Did You Expect to Be Paid Too?

Usually, when a family-law attorney takes on a divorce case, it's with the expectation that at some time before or after the work on the case is completed, he or she will be paid for services rendered. Sure, attorneys often have trouble getting paid by their clients, who may not have the necessary funds at their disposal, but when a client cannot pay, the attorney has other means, including turning to the court for assistance in getting payment from the opposing spouse. But suppose the client discharges the attorney from the case before the divorce is finalized? The option of seeking redress by asking the court to compel the client's spouse to pay is foreclosed, according to a recent decision by the Appellate Division, Second Department, in the case of Frankel v. Frankel, 2003 N.Y. App. Div. LEXIS 9279 (App. Div., 2d Dept. 9/8/03).

In the underlying matrimonial action, attorneys from the firm of Schlissel, Ostrow, Karabatos, Poepplein & Taub, PLLC, Mineola, represented the wife during more than 30 days of the child-custody phase of the couple's trial. During that phase of the trial, the husband was ordered to pay his wife's attorneys $25,000 in pendente lite fees. However, less than a month later, the wife had discharged her attorneys, as reflected on the record on March 30, 2001. Also on that date (after the attorneys had been discharged), an attorney for the firm indicated on the record that the firm was asserting a lien on the wife's file and intended to apply for its accrued legal fees.

The wife hired new attorneys to represent her. On April 27, 2001, the parties entered into a stipulation of settlement that provided, among other things, that each party would be responsible for his or her own legal fees. A month later, the former attorneys moved against the husband to recover the wife's unpaid legal fees in the amount of $94,000. The Supreme Court, Nassau County, granted the motion in part, finding that the husband could be liable for his wife's fees, but referred the matter to a referee for determination of the amount. The husband appealed.

The Majority: Statute Protects Non-Moneyed Spouse, Not Attorney

The question on appeal was whether former counsel for a spouse in a matrimonial action could apply in its own name within that action, against the adversary spouse, for fees for legal services previously rendered. The Second Department opinion, written by Justice Howard Miller, held that the answer was no, because neither “the statute nor case law grants a discharged attorney the right” to make such an application, “either within or without the matrimonial action.” The statute cited in support of the majority's decision is DRL ' 237(a), which says, in pertinent part, that in “an action … brought … for a divorce … the court may direct either spouse … to pay such sum or sums of money directly to the attorney of the other spouse to enable that spouse to carry on or defend the action … as, in the court's discretion, justice requires, having regard to the circumstances of the case and of the respective parties … Any applications for counsel fees and expenses may be maintained by the attorney for either spouse in his own name in the same proceeding.”

The major point of the court's argument for not allowing Schlissel, Ostrow's motion to seek payment from the husband was DRL ' 237(a)'s wording giving attorneys for either spouse the right to seek payment in their own names, but making no mention of former attorneys. This, the court found, evidenced the legislature's intent that only current attorneys for parties in matrimonial actions could seek payment under the statute. The court declined to expand that interpretation absent clarification from the legislature, not wishing to pave the way for a flood of “countless such applications by discharged attorneys, submitted within matrimonial actions with which they no longer have any connection.” The opinion went on to describe the potential for increased attorney fees and distraction from the matrimonial issues at hand that such a decision would engender, especially considering the fact that many people involved in matrimonial actions engage more than one attorney before their cases are finalized.

But, what of the discharged attorneys? Aren't they as deserving of payment as the client's current attorneys? Undoubtedly. But the Second Department wasn't swayed by this fact, noting that the purpose of the DRL ' 237(a) is to level the playing field between the moneyed and non-moneyed spouse, so that if the non-moneyed spouse cannot afford the legal fees the divorce generates, he or she will not have to simply give in to the demands of moneyed spouse. There is no risk of that happening in the situation presented in Frankel, the court said, because the wife had new counsel that would help her bring the action to conclusion. In fact, that is what happened; with the aid of her new attorneys, the wife and husband came to an agreement and settled.

The Dissent: Majority Misunderstood Legislative Intent

The dissent, authored by Justice Myriam J. Altman, pointed out that the Second Department had in a previous case allowed the dismissed attorney of a couple that reconciled and dropped the divorce action to apply for counsel fees under the authority of DRL '  237(a). Sadofsky v. Sadofsky, 78 A.D.2d 520, 431 N.Y.S.2d 594. There, even though the supposed purpose of statute – allowing the non-moneyed spouse to pursue the case even if he or she cannot pay for counsel – was not an issue because the parties had reconciled, the attorney was allowed to seek payment under the statute.

