Andrew W. Levenfeld & Associates, Ltd. v. O'Brien

2024 IL 129599

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

(Docket No. 129599)

ANDREW W. LEVENFELD AND ASSOCIATES, LTD., et al., Appellants, v.

MAUREEN V. O’BRIEN et al., Appellees.

Opinion filed September 19, 2024.

JUSTICE OVERSTREET delivered the judgment of the court, with opinion.

Chief Justice Theis and Justices Neville, Holder White, Cunningham,

Rochford, and O’Brien concurred in the judgment and opinion.

OPINION

¶1 Plaintiffs, Andrew W. Levenfeld and Associates, Ltd., and Stephen J. Schlegel,

Ltd., appeal the decision of the appellate court that reversed, in part, the quantum

meruit award the Cook County circuit court entered in their favor, which was based

on legal services they provided to defendants, Maureen V. O’Brien and Daniel P.

O’Brien III (Maureen and Daniel III, respectively). See 2023 IL App (1st) 211638.

The appellate court remanded the case to the circuit court with directions that it

enter a new determination of the reasonable value of those services. Id. ¶ 56.

Defendants cross-appeal, claiming the courts below erred in determining that

plaintiffs proved the essential elements of a quantum meruit claim and,

alternatively, that plaintiffs failed to present sufficient evidence of the reasonable

value of their services, thus precluding any such award.

¶2 To resolve this appeal, we first determine whether the courts below erred in

finding plaintiffs proved the requisite elements for quantum meruit recovery. If we

find no error in its determination that plaintiffs are entitled to a quantum meruit

recovery, we must decide whether the circuit court erred in determining the

reasonable value of plaintiffs’ legal services. Specifically, we must review the

circuit court’s consideration of the contingency fee structure set forth in the

attorney-client agreement, which was executed by all parties but terminated by

defendants, as evidence of the value of plaintiffs’ services. Defendants argue, and

the appellate court found, that consideration of the contingency fee structure agreed

upon by the parties was improper on the basis that the attorney-client agreement

provided for plaintiffs’ joint representation of defendants and defendants failed to

enter into a contemporaneous fee-splitting agreement conforming with Rule 1.5(e)

of the Illinois Rules of Professional Conduct of 2010. 1 Ill. R. Prof’l Conduct (2010)

R. 1.5(e) (eff. Jan. 1, 2010). If we determine, as the appellate court did, that the

circuit court so erred, we must determine whether plaintiffs presented sufficient

other evidence of the reasonable value of its services to allow for a remand to the

circuit court for a redetermination of the amount of the judgment.

¶3 For the reasons that follow, we agree with the courts below that plaintiffs

presented sufficient evidence to sustain their quantum meruit claim. However, we

find the appellate court erred in reversing the circuit court’s judgment as to the

reasonable value of plaintiffs’ services because, based on the circumstances

presented, the circuit court did not commit reversible error in using the contingency

fee structure set forth in the attorney-client agreement as evidence of value.

1

In the courts below, defendants argued that plaintiffs were barred from any recovery in

quantum meruit because of their violation of Rule 1.5(e). Ill. R. Prof’l Conduct (2010) R. 1.5(e) (eff.

Jan. 1, 2010). 2023 IL App (1st) 211638, ¶ 3. However, defendants have not advanced that argument

before this court and, thus, have forfeited same. See People v. Griffin, 2024 IL 128587, ¶ 54 (citing

Ill. S. Ct. R. 341(h)(7) (eff. Oct. 1, 2020)).

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Accordingly, we need not determine whether other evidence presented at the bench

trial was sufficient to determine that value. Thus, we affirm in part and reverse in

part the appellate court’s judgment and affirm the judgment of the circuit court.

¶4 BACKGROUND

¶5 A. The Operative Complaint

¶6 While the litigation that is the subject of this appeal commenced in 2017, the

operative complaint at the time the circuit court entered its judgment was the

“Second Amended Verified Complaint,” which was filed December 9, 2020. A

summary of the essential allegations contained in the complaint follows.

