** the final bill fee Grund demanded at the
conclusion of the matter was ‘in addition to’ the hourly-rate fees Grund was already
paid and which necessarily took account of the same Rule 1.5 factors supposedly used
in determining the final bill fee.” (Emphasis omitted.)
Stephenson argues that the trial court correctly reasoned that “it was the combination of these
two circumstances which made this an unenforceable contingency fee agreement.”
¶ 15 Initially Grund correctly notes that the trial court’s order did not specify whether the court
dismissed Grund’s complaint pursuant to section 2-615 or section 2-619 of the Code but that
under either section the standard of review for this court is de novo. See, e.g., Calloway v.
Chicago Board of Election Commissioners, 2020 IL App (1st) 191603, ¶ 9 (“We review a
dismissal under either section 2-615 or section 2-619 de novo.”). However, we note that the
trial court dismissed the complaint because it violates the Rules of Professional Conduct “and,
hence, is unenforceable as a matter of public policy.” See K. Miller Construction Co. v.
McGinnis, 238 Ill. 2d 284, 291 (2010). Moreover, the factual basis of the trial court’s judgment
is apparent on the face of Grund’s complaint and Grund’s own allegations of the substance of
the parties’ contract and, specifically, the Enhancement Provision. Cf. id. (distinguishing bases
of motions pursuant to section 2-619(a)(9) and section 2-615). Thus, the trial court’s judgment
is based on an affirmative defense. See id. Whereas “section 2-619(a)(9) speaks in terms of
affirmative matter, not affirmative defenses” (emphases omitted) (id.) an affirmative defense
is raised in a section 2-615 motion. See also id. at 292 (“An affirmative defense may be raised
in a section 2-615 motion where the defense is ‘established by the facts apparent on the face
of the complaint’ and no other facts alleged in the complaint negate the defense. 3 R. Michael,
Illinois Practice § 27.2, at 492 (1989).” (Emphasis omitted.)). We will treat the trial court’s
judgment as having been made pursuant to section 2-615 of the Code. See generally In re
Marriage of Hall, 404 Ill. App. 3d 160, 165 (2010) (“a filing’s substance, not its title,
determines its character”).
“A section 2-615 motion to dismiss challenges the legal sufficiency of a complaint
based on defects apparent on its face. [Citation.] In ruling on a section 2-615 motion,
only those facts apparent from the face of the pleadings, matters of which the court can
take judicial notice, and judicial admissions in the record may be considered. [Citation.]
The court must also accept as true all well-pleaded facts in the complaint and all
reasonable inferences that may be drawn from those facts. [Citation.] We review
de novo an order granting a section 2-615 motion to dismiss. [Citation.]” McGinnis,
238 Ill. 2d at 291.
¶ 16 Turning to the merits, in Malec, appeal was taken from an order denying a “petition for
additional attorney fees” in a dissolution of marriage case filed by Zurla, one of the attorneys
for the petitioner in those dissolution proceedings. (Emphasis added.) Malec, 205 Ill. App. 3d
at 278-79. The petitioner in the underlying dissolution, Malec, paid a retainer and “was told
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that the remainder of the fees would be settled, based on performance, at the end of the case.”
Id. at 278. The parties did not have a written agreement concerning attorney fees. Id. At one
point in the litigation, the details of which are not pertinent, the petitioner in the dissolution
“offered to pay Zurla $1 million if he obtained certain results in his dissolution of marriage.”