And the statute itself says that attorney fees can be awarded to an opposing spouse at the discretion of the court, but says nothing about former counsel being specifically prohibited from seeking such payment. In fact, the dissent wrote, “The propriety of an award of counsel fees in this case is supported not only by the judiciary's flexible approach in interpreting Domestic Relations Law '  237(a), but also by the legislative history of the amendment to the statute permitting an attorney to make a fee application in the attorney's own name, which indicates that applications by former counsel were specifically contemplated. In his memorandum, the sponsor of the amendment stated: “This bill provides that applications for counsel fees and expenses may be maintained by an attorney in the same matrimonial action wherein he has rendered services and has been subsequently discharged by his client. The purpose is to protect attorneys when they are discharged without cause from having their right to counsel fees relegated to a civil court action. Hereunder the claim for counsel fees may be kept alive in the matrimonial action. The attorney is given the right to bring such action in his own name” (Sponsor's Mem, L 1978, ch 444, 1978 Legis Ann, at 262).

Collecting

The majority in Frankel understood that the wife's former attorneys were entitled to payment for their services, but found that the attorneys had no right to move on their own behalf for payment under the terms of DRL ' 237(a) because that statute's intent was to aid the non-moneyed spouse in continuing with the litigation, not make sure attorneys are paid.

Conclusion

So what options does the discharged attorney have for recovering fees incurred by the client who has discharged him or her? The optimum situation for the attorney is one in which the non-moneyed spouse or his/her new attorney makes the fee application on behalf of the client. That option is not foreclosed under the statute to the former client as a continuing party to the litigation. There is an incentive for such application to be made in the fact that the non-moneyed spouse's liability to prior counsel may constitute an impediment to that spouse's ability to carry on or defend the divorce action.

If for some reason the former client does not opt to apply for payment to the discharged attorney through the statute, the former attorney must resort to a plenary action to seek such payment. Short of a legislative clarification that DRL ' 237(a) was intended to protect not only non-moneyed spouses but also their attorneys (including former attorneys), these imperfect remedies may be all that the discharged attorney can turn to, at least in the Second Department.

Usually, when a family-law attorney takes on a divorce case, it's with the expectation that at some time before or after the work on the case is completed, he or she will be paid for services rendered. Sure, attorneys often have trouble getting paid by their clients, who may not have the necessary funds at their disposal, but when a client cannot pay, the attorney has other means, including turning to the court for assistance in getting payment from the opposing spouse. But suppose the client discharges the attorney from the case before the divorce is finalized? The option of seeking redress by asking the court to compel the client's spouse to pay is foreclosed, according to a recent decision by the Appellate Division, Second Department, in the case of Frankel v. Frankel , 2003 N.Y. App. Div. LEXIS 9279 (App. Div., 2d Dept. 9/8/03).

In the underlying matrimonial action, attorneys from the firm of Schlissel, Ostrow, Karabatos, Poepplein & Taub, PLLC, Mineola, represented the wife during more than 30 days of the child-custody phase of the couple's trial. During that phase of the trial, the husband was ordered to pay his wife's attorneys $25,000 in pendente lite fees. However, less than a month later, the wife had discharged her attorneys, as reflected on the record on March 30, 2001. Also on that date (after the attorneys had been discharged), an attorney for the firm indicated on the record that the firm was asserting a lien on the wife's file and intended to apply for its accrued legal fees.

The wife hired new attorneys to represent her. On April 27, 2001, the parties entered into a stipulation of settlement that provided, among other things, that each party would be responsible for his or her own legal fees. A month later, the former attorneys moved against the husband to recover the wife's unpaid legal fees in the amount of $94,000. The Supreme Court, Nassau County, granted the motion in part, finding that the husband could be liable for his wife's fees, but referred the matter to a referee for determination of the amount. The husband appealed.

The Majority: Statute Protects Non-Moneyed Spouse, Not Attorney

The question on appeal was whether former counsel for a spouse in a matrimonial action could apply in its own name within that action, against the adversary spouse, for fees for legal services previously rendered. The Second Department opinion, written by Justice Howard Miller, held that the answer was no, because neither “the statute nor case law grants a discharged attorney the right” to make such an application, “either within or without the matrimonial action.” The statute cited in support of the majority's decision is DRL ' 237(a), which says, in pertinent part, that in “an action … brought … for a divorce … the court may direct either spouse … to pay such sum or sums of money directly to the attorney of the other spouse to enable that spouse to carry on or defend the action … as, in the court's discretion, justice requires, having regard to the circumstances of the case and of the respective parties … Any applications for counsel fees and expenses may be maintained by the attorney for either spouse in his own name in the same proceeding.”