¶7 Pursuant to a contract executed on October 29, 2015, defendants retained the

legal services of plaintiffs and their respective firms regarding various assets

pertaining to the estate of Daniel P. O’Brien Sr. and Mary D. O’Brien (O’Brien

Estates), both deceased. The attorney-client agreement, which plaintiffs attached to

the complaint, provides inter alia that “the total fees to be charged shall be either

15% of the first $10,000,000 and 10% of any additional values of the assets

recovered for the clients, or the amount of charges made for time expended,

whichever is greater.” In addition, the attorney-client agreement provides,

inter alia, that “[a]ny party hereto may terminate this agreement upon reasonable

advance notice.”

¶8 Over the course of one year and seven months, plaintiffs represented defendants

pursuant to the attorney-client agreement, in connection with numerous cases

pending in the circuit court of Cook County, the Appellate Court, Fourth District,

federal court, and in circuit courts located in the State of Michigan. The goal of the

litigation was to secure a liquidation of plaintiffs’ interests in assets held by the

O’Brien Estates and related entities. In so doing, plaintiffs spent in excess of 3100

hours of attorney and paralegal time culminating in settlement negotiations with the

executors and/or trustees, with the gap between demands and settlement offers

closing substantially just prior to May 25, 2017.

¶9 On May 25, 2017, without cause, defendants terminated the attorney-client

agreement by e-mailing a termination letter to plaintiffs. Soon thereafter,

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defendants entered into a settlement agreement with the O’Brien Estates by virtue

of which defendants received substantial sums of money far in excess of the fees

and costs claimed by plaintiffs and not significantly greater than that offered during

plaintiffs’ representation of defendants. Plaintiffs attached certified billing records

documenting their representation of defendants, showing a combined total of 3000

hours. Both plaintiffs, along with their respective staff, expended a considerable

portion of the total hours expended.

¶ 10 As their claims for relief, plaintiffs sought an adjudication of their fees and costs

“upon equitable principles,” claiming that an equitable adjudication would include

the imposition of fees based on the percentages as provided in the attorney-client

agreement. Specifically, plaintiffs asserted that the contingency structure set forth

in the attorney-client agreement would constitute a reasonable fee in quantum

meruit for services they rendered before their termination. Plaintiffs alleged that

defendants accepted and benefited from their services and have not paid plaintiffs.

Plaintiffs alleged the services they provided to defendants were “worth not less than

$2,437,500 plus costs advanced of $7,390.60” and sought this amount in quantum

meruit, along with the advanced costs and a corresponding equitable lien against

the settlement fund.

¶ 11 B. The Attorney-Client Agreement

¶ 12 We set forth with particularity the terms of the attorney-client agreement as

attached to the operative complaint. It is made between “ANDREW W.

LEVENFELD & ASSOCIATES, LTD., STEPHEN J. SCHLEGEL, LTD.

(‘Attorneys’), and MAUREEN V. O’BRIEN and DANIEL P. O’BRIEN III

(‘Clients’)” on October 29, 2015. Therein, “Attorneys” agree to represent “Clients”

in their claims to enforce their rights to assets held by the O’Brien Estates and

related entities, to which they both owned interests. “Clients” agree to retain and

employ “Attorneys” to represent them and protect and enforce any rights they have

or that may arise in the future, in connection with their relationship with the O’Brien

Estates and related entities.

¶ 13 The attorney-client agreement states that “Clients” do not have a current

retainer deposit with “Attorneys,” who reserve the right to request one in the future

should they believe it necessary for any reason. It specifies that it is understood and

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agreed that the matters being undertaken are expected to involve a substantial

amount of professional time, services, and risk, and that “Clients” currently do not

have liquid cash assets to provide for the bills for anticipated legal services and

costs.

¶ 14 “Clients” agree to pay “minimum” attorney fees at an hourly rate of $300 per

hour for time spent by Andrew W. Levenfeld and/or Stephen J. Schlegel, $250 per

hour for associate attorney time, and $85 per hour for paralegal or paraprofessional

time. In addition, “Clients” are responsible to reimburse “Attorneys” all reasonable

and necessary costs and expenses incurred in the performance of the legal services.

The minimum fee to be charged in any event for time spent prior to the execution

of the attorney-client agreement and thereafter shall be the sum of $30,000.