Id. at 279. Subsequently, at a meeting to discuss the payment of attorney fees with Zurla, the
attorney to whom the petition promised $1 million, Zurla allegedly requested $3 million. Id.The petitioner “was incensed and stated that the only fee previously promised was the $1
million fee, contingent upon the achievement of certain results.” Id. The petitioner further
stated at that meeting that he did not owe the $1 million “because those contingencies had not
been met.” Id. Zurla allegedly stated that he was only kidding about the $3 million; petitioner
fired Zurla the next day. Id. The petitioner and Zurla attempted to negotiate a settlement on the
payment of fees but they were not successful. Id.¶ 17 The petitioner had paid Zurla some attorney fees, either directly or through Zurla’s former
law firm, which had initially represented the petitioner. See id. at 278-79. Zurla petitioned the
trial court to award him fees in the amount of $1 million in quantum meruit or, alternatively,
$751,048.75 on a theory of accord and satisfaction. Id. at 279. The trial court denied Zurla’s
petition for fees under either theory and “declined to award any additional fees.” Id. Zurla
appealed. Id. Zurla’s first argument on appeal was that the trial court “erroneously credited
payments made by [the] petitioner against the $1 million fee.” Id. The Malec court addressed
“each disputed credit in turn” (id.) and concluded (1) there was no evidence the trial court
actually made the first alleged credit but if it did “any such credit would have been error” (id.
at 280), (2) the second alleged credit was proper if the payment to Zurla’s former law partner
“was in fact for legitimate services *** rendered in the dissolution case” (id. at 283), and (3) the
trial court’s determination a third credit should apply was not clearly against the manifest
weight of the evidence (id. at 285).
¶ 18 Next, the Malec court turned to Zurla’s contention “that the trial court failed to consider
the relevant factors in determining the reasonableness of his fee.” Id. The Malec court stated
the factors used to determine the reasonableness of an attorney fee, then proceeded, based on
Zurla’s arguments, to apply the facts of that case to the relevant factors. Id. at 285-86.
Specifically, the Malec court found that the trial court “did consider the complexity of the
issues involved” (id. at 286) and gave “proper consideration” to the novelty and difficulty of
the issues involved in Zurla’s representation (id.). It then stated that, on remand, the trial court
should consider “the preclusion of taking other cases,” which the court found was clearly
established by the testimony (id. at 286-87).
¶ 19 The Malec court next addressed Zurla’s argument “that the trial court failed to consider the
‘results achieved’ as a factor in its determination of the reasonableness of the fees.” Id. at 287.
(It is from there the argument “that enhancement fees have been approved by this court and
are permissible” and the issues in this appeal emerge. See id.) The Malec court noted that
Zurla’s argument concerning the “results achieved” factor
“is premised on the [trial] court’s statement that it ‘[d]id not believe that either a
multiplier or an enhanced fee is ever appropriate in a marital dissolution case.’ Zurla
relies on In re Marriage of Barry (1st Dist. 1988), Nos. 86-1908, 86-2206 (unpublished
order under Supreme Court Rule 23). In that order, this court stated that the circuit
court’s determination that the attorney was not entitled to enhancement fees was
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supported by the evidence. From that language, Zurla concludes that enhancement fees
have been approved by this court and are permissible.” Id.The Malec court found that based on “the result obtained in a case,” the fee “may be adjusted
upward or downward.” Id. The court also held that “[w]hile we agree with the [trial] court that
a multiplier would not be appropriate in a dissolution case [citation], we do not agree that fees
may not be ‘enhanced’ in consideration of the circumstances involved.” Id.¶ 20 The Malec court turned to the petitioner’s argument “that an enhanced fee or one that is
based on results achieved is a contingent fee” and that “since contingent fee agreements in
dissolution cases are void as against public policy, [the] petitioner should be barred from
recovering any fees.” (Emphasis added.) Id. at 287-88. Zurla responded that “since his fee was
not based on a percentage of any amount recovered or saved[,] it was not contingent.” Id. at
288. Zurla cited Head v. Head, 505 A.2d 868 (Md. Ct. Spec. App. 1986), which held “that
because the results obtained is one of the factors considered in determining the fee, it does not
render the fee contingent.” Malec, 205 Ill. App. 3d at 288 (citing Head, 505 A.2d at 874-75).
