Two law firms are battling over attorneys’ fees in a fraud and medical malpractice settlement involving former cardiologist Mark Midei and MidAtlantic Cardiovascular Associates.
The Law Offices of Peter G. Angelos P.C. is seeking a cut of the fees collected by attorneys who were affiliated with the firm for most of the case. The Court of Special Appeals found the firm was entitled to the reasonable value of its services and sent the case back to the circuit court to recalculate the amount.
Attorney William Gately was formerly of counsel for the Angelos firm and worked on the case for about five years, along with Albert D. Brault of Brault Graham LLC in Rockville. The Angelos firm terminated its relationship with Gately about 18 months before the case settled. The clients chose to stay with Gately and Brault, but the Angelos firm argued that it was entitled to a portion of the attorneys’ fees.
The Baltimore County Circuit Court found the Angelos firm was entitled to 65 percent of the fees Gately and Brault received in the settlement, the amount of which was not disclosed.
In a decision published May 3, the Court of Special Appeals agreed that the Angelos firm was entitled to recover quantum meruit attorney fees. However, it found the Baltimore County Circuit Court improperly considered a fee-sharing agreement the Angelos firm had with Brault, and remanded on that point.
Brault said they will appeal the decision, but declined to further comment on the case. An attorney representing the Angelos firm in the case, Andrew H. Baida of Rosenberg Martin Greenberg LLP in Baltimore, also declined to talk about the decision.
In the underlying case, Gately and Brault’s client, Harry Bargar, needed a second bypass surgery and requested the doctor who had performed his first procedure. He was falsely told that his doctor, who was not associated with MidAtlantic, was not available. The surgery was assigned to a doctor who was associated with MidAtlantic. Barger suffered a massive heart attack three days after the surgery.
Bargar and his wife met with Gately, who recommended the Angelos firm take the case. In 2003, the Bargars entered into a contingent fee retainer agreement, agreeing to pay the Angelos firm 40 percent of any verdict or settlement and reimburse its out-of-pocket expenses.
Gately, who worked for Howell & Gately, was of counsel to the Angelos firm at the time and was supposed to receive 25 percent of the fee from any case he brought to the firm.
The Angelos firm brought in Brault in 2005 to help Gately handle the medical malpractice elements of the case.
A jury awarded the couple $2.25 million in compensatory damages on Bargar’s informed consent, battery and fraud claims and $2.75 million in punitive damages for fraud.
MidAtlantic appealed and, in March 2008, the Court of Special Appeals vacated the decision and remanded it for a new trial.
The Angelos firm terminated its association with Gately about a month later. The Bargars chose to stay with Gately and Brault and entered into a new retainer agreement with them, agreeing to a 40 percent contingency fee.
They settled the underlying case in September 2009, after their petition to the Court of Appeals was rejected.
In March 2010, the Angelos firm filed an amended motion to enforce an attorney’s lien on the settlement’s proceeds, saying it had represented the Bargars for more than four years under a 40 percent fee agreement. It requested a quantum meruit judgment against Brault and Gately.
Brault and Gately said the settlement was the direct result of outside factors unrelated to work done by the Angelos firm and that the firm had forfeited its right to attorneys’ fees by abandoning the Bargars.
A Baltimore County Circuit Court judge ruled that Brault and Gately should pay the Angelos firm $21,165 in expenses and was entitled to 65 percent of Brault and Gately’s contingency fee.
The county judge also found that Gately had no fee-sharing agreement with the Angelos firm, but, according to the opinion, “appeared to find” that Brault still did. The trial judge said the agreement with Brault was “factored in” to the 65 percent award.
The Court of Special Appeals vacated the opinion without saying whether the award should be higher, lower or the same.
“There was no error in the circuit court’s order directing Mr. Gately and Mr. Brault to pay [the Angelos firm] the reasonable value of the services [it] rendered prior to its discharge,” the appellate court wrote.
However, “when a client discharges his or her lawyer, any contingency fee contract ceases to exist, and generally, absent contractual language to the contrary, any fee-splitting agreement predicated on the initial contingency fee contract also ceases to exist,” Judge Kathryn G. Graeff wrote for the appellate panel.
To the extent the circuit court factored in the fee-sharing agreement with Brault, its award must be recalculated, the decision said.
“We stress that our decision in this case does not mean that Mr. Brault is not entitled to compensation for his work while the contingency agreement was in effect,” Graeff wrote. “Like [the Angelos firm], however, his claim would be for the reasonable value of his services.”
WHAT THE COURT HELD
Brault Graham LLC, et al. v. The Law Offices of Peter G. Angelos, P.C., No. 2887, September Term 2011. Argued April 3, 2013. Decided May 3, 2013. Opinion by Graeff, J.
Is a law firm entitled to a portion of attorneys’ fees when it handled the case for four years but discharged attorneys working on the case 18 months before those attorneys reached a settlement?
Yes. The law firm is entitled to the reasonable value of its services based on the amount of time and labor required and the length of its relationship with the client.
Albert D. Brault of Brault Graham LLC in Rockville, for petitioner; Stuart A. Cherry, Benjamin Rosenberg and Steven F. Wrobel of Rosenberg Martin Greenberg LLP in Baltimore, for respondent.
RecordFax 13-0503-01 (42 pages).