¶ 15 The “total” fees to be charged shall be either 15% of the first $10 million and

10% of any additional values of the assets recovered for “Clients” or the amount of

charges made for time expended, whichever is greater. “[A]ssets recovered” is

defined as “the fair market value of any property *** transferred from the [O’Brien

Estates] or businesses in which Clients currently own percentage interests, to the

ownership of the Clients or either of them.”

¶ 16 Any party thereto may terminate the attorney-client agreement upon

“reasonable advance notice.” However, termination of the attorney-client

agreement “will not dispel [Clients’] obligation to pay for all work done prior to

the end of the attorney-client relationship.”

¶ 17 C. Defendants’ Affirmative Defense

¶ 18 Defendants filed an answer and affirmative defenses to the complaint, averring,

inter alia, that plaintiffs violated Rule 1.5(e) of the Rules of Professional Conduct

(Ill. R. Prof’l Conduct (2010) R. 1.5(e) (eff. Jan. 1, 2010)) in that they never entered

into a proper agreement to divide the fee they earned from defendants and thus did

not disclose to defendants in writing how they planned to split the attorney fee.

According to this affirmative defense, plaintiffs are barred from any recovery

whatsoever due to this failure to comply with Rule 1.5(e). Id.

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¶ 19 In their reply to defendants’ affirmative defenses, plaintiffs acknowledged Rule

1.5(e) and admitted that they did not, during the course of their representation of

defendants, disclose to defendants how they planned to split attorney fees.

However, they denied that Rule 1.5(e) is applicable in a claim in quantum meruit

and denied that a violation of Rule 1.5(e) warrants a nondisciplinary remedy such

as barring recovery for the reasonable value of legal services they provided to

defendants.

¶ 20 D. Bench Trial and Circuit Court Judgment

¶ 21 In May 2021, the circuit court held a bench trial over the course of several days.

The evidence introduced at trial included expert testimony concerning the

reasonable value of plaintiffs’ services to defendants. Plaintiffs’ expert testified that

he has been in practice since 1989, specializing in contested trusts and estates. His

articles and lectures are widely published, and he has been the general editor of the

Illinois Institute for Continuing Legal Education book “Litigating Disputed Estates,

Trusts, Guardianships, and Charitable Bequests” and authored many of its chapters.

After the circuit court found him qualified to render an opinion as to the value of

the legal services plaintiffs provided to defendants, plaintiffs’ expert testified to the

following.

¶ 22 1. Plaintiffs’ Expert’s Opinion on Value of

Legal Services Provided

¶ 23 Plaintiffs’ expert explained, as a basis for his valuation opinion, that defendants’

pursuit of liquidation of their interests in the O’Brien Estates and related assets was

complex, with some 80 properties spread over three states and a number of LLPs

and LLCs involving a very litigious family. Defendants had little to no leverage

over the estates, trusts, or properties involved and had no funds to hire a lawyer.

Both plaintiffs were highly qualified and spent around 3000 hours over 19 months,

achieving a very good result for defendants, who discharged them for no reason.

The offers plaintiffs generated and the counteroffer they suggested looked almost

identical to what defendants settled for less than 60 days after discharging plaintiffs.

For these reasons, the expert opined that a reasonable fee in this matter could be

found by reference to the contingency fee structure set forth in the attorney-client

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agreement. The expert acknowledged that the attorney-client agreement had been

terminated and thus was unenforceable, but he stated that the reasonable value of

the services rendered under these circumstances is 15% of the first $10 million and

10% of the remaining amount of recovery.

¶ 24 Plaintiffs’ expert testified that he found the contingency fee structure was

reasonable in its percentage and that, using the percentages set forth therein, a

reasonable award in quantum meruit would be $2,132,390.60. This amount

represents 15% of the first $10 million and 10% of the remaining $6.25 million, all

based on the May 1, 2017, offer that was generated by plaintiffs, plus $7390.60 in

costs and expenses.

¶ 25 2. Defendants’ Expert Opinion on Value of

Legal Services Provided

¶ 26 Defendants’ expert had been a practicing attorney for 18 years and had been

practicing in estate planning and estate and trust administration and litigation. After

the circuit court found him qualified to render an opinion on how such litigation is

handled, he testified that plaintiffs are not entitled to any recovery of fees under

quantum meruit because they mishandled defendants’ case. He testified that,

because defendants’ interests in the O’Brien Estates and related assets were

“uncontested,” a reasonable Illinois estate and trusts attorney would not have

elected to utilize a contingency fee structure and entering into such a fee agreement

was improper.