The Malec court held that “[i]n Illinois, the results obtained is also a factor to be considered as
a guide in determining the reasonableness of a fee. [Citation.] Thus, to the extent that Head
stands for the proposition that consideration of that factor does not convert the fee into a
contingency fee, we agree.” Id. The court concluded that “while Zurla’s fee arrangement would
not have been contingent because of the consideration to be given to the results achieved
factor, we do believe that it was contingent for another reason.” (Emphases added.) Id.¶ 21 The Malec court began with the definition of a contingent fee. At that time,
“Canon 2-106 of the Code of Professional Responsibility define[d] a contingent fee
agreement in the following manner:
‘[A]ny agreement for the provision of legal services by a lawyer under which
the amount of the lawyer’s compensation is contingent in whole or in part upon the
successful accomplishment (by settlement or litigation) of the subject matter of the
agreement, regardless of whether the fee is established by formula or in fixed
amount.’ 107 Ill. 2d R. 2-106(c)(1).” Id.See also Hernandez v. New Rogers Pontiac, Inc., 332 Ill. App. 3d 461, 465 (2002). “Under this
definition, a contingent fee agreement is contractual in nature, as it is an agreement whereby
the lawyer provides legal services to a client in consideration for payment upon successful
completion thereof.” Id.¶ 22 Based on the petitioner’s offer “to pay Zurla $1 million if certain, particularized results
were obtained,” and Zurla’s argument “that since those results were achieved, he should be
paid the $1 million,” the court held the “agreement to be characteristic of contingent
agreements as they are defined in the Code of Professional Responsibility.” Malec, 205 Ill.
App. 3d at 288. The Malec court rejected Zurla’s request for recovery of the $1 million in
quantum meruit and his argument based on “other jurisdictions wherein recovery has been
allowed.” Id. As to the latter, the court held that “the mere existence of a contrary rule in foreign
jurisdictions does not persuade us toward repudiation of so well established a rule as the one
here in Illinois.” Id. at 289. As to the former, the Malec court, relying on its earlier decision in
Licciardi v. Collins, 180 Ill. App. 3d 1051, 1061 (1989), rejected Zurla’s argument. In
Licciardi, the court held that “ ‘as long as an attorney’s services are employed with respect to
the division of marital property, the rule bars contingent fees therefor.’ ” Malec, 205 Ill. App.
3d at 289 (quoting Licciardi,180 Ill. App. 3d at 1061). “The policy against permitting
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contingent fees in divorce actions is based on a concern that if the attorney has a financial
interest in the outcome of the case, reconciliation of the parties will be either deterred or
prevented.” Id. at 290. The Malec court refused to depart from Licciardi, holding “[o]ur interest
in the preservation of the marital relationship is so strong as to outweigh our concerns that the
party may have been unjustly enriched.” Id. at 289. “Thus, under the rule of Licciardi, which
is firmly rooted in our public policy and based on our canon of ethics, we conclude that Zurla
is precluded, under any theory, from recovering on the $1 million contingency fee agreement.”
Id.
¶ 23 Nonetheless, the Malec court held that there was no reason Zurla should be barred from
recovery of any “additional fee due him under the fee arrangement which was originally agreed
upon between [the] petitioner and the [law] partnership.” Id. at 289-90. In Malec, that
“original agreement for fees was entered into prior to the filing of the petition for
dissolution of marriage, and its terms were not conditioned on any particular result in
the case. Thus, since the attorneys, at the time they entered into the original fee
agreement with petitioner, had no interest in the outcome of the case, the agreement is
not tainted by any illegality and Zurla may properly seek to recover fees based on its
terms.” Id. at 290.
The Malec court held that if the trial court had failed to consider “the results achieved” because
it believed “that to do so would be an improper ‘enhancement,’ ” the trial court erred. Id. The
Malec court directed the trial court to give proper consideration to “the results achieved” to
determine whether Zurla was “entitled to any additional fees” which “must, nonetheless,
satisfy the reasonableness requirement.” Id.
¶ 24 Notably for purposes of this appeal, the Malec court did not state whether, under the
original fee agreement entered into with the partnership, Zurla might be entitled to “additional
fees” in the form of an increased hourly rate or an additional flat amount. See id. The Malec
court in fact never discussed whether the “enhancement” it discussed would be an
“enhancement” in the form of an increased hourly rate, billing for more hours, or a flat amount.
