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Court of Appeal:
Attorneys Not Entitled to Retain Full Flat Fee Where Ethics Compelled Them to Withdraw
Argument Rejected That Clash With Client Barring Continued Representation Justified Non-Completion of Services, Obviating Need to Make Refund
By a MetNews Staff Writer
Div. One of this district’s Court of Appeal has affirmed a judgment awarding the partial return of a flat fee paid to attorneys for representation in a criminal matter where the defense lawyers withdrew, with court approval, based on a breakdown of the relationship with their client, rejecting the lawyers’ contention that their ethical compulsion to bow out excused further performance and thus justified retention of the full amount paid.
The unpublished opinion was written by Justice Helen Bendix and joined in by Presiding Justice Frances Rothschild and Justice Gregory Weingart.
Seeking a full refund is plaintiff Craig Noell, a former Wall Street executive and investment banker who in July 2016, hired attorneys David Kenner and Brett Greenfield, then-law partners in Encino, to represent him in a criminal matter in which he was accused of the attempted murder of his estranged wife and committing felony domestic violence against her. Noell paid a flat fee of $350,000 to them for representation.
According to the lawyers, during mock questioning by Kenner, Noell said, contrary to earlier statements, that he did not walk away from a 2015 altercation with his wife after he pinned her to the ground because he “wanted to inflict as much damage” as possible. The attorneys warned him that if he insisted on testifying to the contrary in an actual courtroom, ethical obligations would prevent them from representing him.
Trial Court Proceedings
A conflict ensued and on Oct. 16, 2017, Los Angeles Superior Court Judge Daniel S. Murphy granted the attorneys’ motion to withdraw as counsel. Noell then hired celebrity attorney Leslie Abramson—who defended parent-slayers Lyle and Erik Menéndez—to take over the case, and was acquitted of attempted murder, but was convicted on the felony domestic abuse charge.
Noell filed suit against Kenner and Greenfield. His allegations included breach of contract and malpractice.
After a bench trial on the causes of action against attorneys, Murphy found in favor of them on the professional misconduct claim but found for Noell on the breach of contract cause of action and awarded damages in the amount of $52,750 plus interest and costs. In reaching that figure, Murphy examined the terms of the legal services agreement between the parties which contained both a flat fee provision and a statement of the attorney’s hourly rates—reciting Kenner’s hourly rate of $950 and Greenfield’s $700 per hour rate—as well as lower rates for other lawyers in the firm.
The agreement also contained a termination provision saying that in the event Noell fired the lawyers, he would pay for their services up to and including the date of dismissal.
After considerable testimony concerning the number of hours spent on the case, Murphy’s damage award was calculated based on the difference between the $350,000 flat fee and the contractual hourly rates for the hours actually shown to have been worked.
The attorneys argued that Murphy did not find that they breached the agreement, and even if they had done so, such a breach was excused and they were entitled to retain the entire fee. Noell cross-appealed and maintained that the judge should have awarded him a return of the full $350,000 flat fee, as disgorgement, or the $450,000 he paid Abramson after Kenner and Greenfield withdrew.
Breach of Contract
Bendix noted that no party on appeal challenged the finding that the legal services agreement was valid and enforceable. However, she took issue with attorneys’ assertion that Murphy did not find that they had breached the agreement, saying:
“Contrary to Attorneys’ contention, the trial court did find material breaches, some of which predated attorneys’ withdrawal from representing Noell.”
She also found lacking attorneys’ argument that because Noell caused the conflict that required them to withdraw, they were excused from their obligations under the agreement and entitled to retain the entire $350,000 fee. Citing the California State Bar Rules of Professional Conduct governing fees, Bendix wrote:
“Even if arguendo Attorneys’ performance were excused under general contract principles, that would not entitle them to retain unearned legal fees. An attorney whose employment has terminated has a professional obligation promptly to refund any part of a fee paid in advance that has not been earned.”
She cited rule 1.16(e)(2) which says that if a lawyer withdraws for any reason, “the lawyer promptly shall refund any part of a fee or expense paid in advance that the lawyer has not earned or incurred.”
Bendix analogized the situation to a more common one where a lawyer who has a civil case on a contingency-fee basis quits or is fired before conclusion of the matter and is relegated to a receipt of fees, if the client prevails, on a quantum meruit basis.
Noell’s Cross Appeal
The jurist found meritless Noell’s assertion on cross-appeal that he was entitled to the entire flat fee or the cost of hiring his new attorney. She agreed with Murphy’s finding that although the attorneys had materially breached the terms of the contract prior to making their request to withdraw, it would be unjust to require them to disgorge the entire flat fee.
The jurist pointed out in a footnote:
“The requirement that an attorney refund unused fees is not applicable to a true retainer fee paid solely for the purpose of ensuring availability of the attorney for the matter….Here, attorneys do not argue that the Agreement was a true retainer and acknowledge that instead, the Agreement contained a “flat fee.”
Although the court imposes no sanction on the lawyers, it directs: “Upon the issuance of the remittitur, the clerk of the court is ordered to forward a copy of this opinion to the State Bar of California.”
The case is Noell v. Kenner & Greenfield, B316818.
Noell was represented by Oxnard attorney Patrick Walsh. Kenner, who continues to practice in Encino, acted for himself and for his former partner, Greenfield, now a Woodland Hills practitioner.
Ventura Superior Court Judge Anthony Sabo on Aug. 19, 2019, sentenced Noell to nine months in jail for the attack on Rhonda Noell, now his ex-wife, at a Thousand Oaks office complex.
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