¶ 27 Defendants’ expert further testified that plaintiffs mishandled the case because

Maureen should have been advised to seek independent counsel due to potential

conflicts of interest caused by her dual roles as coexecutor and beneficiary of the

O’Brien Estates. He criticized plaintiffs’ litigation strategy, particularly for failing

to develop a coherent strategy for valuing the assets prior to engaging in settlement

negotiations and for advising Maureen to resign as coexecutor of the O’Brien

Estates.

¶ 28 After hearing all the testimony and taking the case under advisement, the circuit

court entered a 15-page judgment in which it outlined its findings of fact and

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conclusions of law, as follows.

¶ 29 3. Circuit Court’s Findings of Fact and

Conclusions of Law

¶ 30 In July 2015, defendants approached plaintiff Schlegel, who specializes in civil

litigation, seeking legal counsel to monetize their interests in the O’Brien Estates

and related entities. At that meeting, defendant Maureen provided Schlegel with a

large bag of documents and later provided him with additional documents. During

this time, Schlegel reviewed thousands of documents provided by Maureen and

examined court files in order to understand the relationships of the parties and the

disputes. Due to the complexity of the issues, Schlegel told defendants he would

not accept the case unless plaintiff Levenfeld, an estates and trusts attorney, would

agree to work on the matter with him, to which defendants agreed.

¶ 31 Prior to plaintiffs accepting the assignment, plaintiffs understood the total net

value of the assets of the O’Brien Estates and related entities to be between $40

million and $80 million. The assets were valued at $52 million for tax purposes.

This valuation was performed by defendant Maureen, who is a real estate broker.

At the time they sought plaintiffs’ representation, defendants did not have the

ability to pay ongoing legal fees and had substantial debt. On October 29, 2015,

plaintiffs and defendants entered into the attorney-client agreement.

¶ 32 During their time representing defendants, both plaintiffs were responsible for

handling defendants’ legal matters over multiple pieces of litigation, including

actions in the circuit court of Cook County, in the United States District Court for

the Northern District of Illinois, in the Illinois Appellate Court, First District, and

in Barrien County, Michigan. Plaintiffs represented defendants in their capacity as

plaintiffs and also as defendants in what had been characterized as retaliatory

litigation, which was initiated by the coexecutor of the O’Brien Estates. Plaintiffs

developed and implemented a strategy that included having defendant Maureen

resign as coexecutor, actions to remove the remaining executors, petitions to

convert the O’Brien Estates from independent administration to supervised

administration, actions seeking to partition the O’Brien Estates’ assets for

distribution, and a petition to recover assets against the son of an executor, who

allegedly received assets belonging to the O’Brien Estates without entitlement.

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¶ 33 Plaintiffs were successful in having defendant Maureen resign as coexecutor

and in terminating the administration of the O’Brien Estates, thereby turning them

into supervised administrations. The circuit court of Cook County denied plaintiffs’

petition to remove the executors of the O’Brien Estates, which was affirmed on

appeal. Significant motion practice and exchange of discovery ensued in the

partition actions, and ultimately, some or all of the claims were dismissed. The

petition to recover assets from the executor’s son was still pending when defendants

terminated plaintiffs’ representation.

¶ 34 At the time of plaintiffs’ engagement, defendants had never received a

settlement offer from the O’Brien Estates and related entities. Shortly after the

engagement, defendant Daniel III received two offers of between $5 and $6 million,

which he rejected. Daniel III testified that, at an unspecified time, plaintiffs made a

demand of $40 million on behalf of defendants. In September 2016, defendants

received an offer totaling $13.3 million, which they rejected. On April 5, 2017,

plaintiffs issued a demand on behalf of defendants for $18.3 million. The O’Brien

Estates responded on April 11, 2017, with a “final” counteroffer of $15.44 million

and requested a response by the close of business on April 14, 2017. Defendants

did not accept the offer, but on April 17, 2017, plaintiffs sent a demand on behalf

of defendants totaling $17,106,662 that included a provision allowing defendant

Maureen to purchase the home in which she resided, for which the title was held by

one of the trusts established by the O’Brien Estates.

