Denial of Fees in the Absence of Written Contract

By Robert K. Sall

Robert K. Sall practices with Sall Spencer Callas & Krueger in Laguna Beach and is a past chair of the LACBA Professional Responsibility and Ethics Committee. His practice focuses on business litigation, legal malpractice litigation, and attorney-client fee disputes. The opinions expressed are his own.

Since 1979, California has required, with few exceptions, that attorneys must have written fee agreements with clients who are individuals.[1] Fee disputes result often when lawyers don’t follow these simple requirements. The 2017 decision in Leighton v. Forster [2] provides a useful example, in this instance, demonstrating the inability to collect a fee at all.

In Leighton, an attorney was unable to enforce the terms of the agreement she claimed to have despite a history of providing legal services and receiving payments from the client. Her attempt to demonstrate an implied agreement and account stated was unsuccessful and she could not collect in quantum meruit because she delayed bringing the action for more than two years. The case is a grim reminder of things that may go wrong when an attorney fails to obtain the required written fee agreement.[3]

The clients, Rochelle Forster and Bob Forster, husband and wife, had a dispute with their partner in a shared equity transaction involving ownership of a home. The Forsters’ neighbor, a semi-retired attorney, Robert James, agreed to help the Forsters, apparently without charging them for his personal legal assistance.

James used the services of a contract attorney, Sheryl Leighton, to assist him. James and Leighton had a 2002 letter agreement providing that she perform legal research and writing for $75 per hour plus costs. During 2004-2007, Leighton issued monthly invoices to James for her legal services on the Forsters’ matter. James paid only a few of these invoices. The rest of them were directly paid by Bob Forster. In 2007, James became ill and passed away. Bob subsequently paid Leighton’s outstanding invoices that were addressed to James.

Bob Forster asked Leighton to represent him and Rochelle, proposing to pay $2,000 per month for her services. Via a series of e-mails, Leighton rejected this proposal because she would not carry a balance. Forster told her that he would arrange to pay her invoices within 15 days. Leighton continued to work. She sent invoices directly to Forster, who made less than full payments. The outstanding balance grew.

In May 2007, Leighton sent Forster an e-mail stating her understanding of the fee arrangement. She told Forster he did not have to sign it, just let her know that he agrees. The e-mail confirmed that the Forsters had asked her to proceed and she intended to bill them at $105 per hour for her work. Bob Forster responded: “[W]e will review this.” Neither Bob nor Rochelle Forster ever signed the letter and Rochelle never even saw it.

Bob Forster continued to make partial payments on invoices from Leighton, and his wife, Rochelle, also wrote a few checks. The clients signed Notices of Limited Scope Representation which Leighton filed in court in 2007. Thereafter, Bob Forster developed cancer and died in May 2008. At his death, Leighton’s invoices reflected an unpaid balance of over $100,000.

Although Leighton continued to represent Rochelle Forster after her husband’s death, Rochelle Forster hesitated in payments. She had not been involved in the communications while her husband was alive, was unsure of the fee arrangement, and expressed concern about the exorbitant expenses. Leighton told her that Bob had promised to pay at least $5,000 per month. In June 2008, Leighton delivered a package of documents for Rochelle to review, including the fee letter that she had never seen. While she received a few additional payments from Rochelle, by July 2008, Leighton’s invoice had grown to over $114,000. She would perform no more services and filed a motion to withdraw which was granted in August 2008.

Nearly four years later, Leighton sued Rochelle Forster for breach of a written attorney fee contract and account stated. Her claims resulted in zero recovery and an award of summary judgment against her that was affirmed on appeal. The engagement letter was never signed and did not satisfy the mandatory requirements of Business and Professions Code Section 6148. Leighton’s argument that the agreement had been “accepted electronically” instead of by physical signatures was rejected for two reasons. First, the absence of signature is not a mere technicality, the court of appeal said, “but a material failure to comply with a crucial statutory requirement.” The court said that Section 6148 is designed to assure that fee agreements fully inform the client of the terms upon which the attorney will be compensated. The absence of signatures left the court to speculate about the client’s understanding of the situation. Second, even if electronic acceptance could be construed as substantial compliance with the statute, Rochelle Forster had never accepted it, either electronically or in any other way.[4] It was undisputed that she was not even aware of the document until June 2008 and had never been asked to sign it. On these facts, the court declined to decide whether an e-mail, or some form of acceptance short of a fully executed contract could satisfy the requirement of a signed agreement.

The court found that Rochelle Forster’s signature on Leighton’s Notice of Limited Scope Representation did not constitute acceptance of a written contract. It reflected only an agreement to retain an attorney, not an agreement as to what to pay the attorney—a substantive distinction. Further, the statute requires the attorney to provide the client a duplicate copy of the contract signed by both the attorney at the client, at the time it is entered into. Leighton could not use a document signed more than a year later as proof that an agreement was executed in the first place.[5]

The court likewise rejected Leighton’s argument that Rochelle Forster’s payments waived her right to dispute the validity of the agreement. While there was certain evidence that Rochelle may have impliedly agreed or assumed an equitable obligation that still does not constitute a written fee contract under Section 6148. Leighton had never disclosed what the statute requires, thus Rochelle could not have waived those requirements even under the statutory exceptions to a writing in Section 6148(d).[6] Even had there been an agreement, Rochelle implicitly exercised her right to void it by refusing to pay Leighton’s July 2008 invoice.

Leighton’s argument that there was an implied fee arrangement under Section 6148(d)(2) because the services were of the same kind as previously rendered for attorney James for which the clients had paid was also rejected. Leighton’s assignments under her written agreement with James were expressly limited in nature to only research and writing, and subject to James’ supervision. Thus, as a matter of law, the litigation services she later performed for Bob and Rochelle Forster were materially different than those she had performed as James’ contract attorney.[7]

Leighton’s quantum meruit claim was barred by the two-year statute of limitations.[8] Her claim for account stated failed because she did not prove there was an established balance between the parties, agreed to be the correct sum owing, along with an implied agreement to pay it. Thus, because the essential elements of account stated did not exist, Leighton’s claim failed as a matter of law.[9]

The Leighton v. Forster case appears to be one where the analysis of the facts and law was driven by a result the court wanted to reach—yet it serves as an important reminder of the problems likely to arise when the client is able to demonstrate lack of understanding of the fee arrangement due to poor management of the client relationship and lack of an enforceable written fee agreement.

[1] Bus. & Prof. Code §6148.

[2] Leighton v. Forster, 8 Cal. App. 5th 467 (2017).

[3] Bus. & Prof. Code §6148(a). This section requires, in the non-contingent fee representation of an individual in which the representation will exceed $1,000, that there be a written contract for the legal services signed by both the attorney and the client, and a duplicate signed copy shall be provided to the client at the time it is entered into. Particular content requirements for the contract are specified in subdivision (a) of the section and requirements for billing statements in subdivision (b).

[4] Leighton v. Forster, supra, 8 Cal. App. 5th 467, 485.

[5] Id., at 486.

[6] Id., at 487, and Bus. & Prof. Code §6148(d)(3).

[7] Leighton v. Forster, supra, 8 Cal. App. 5th 467, at 488-489.

[8] Code Civ. Proc. §339; Leighton, supra, at 490.

[9] Leighton, supra, at 490-493.