Illinois Law Firm Recovers No Attorney’s Fees After Trial Court Concluded The Firm Breached Its Fiduciary Duties

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Scot and Patricia Vandenberg (the “Vandenbergs”) retained the McNabola Law Group, P.C. (“MLG”) to represent them in a lawsuit against RQM, LLC (“RQM”), Brunswick Corporation, and Brunswick Boat Group (together “Brunswick”). The Vandenbergs promised to pay all of MLG’s expenses, plus a contingency fee. The Vandenbergs agreed that, if they dropped MLG as counsel, they would pay MLG an hourly rate or contingency fee for services rendered up to that point, whichever was greater. Id. at ¶5. Mark McNabola (“McNabola”) of MLG represented the Vandenbergs during the trial of their case.

While the jury deliberated, Charles Patitucci (“Patitucci”), a representative for Brunswick, presented a settlement offer to McNabola. The Vandenbergs instructed him to accept that same day at 3:40 p.m. Before McNabola could reach Patitucci, the judge’s clerk called McNabola at 3:52 p.m. to tell him that the jury had sent the judge a note asking if they could find fault with RQM alone. McNabola said the answer to the jury’s question was “no,” but to “hold-off, don’t do anything yet, I’m going to try to settle this.” Id. At 4:01 p.m., he called the clerk back to say that he still could not reach Patitucci. The clerk responded that the judge wanted all parties back in court. McNabola then called Brunswick’s lead counsel, John Patton (“Patton”), to get Patitucci’s cell phone number and did not mention the note. McNabola finally reached Patitucci at 4:03 p.m. and accepted the settlement offer, still not mentioning the note. McNabola informed Patton of the settlement at 4:11 p.m. At 4:19 p.m., the clerk called Patton to say that the judge wanted the parties to come to court to discuss the note. This was the first Patton or Patitucci had heard of it. At approximately 4:40 p.m., the judge informed the parties about the note which went out “at approximately 3:50 p.m.” Id. at ¶11. All counsel present viewed it. At 4:50 p.m., the settlement was entered on the record and the case was dismissed. The jury was still allowed to deliberate and reached a verdict in Brunswick’s favor at approximately 5:00 p.m. Patton then informed the judge that the settlement had occurred without him having knowledge of the jury’s note or the clerk’s call to McNabola. Brunswick therefore moved to vacate the settlement and for judgment to be entered on the jury’s verdict instead. A new judge did so on the grounds of fraud in the inducement, unilateral and mutual mistake, absence of due process, and public policy, noting however that the Vandenbergs had “clean hands.” Id. at ¶16. Moreover, the parties did not dispute that the Vandenbergs “formed this intent [to accept Brunswick’s settlement offer] prior to the 3:50 p.m. note.” Id.

Ultimately, the Circuit Court entered judgment in favor of Brunswick and against the Vandenbergs due to alleged misconduct by McNabola. Months later, the Vandenbergs discharged MLG and with new counsel moved to vacate and enforce the original settlement. A third judge did so, finding that prior to the settlement being entered, all parties were made aware of the content of the jury’s note and the time at which it was published and had an opportunity to participate in discussion as to how to respond to it. Brunswick appealed, but was unsuccessful. The Vandenbergs then moved to adjudicate any claimed attorney’s liens MLG had for fees and expenses. They argued that McNabola engaged in misdeeds that caused their initial loss of the settlement and that “to reward him with fees out of the reinstated settlement would be wholly unfair and contrary to public policy.” Id. at ¶20. MLG responded that it was entitled to one-third of the settlement plus interest and a deferred fee, but excluding the Vandenbergs’ current attorney’s quantum meruit. Id. at ¶21. The circuit court determined that McNabola breached his fiduciary duties to the Vandenbergs by violating the professional rules of conduct in eleven specific ways. In addition, it found that he “failed to provide any evidence of the total number of hours his firm engaged in the underlying case, thus failing to properly plead and prove Quantum Meruit fees for his hourly rate.” Id. at ¶22. The circuit court denied McNabola’s petition for fees and adjudicated his lien to nothing.

On appeal, MLG argued that the only proper award was the full contingency amount given how much work it had performed prior to being discharged, less the hourly fees earned by it’s successor counsel. The Appellate Court disagreed, explaining that contingency fee arrangement requires a firm “bear the full risk of loss” and “often bear[s] little relation to the true value of the time a firm has spent on a case.” Id. at ¶36. MLG also contended that the Circuit Court erred in denying fees based on the eleven alleged breaches of the firm’s fiduciary duty to the Vandenbergs, which can be broadly categorized as “improperly charging legal fees as expenses, failing to obtain the Vandenbergs’ consent for bringing in other lawyers, putting the $25 million settlement at risk, and putting the firm’s interests ahead of the Vandenbergs in the posttrial proceedings.” Id. at ¶38. The Appellate Court disagreed here as well, explaining that these were “serious breaches that the circuit court was entitled to consider.” Id . It continued that although “adjudication of a firm’s fees to zero dollars is relatively uncommon, […] this was an unusual case” in that the firm “had repeatedly breached its duty to the Vandenbergs throughout the attorney-client relationship.” Id. at ¶40. The fact that the Vandenbergs had clear cause for terminating their representation by MLG weakened the firm’s position. Ultimately, MLG failed to make any showing of the hours it spent in connection with the Vandenberg’s claims as expressly required in the parties’ contract. The Appellate Court did rule in MLG’s favor regarding litigation expenses, explaining that “to the extent that the circuit court might have had some discretion to deny these requested payments despite the contracts, the court provided no explanation for its actions,” which seemed “to be an abuse of any discretion the court might have had.” Id. at ¶55.

Scott Vandenberg and Patricia Vandenberg v. RQM, LLC, Brunswick Corporation and Brunswick Boat Group, 2020 IL App (1st) 190544, June 26, 2020

(This is for informational purposes only and not legal advice.)

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