¶ 35 On May 1, 2017, the O’Brien Estates responded with an offer totaling $16.25

million, with no provision that Maureen could keep the home. On May 8, 2017,

plaintiffs provided defendants with their recommended demand totaling $16.75

million. However, defendants did not authorize plaintiffs to issue the proposed

demand, and when they did not receive a response to their May 1, 2018, offer by

May 10, 2018, the O’Brien Estates withdrew all offers. On May 25, 2018, in an e-

mail from defendants’ new attorneys, defendants advised plaintiffs that their

representation was terminated. On July 21, 2017, defendants accepted $16.85

million in settlement from the O’Brien Estates. Defendants agreed to pay their new

attorneys a flat fee of $500,000 to settle the case.

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¶ 36 The circuit court found that plaintiffs had proven all the elements of a quantum

meruit claim, which are summarized as follows. 2 Although the attorney-client

agreement was not effective after it was terminated by defendants, its very existence

proves that plaintiffs intended to perform legal services nongratuitously.

Defendants accepted those services and authorized plaintiffs to act on their behalf

in multiple pieces of litigation and during settlement negotiations with attorneys for

the O’Brien Estates.

¶ 37 The circuit court concluded that plaintiffs proved they conferred a benefit on

defendants in their rendition of legal services on defendants’ behalf based on the

amount and quality of the work performed, as set forth above. While certain of

plaintiffs’ litigation tactics failed, when defendants retained plaintiffs, they were

receiving no benefit whatsoever from their combined 50% interest in the O’Brien

Estates’ assets. Over the next 19 months, plaintiffs obtained progressively larger

settlement offers, and 3 weeks before they were terminated, on May 1, 2017, the

O’Brien Estates offered to settle for $16.85 million.

¶ 38 The circuit court found defendants’ argument that plaintiffs had harmed

defendants by not retaining a professional to perform a valuation of the assets was

purely speculative, as they had presented no evidence to show that the settlement

was significantly below the fair market value of their interests. Because defendants

ultimately accepted a settlement less than two months after plaintiffs were

terminated, the circuit court found the settlement was based in significant part on

the pressure plaintiffs brought to bear on the O’Brien Estates through their litigation

efforts. Thus, the circuit court concluded that plaintiffs were entitled to recovery in

quantum meruit.

¶ 39 The circuit court next addressed defendants’ first affirmative defense, which

asserted that plaintiffs’ violation of Rule 1.5(e) of the Rules of Professional

Conduct (Ill. R. Prof’l Conduct (2010) R. 1.5(e) (eff. Jan. 1, 2010)) requires that

plaintiffs are barred from recovery in quantum meruit. The court noted that it

previously rejected this argument when it denied defendants’ motion for summary

2

A party seeking recovery on a quantum meruit theory must demonstrate the performance of

services by the party, the conferral of the benefit of those services on the party from whom recovery

is sought, and the unjustness of the latter party’s retention of the benefit in the absence of any

compensation. First National Bank of Springfield v. Malpractice Research, Inc., 179 Ill. 2d 353,

365 (1997).

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judgment on December 9, 2019, finding that a technical violation of an Illinois Rule

of Professional Conduct did not bar recovery as a matter of law. Rather, the circuit

court had ruled it would consider the egregiousness of the violation and any

resulting prejudice to defendants or the administration of justice in determining

whether the violation would bar quantum meruit recovery under the circumstances.

¶ 40 The circuit court found that, despite the foregoing, defendants failed to present

any evidence at trial tending to show that the violation was egregious or prejudicial

to them or the administration of justice. Plaintiffs, on the other hand, elicited

testimony from defendants showing that they understood they were being

represented by lawyers at two different firms and both lawyers would be

responsible for handling their legal matters. They understood that Schlegel would

not accept their case unless Levenfeld agreed to jointly represent them. Each

defendant communicated with each plaintiff regarding the matters undertaken by

plaintiffs. The circuit court found it important that both defendants testified they

understood both attorneys would be compensated and that it did not particularly

matter to them how the fees were being shared.