The major point of the court's argument for not allowing Schlissel, Ostrow's motion to seek payment from the husband was DRL ' 237(a)'s wording giving attorneys for either spouse the right to seek payment in their own names, but making no mention of former attorneys. This, the court found, evidenced the legislature's intent that only current attorneys for parties in matrimonial actions could seek payment under the statute. The court declined to expand that interpretation absent clarification from the legislature, not wishing to pave the way for a flood of “countless such applications by discharged attorneys, submitted within matrimonial actions with which they no longer have any connection.” The opinion went on to describe the potential for increased attorney fees and distraction from the matrimonial issues at hand that such a decision would engender, especially considering the fact that many people involved in matrimonial actions engage more than one attorney before their cases are finalized.

But, what of the discharged attorneys? Aren't they as deserving of payment as the client's current attorneys? Undoubtedly. But the Second Department wasn't swayed by this fact, noting that the purpose of the DRL ' 237(a) is to level the playing field between the moneyed and non-moneyed spouse, so that if the non-moneyed spouse cannot afford the legal fees the divorce generates, he or she will not have to simply give in to the demands of moneyed spouse. There is no risk of that happening in the situation presented in Frankel, the court said, because the wife had new counsel that would help her bring the action to conclusion. In fact, that is what happened; with the aid of her new attorneys, the wife and husband came to an agreement and settled.

The Dissent: Majority Misunderstood Legislative Intent

The dissent, authored by Justice Myriam J. Altman, pointed out that the Second Department had in a previous case allowed the dismissed attorney of a couple that reconciled and dropped the divorce action to apply for counsel fees under the authority of DRL '  237(a). Sadofsky v. Sadofsky , 78 A.D.2d 520, 431 N.Y.S.2d 594. There, even though the supposed purpose of statute – allowing the non-moneyed spouse to pursue the case even if he or she cannot pay for counsel – was not an issue because the parties had reconciled, the attorney was allowed to seek payment under the statute.

And the statute itself says that attorney fees can be awarded to an opposing spouse at the discretion of the court, but says nothing about former counsel being specifically prohibited from seeking such payment. In fact, the dissent wrote, “The propriety of an award of counsel fees in this case is supported not only by the judiciary's flexible approach in interpreting Domestic Relations Law '  237(a), but also by the legislative history of the amendment to the statute permitting an attorney to make a fee application in the attorney's own name, which indicates that applications by former counsel were specifically contemplated. In his memorandum, the sponsor of the amendment stated: “This bill provides that applications for counsel fees and expenses may be maintained by an attorney in the same matrimonial action wherein he has rendered services and has been subsequently discharged by his client. The purpose is to protect attorneys when they are discharged without cause from having their right to counsel fees relegated to a civil court action. Hereunder the claim for counsel fees may be kept alive in the matrimonial action. The attorney is given the right to bring such action in his own name” (Sponsor's Mem, L 1978, ch 444, 1978 Legis Ann, at 262).

Collecting

The majority in Frankel understood that the wife's former attorneys were entitled to payment for their services, but found that the attorneys had no right to move on their own behalf for payment under the terms of DRL ' 237(a) because that statute's intent was to aid the non-moneyed spouse in continuing with the litigation, not make sure attorneys are paid.

Conclusion

So what options does the discharged attorney have for recovering fees incurred by the client who has discharged him or her? The optimum situation for the attorney is one in which the non-moneyed spouse or his/her new attorney makes the fee application on behalf of the client. That option is not foreclosed under the statute to the former client as a continuing party to the litigation. There is an incentive for such application to be made in the fact that the non-moneyed spouse's liability to prior counsel may constitute an impediment to that spouse's ability to carry on or defend the divorce action.

If for some reason the former client does not opt to apply for payment to the discharged attorney through the statute, the former attorney must resort to a plenary action to seek such payment. Short of a legislative clarification that DRL ' 237(a) was intended to protect not only non-moneyed spouses but also their attorneys (including former attorneys), these imperfect remedies may be all that the discharged attorney can turn to, at least in the Second Department.