See id. at 287-90. In connection with Zurla’s argument that the trial court erred in finding no
evidence supported his hourly rate, the Malec court noted the testimony of one of plaintiff’s
experts, who is also the fee petitioner in this case. “It was David Grund’s, one of Zurla’s
experts, belief that a reasonable hourly rate would be $275 an hour with the multiplier applied
as an enhancer.” Id. at 293. The Malec court did not address the assertion there should be a
“multiplier applied as an enhancer” specifically in connection with either the trial court’s
finding that there was no evidence offered to support Zurla’s hourly fee or the remand for the
trial court to determine whether Zurla is “entitled to any additional fees.” See id. at 290-93.
However, we acknowledge that, in addressing Zurla’s argument, the Illinois Supreme Court
had yet to address “the trial court’s conclusion that there should be separate rates for office
time and for court time.” The Malec court did note that “Illinois case law is clear that when
fees are granted in dissolution cases, it is based upon a separate hourly rate for court time and
office time.” Id. at 293 (citing Christian v. Christian, 69 Ill. App. 3d 450 (1979)). Nonetheless,
the Malec court did not carry that finding into the grounds for holding that Zurla might be
entitled to additional attorney fees under the parties’ agreement. Additionally, Zurla argued
that he should be permitted to recover $751,048.75 “of the $1 million fee” based on a theory
of accord and satisfaction because the petitioner allegedly verbally agreed to pay that sum to
settle the parties’ fee dispute. Id. at 294. The Malec court held that its “determination that Zurla
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may recover any reasonable fees obviates the need *** to consider his accord and satisfaction
argument.” Id. Nonetheless, the court found there was no accord and satisfaction, but not
because there was “no agreement” to a $1 million flat fee. See id. at 294-95. 1
¶ 25 Ultimately, the Malec court held that “the trial court failed to give due consideration to all
of the necessary factors in determining whether Zurla was entitled to additional fees” and
remanded for the trial court to “give careful consideration” to the factors discussed in the case
to “determine a reasonable fee for necessary services rendered.” Id. at 295. The Malec court
did not say the additional reasonable fee had to be applied in the form of an increased hourly
rate or imply that further review of Zurla’s performance or time records might result in finding
more time spent on the case. See id. at 287-90. Rather, the Malec court simply held that Zurla
was entitled to recover any reasonable fees due him under the parties’ fee arrangement. See id.
at 289-90 (“even though we have determined that the $1 million fee agreement was illegal, we
see no reason to bar Zurla recovery of any additional fees due him under the fee arrangement”).
However, the fee arrangement may not be “conditioned on any particular result” in the case or
create a financial interest in the outcome. Id. at 290.
¶ 26 In this case, the parties, like the parties in Malec, entered a fee agreement providing for a
“final bill” that would include a fee “in addition to the hourly rates” that considered “the
amounts involved and the results obtained” prior to the filing of the petition for dissolution of
marriage. See id. The question becomes whether that “final bill” portion of the fees the parties
agreed to was “conditioned on any particular result in the case.” See id. In this case, the trial
court found that it was so conditioned because the “final bill” was “at least partially, contingent
on the outcome of the divorce proceeding.” The only indication of why the trial court believed
the final bill was partially contingent on the outcome of the divorce proceeding is its concurrent
finding that the final bill is to take “into account *** the amounts involved and the results
obtained.” If that were the basis of the trial court’s judgment it is, clearly, erroneous.
Consideration of the result achieved in a particular case is not only permissible but required
under Malec. See id. (“We are unable to determine from the record what consideration the trial
court gave to the results achieved in this case. However, any determination which excluded
consideration of that factor, based on the belief that to do so would be an improper
‘enhancement,’ was error.”). Moreover, consideration of that factor is required by rule. See Ill.
R. Prof’l Conduct R. 1.5(a)(4) (eff. Jan. 1, 2010) (“the amount involved and the results
obtained”).