¶ 41 Moreover, although the attorney-client agreement was terminated by

defendants, it was admitted into evidence at trial and demonstrated the relationship

between the parties. Specifically, it was signed by both defendants and clearly

identifies that both plaintiffs would render legal services to both defendants and

that plaintiffs would be jointly and severally compensated by defendants.

Accordingly, the circuit court found defendants failed to meet their burden to

demonstrate that plaintiffs’ violation of Rule 1.5(e) was sufficiently egregious or

prejudicial to the administration of justice and thus precluded quantum meruit

recovery.

¶ 42 After the circuit court disposed of the remainder of defendants’ affirmative

defenses, which are not relevant to this appeal, it turned to the task of determining

the reasonable value of plaintiffs’ services. In so doing, it began with an analysis

of the factors relevant to an attorney fee award in quantum meruit as applied to the

evidence presented at trial. 3 The circuit court found plaintiffs are highly qualified

3

In awarding legal fees on the basis of quantum meruit, courts consider (1) the attorney’s skill

and standing, (2) the time and labor required, (3) the nature of the cause and the difficulty of the

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and skilled attorneys who have each been in practice and in good standing with the

Illinois bar for more than 40 years. Schlegel’s practice focuses on litigation, while

Levenfeld’s practice focuses on estate and financial planning. It noted that

plaintiffs’ time records reflect plaintiffs, as well as their staff and a volunteer helper,

spent in excess of 3000 hours working on defendants’ behalf over approximately

19 months. The matters involved were complex and required expertise in federal

and state court litigation as well as estate and trust expertise, which is why Schlegel

required defendants to agree to Levenfeld’s joint representation prior to entering

into the attorney-client relationship.

¶ 43 Plaintiffs were responsible for all the underlying legal matters until the date of

their termination, although they aptly hired local counsel to represent defendants in

Michigan. Schlegel testified that his usual and customary rate for complex litigation

matters at that time was $450 to $600 per hour, and he charged $250 per hour for

associates and $85 per hour for paralegals and paraprofessionals. Levenfeld did not

testify as to his normal hourly rate. Again, the circuit court determined that, as a

direct result of plaintiffs’ work, defendants received all, or nearly all, the leverage

needed to consummate a $16.85 million settlement.

¶ 44 In calculating the amount of the fee, the circuit court noted that, although the

attorney-client agreement was unenforceable due to defendants’ termination notice,

and despite the violation of Rule 1.5(e), the contingency fee structure contained

therein could serve as a basis for calculating the amount of the award. The circuit

court reasoned that the contingency fee term in the attorney-client agreement

constitutes evidence of the parties’ own views as to what was fair and reasonable.

In addition, the circuit court gave the contingency fee term weight because it was

accurately based on the circumstances of the representation. Specifically, plaintiffs

incurred a great deal of risk by not charging defendants, who received the benefit

of legal representation without the obligation to pay legal fees until the

representation was concluded. The circuit court recognized defendants’ argument

that the amount should be zero because plaintiffs actually harmed defendants during

issues involved, including the amount of money at issue, (4) the novelty and difficulty of the subject

matter, (5) the attorney’s degree of responsibility in managing the case, (6) the usual and customary

charge for that type of work in the community, and (7) the benefits resulting to the client. In re

Estate of Callahan, 144 Ill. 2d 32, 44 (1991).

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their representation but rejected it outright based on its analysis of the benefit

conferred upon defendants as outlined above.

¶ 45 Noting that defendants did not set forth an alternative method of calculating

fees under a quantum meruit theory, the circuit court agreed with plaintiffs’

calculation. The circuit court found the settlement was reached shortly after

plaintiffs’ representation of defendants terminated and could be substantially

attributed to plaintiffs’ efforts. Thus, citing cases from the First, Second, and Third

Districts, the circuit court concluded that a calculation of fees based on the

contingency term of the attorney-client agreement would result in the reasonable

value of their services and thus an appropriate quantum meruit award. See Will v.

Northwestern University, 378 Ill. App. 3d 280 (1st Dist. 2007); Wegner v. Arnold,

305 Ill. App. 3d 689 (2d Dist. 1999); In re Estate of Kelso, 2018 IL App (3d)

170161.

¶ 46 Based on the contingency fee in the attorney-client agreement, as applied to the

amount of defendants’ settlement, the circuit court found that the reasonable value

of plaintiffs’ legal services to defendants is $2,185,000, which is 15% of $10

million plus 10% of $6.85 million. The circuit court then deducted the amount of

$500,000, which was the flat fee paid to the subsequent attorneys for the work they

performed. The circuit court then added the amount of $7390.60, which the parties

stipulated plaintiffs had incurred in expenses during the representation, resulting in

a judgment in favor of plaintiffs in the amount of $1,692,390.60. 4

¶ 47 E. Appellate Proceedings

¶ 48 The appellate court reversed the circuit court’s determination that the amount

of the contingency fee was a reasonable fee for plaintiffs’ services but affirmed the

circuit court’s finding that plaintiffs are entitled to recover from defendants in

quantum meruit. 2023 IL App (1st) 211638, ¶ 4. After setting forth the evidence

presented at the bench trial in detail, the appellate court found that, as a matter of

law, the attorney-client agreement was unenforceable due to the plaintiffs’ violation

of Rule 1.5(e) (Ill. R. Prof’l Conduct (2010) R. 1.5(e) (eff. Jan. 1, 2010)) but that

4

The circuit court did not enter an attorney’s lien but only a money judgment.

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the violation, under the circumstances presented, did not preclude recovery under a

theory of quantum meruit. 2023 IL App (1st) 211638, ¶ 38.

¶ 49 In examining the circuit court’s determination of the amount of the award, the

appellate court found that the circuit court erroneously based its calculation of the

reasonable value of plaintiffs’ services on the contingency structure set forth in the

attorney-client agreement. Citing a case from the First District as well as a

California case, the appellate court found that the attorney-client agreement is void

as against public policy due to the Rule 1.5(e) violation. Id. ¶¶ 40-45 (citing Donald

W. Fohrman & Associates, Ltd. v. Marc D. Alberts, P.C., 2014 IL App (1st)

123351, and Chambers v. Kay, 56 P.3d 645 (Cal. 2002)). The appellate court found

that using the contingency fee structure in a void contract would allow plaintiffs to

skirt the requirements of Rule 1.5(e), while indirectly enforcing an unlawful fee

agreement, leading to an unjust and absurd result and rendering the rule

superfluous. Id. ¶ 44.

¶ 50 The appellate court subsequently addressed defendants’ arguments that the

evidence was insufficient to prove the benefit element of quantum meruit. Id. ¶¶ 47-

51. Outlining the evidence of plaintiffs’ litigation strategy, the evolution of

settlement negotiations, and the timing of the settlement following plaintiffs’

termination, the appellate court upheld this part of the circuit court’s judgment, thus

remanding to the circuit court for a redetermination of the amount of the award. Id.

¶¶ 51-52. We allowed plaintiffs’ petition for leave to appeal, and defendants

subsequently cross-appealed. See Ill. S. Ct. R. 315 (eff. Oct. 1, 2021).

¶ 51 ANALYSIS

¶ 52 A. Quantum Meruit Recovery for Legal Services

¶ 53 To resolve both the appeal and the cross-appeal, we must first determine

whether the courts below erred when they determined that plaintiffs are entitled to

recover the reasonable value of their legal services to defendant in quantum meruit.

According to the attorney-client agreement, any party could terminate the

representation upon reasonable advance notice, but this does not discharge the

client’s agreement to pay for services rendered. This termination clause was

superfluous, however, because under Illinois law, a client may discharge his

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attorney at any time, with or without cause. Rhoades v. Norfolk & Western Ry. Co.,

78 Ill. 2d 217, 227-28 (1979). In the event a client terminates an attorney without

cause, the attorney is entitled to reasonable fees for the services rendered on the

basis of quantum meruit. Id. at 230.