¶ 27 In its oral ruling, the trial court expressed a different reason for denying Grund recovery
under the Enhancement Provision: that the “final bill” was in addition to its hourly fees but
based on the same factors used to determine the hourly fee. However, the trial court cited no
authority for that limitation on attorney fees in dissolution proceedings. Stephenson argued on
appeal that the attorney fees were limited (1) by consideration of the amounts involved and the
results obtained and (2) because the final bill was “in addition to” the hourly rate fees.”
1
“First, there was apparently no meeting of the minds. Petitioner intended that Vrdolyak’s promise
of nondisclosure would be a part of the agreement. However, Vrdolyak had no knowledge that he was
even to be included in the settlement agreement. Additionally, the agreement was never signed. While
the parties negotiated on the terms of the settlement, there was neither mutual assent nor execution of
the agreement. Finally, there was no tender of the agreed-upon amount.” Malec, 205 Ill. App. 3d at
294-95.
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However, Stephenson has not cited any rule or authority so limiting the parties’ ability to
contract for a reasonable attorney fee except for, purportedly, Malec itself. To that end,
Stephenson argues that Malec only permits consideration of the results obtained in the absence
of an hourly fee arrangement. Specifically, Stephenson argues that “Malec only held that the
results achieved, along with the other relevant Rule 1.5 factors, could be considered without
turning the agreement into a contingency where the parties had not otherwise agreed to a fee
in advance.” (Emphasis in original.)
¶ 28 We reject Stephenson’s characterization of the scope of the holding in Malec. First,
Stephenson’s interpretation is contrary to the plain language of Rule 1.5(d), which does not
contain Stephenson’s purported limitation on the applicability of the Rule to determinations of
when a fee is reasonable—including when the fee is in addition to other fees. “In Illinois, the
result obtained is also a factor to be considered as a guide in determining the reasonableness
of a fee.” Malec, 205 Ill. App. 3d at 288. “We interpret the Illinois Rules of Professional
Conduct in the same manner as statutes.” In re Marriage of Stephenson, 2011 IL App (2d)
101214, ¶ 26. “We may not depart from the plain statutory language by reading into a statute
exceptions, limitations, or conditions not expressed by the legislature.” In re Marriage of
Zamudio & Ochoa, 2019 IL 124676, ¶ 15.
¶ 29 Second, Stephenson’s position is belied by the facts in Malec, in which the court detailed
what the petitioner and Zurla had “otherwise agreed to” with regard to the fees the petitioner
in that case paid to Zurla before the parties allegedly agreed to the $1 million fee or any others.
See Malec, 205 Ill. App. 3d at 279.
“Law and public policy demand that competent parties be free to contract with one
another. [Citation.] Parties to a contract are free to choose any terms that are not against
public policy and do not contravene some positive rule of law. [Citation.] Parties are
bound to the contracts they make, and the court has a duty to construe and enforce
them.” J.B. Esker & Sons, Inc. v. Cle-Pa’s Partnership, 325 Ill. App. 3d 276, 284
(2001).
The Malec court expressly disagreed with the proposition that “fees may not be ‘enhanced’ in
consideration of the circumstances involved.” Malec, 205 Ill. App. 3d at 287.
¶ 30 Stephenson implies on appeal that the impermissible “particular result” in this case is the
securing of a dissolution. Specifically, Stephenson argues “a divorce lawyer could avoid the
prohibition of Rule 1.5(d) by simply making its fee contingent on a general outcome rather
than a specific one,” which would be “contrary both to the letter and spirit of the ethical rules.”
However, Stephenson’s interpretation would constitute an exception to the rule that the
reasonableness of a fee is determined in part by the results achieved that in fact swallows the
rule. Under Stephenson’s interpretation that exception would arise when the parties in any way
expressly, rather than impliedly “by rule,” contemplate the ultimate “results” desired from the
representation when agreeing to the attorney fee. Regardless, in this case, given the context of
the language of the agreement, consideration of “the results obtained” appears to mean as that
term is used in Rule 1.5(a), which is permissible as a matter of law. Because the trial court
failed to consider the parties’ agreement it did not address the meaning of the language in the
parties’ agreement or whether that question has any bearing on the reasonableness or alleged
contingent nature of the fees sought under the Enhancement Provision. The trial court did not
consider whether Grund was entitled to any additional fees under the final bill provision at all.
We express no opinion at this time on these unanswered and unbriefed questions. See, e.g.,
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Puffer-Hefty School District No. 69 v. Du Page Regional Board of School Trustees of Du Page
County, 339 Ill. App. 3d 194, 200 (2003) (“If the issue is one of law and is fully briefed and
argued by the parties, this court may consider the issue for the first time on appeal.”). At this
stage of the proceedings, the trial court has found the provision for a “final bill” was contingent
(1) because it considered “the results obtained” but not any particular result in the case or
(2) because it considered the results obtained and was in addition to Grund’s hourly fees that
already considered the results obtained. Neither is a valid basis to reject the parties’ original
fee agreement.
¶ 31 Although the rules do provide limitations on the fees attorneys may charge (see, e.g.,
Malec, 205 Ill. App. 3d at 285), Stephenson has cited no Illinois authority for the proposition
that one of those limitations is that the Rule 1.5(a) factors may not be considered in connection
with a fee that is in addition to an hourly fee, even a hefty one. Stephenson’s foreign authorities
ostensibly to the contrary are wholly unpersuasive in this court. Like the Malec court, we
believe that “the mere existence of a contrary rule in foreign jurisdictions does not persuade us
toward repudiation of so well established [rules] as the one[s] here in Illinois.” Id. at 289. The
trial court in this case should have given consideration to the parties’ agreement expressed in
a written contract for a final bill, giving “proper consideration to the relevant factors, including
the results achieved” to determine whether Grund “is entitled to any additional fees” beyond
the hourly fees that “must, nonetheless, satisfy the reasonableness requirement.” (Emphases
added.) See id. at 290. In failing to do so, based on our de novo review, we hold the trial court
erred in granting Stephenson’s motion to dismiss.
¶ 32 Stephenson asks this court to affirm the trial court’s judgment granting his motion to
dismiss on the alternative grounds that (1) the final bill provision is unenforceable because it
does not specify a key term and said key term is “to be determined by one party weighing
subjective factor” or (2) the final bill provision is unreasonable and unenforceable—but for the
same reasons it is allegedly unenforceable under Rule 1.5(d), because “the Rule 1.5 factors it
purports to consider were already subsumed within Grund’s hourly fee billing” (emphasis
omitted) and, in essence, because Grund separately charged Stephenson for, and he paid,
significant hourly bills. We believe the better course is to remand to the trial court. On remand
the trial court is to consider the motion to dismiss in its entirety; including, but not limited to,
the alternative grounds raised in the motion concerning the specification of a key term, the
method of determining that key term, and the reasonableness and enforceability of the final
bill given the factors it is to consider and Stephenson’s payment of significant hourly bills
based on those factors. See generally General Auto Service Station, LLC v. Garrett, 2016 IL
App (1st) 151924, ¶ 26 (“because we believe it is appropriate for the trial court to resolve these
issues in the first instance, we remand for the trial court’s consideration”).
“Unlike findings in a fee petition case, which rest in the sound discretion of the trial
judge, the reasonableness of attorney fees in a common law breach of contract action
presents a question to be resolved by the trier of fact, following a fair and impartial
trial. [Citation.] In civil actions brought by attorney-plaintiffs to recover compensation
for professional services performed under an alleged contract, the usual rules governing
breach of contract actions apply because ‘[t]he liability to pay for legal services stands
upon the same footing as other agreements.’ [Citation.] *** ‘It is not the province of
this court to substitute its judgment for that of a [trier of fact]’ in a breach of contract
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action seeking attorney fees ***. [Citations.]” Wildman, Harrold, Allen & Dixon v.
Gaylord, 317 Ill. App. 3d 590, 597 (2000).
¶ 33 Accordingly, we reverse the trial court’s judgment and remand for further proceedings
consistent with this opinion.
¶ 34 III. CONCLUSION
¶ 35 For the foregoing reasons, the circuit court of Cook County is reversed, and the cause
remanded for further proceedings.
¶ 36 Reversed and remanded.
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