¶ 54 B. Whether Plaintiffs’ Services Benefited Defendants

¶ 55 Defendants argue that the circuit court erred in its determination that plaintiffs’

legal services conferred a benefit on them, thus negating an essential element of

their quantum meruit claim. See First National Bank of Springfield v. Malpractice

Research, Inc., 179 Ill. 2d 353, 365 (1997) (a party seeking recovery on a quantum

meruit theory must demonstrate the performance of services by the party, the

conferral of the benefit of those services on the party from whom recovery is

sought, and the unjustness of the latter party’s retention of the benefit in the absence

of any compensation). However, in holding that the termination of an attorney’s

services without cause creates liability in quantum meruit for the reasonable value

of the services rendered, this court necessarily found that, in such a scenario, the

elements of such quantum meruit are established as a matter of law. See Rhoades,

78 Ill. 2d at 227-28; see also In re Estate of Callahan, 144 Ill. 2d 32, 40 (1991)

(attorney discharged without cause entitled to recover in quantum meruit regardless

of the outcome of the litigation, even where attorney was hired pursuant to

contingency agreement).

¶ 56 Assuming plaintiffs were required to specifically prove that their representation

conferred a benefit on defendants, the standard of review is deferential to the circuit

court’s findings of fact following a bench trial, and we will not disturb them unless

they are against the manifest weight of the evidence. Reliable Fire Equipment Co.

v. Arredondo, 2011 IL 111871, ¶ 12. “ ‘A finding is against the manifest weight of

the evidence where “the opposite conclusion is clearly evident or if the finding itself

is unreasonable, arbitrary, or not based on the evidence presented.” ’ ” People v.

Chatman, 2024 IL 129133, ¶ 34 (quoting People v. Peterson, 2017 IL 120331, ¶ 39,

quoting People v. Deleon, 227 Ill. 2d 322, 332 (2008)). Here, the circuit court

outlined its findings of fact with regard to the benefit plaintiffs conferred on

defendants, finding that the extensive litigation plaintiffs conducted provided

nearly all the leverage that consummated defendants’ settlement with the O’Brien

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Estates. That evidence is outlined above, and this court finds that it is sufficient to

sustain the circuit court’s findings.

¶ 57 C. Amount of Award

¶ 58 1. Use of Contingency Fee to Calculate

Quantum Meruit Award

¶ 59 Having found that the courts below did not err in holding that plaintiffs are

entitled to recover from defendants in quantum meruit, we turn to the issue of

whether the circuit court erred in its determination of the amount of the award.

“Quantum meruit is an equitable remedy [citation], which allows the circuit court

to use its broad discretion in arriving at what it determines to be the reasonable

value of the discharged attorney’s services.” Seiden Law Group, P.C. v. Segal, 2021

IL App (1st) 200877, ¶ 29. While plaintiffs may not be required to provide a line-

by-line detailing of all their efforts, they must provide some evidence that is

sufficiently specific to prove the reasonable value of the benefit defendants

received. Bernstein & Grazian, P.C. v. Grazian & Volpe, P.C., 402 Ill. App. 3d

961, 979 (2010). If plaintiffs fail to present such evidence, the award will be deemed

to be against the manifest weight of the evidence. Id.

¶ 60 Here, plaintiffs presented detailed time records regarding the extensive work

they and their respective staff dedicated to the various lawsuits involved. In

addition, they presented the attorney-client agreement, which included the

contingency fee structure that had been agreed to by the parties. Importantly,

plaintiffs did not present the attorney-client agreement in order to enforce the fee

structure as a term of contract. Rather, they introduced it as evidence of what the

parties believed would be a reasonable method of calculating the value of the

services rendered in the event that defendants recovered as a result of their

representation. “In cases in which an attorney who has done much work is fired

immediately before settlement is reached, the factors involved in determining a

reasonable fee would justify a finding that the entire contract fee is the reasonable

value of services rendered.” Wegner, 305 Ill. App. 3d at 693 (citing Rhoades, 78

Ill. 2d at 230). Here, plaintiffs’ expert testified that the contingency structure was

reasonable and that the resulting fee represented the value of the services that

plaintiffs provided defendants.

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¶ 61 The circuit court made specific findings as to each factor necessary to the

determination of the amount of attorney fees to be awarded in quantum meruit. See

In re Estate of Callahan, 144 Ill. 2d at 44 (factors to be considered are (1) the

attorney’s skill and standing, (2) the time and labor required, (3) the nature of the

cause and the difficulty of the issues involved, including the amount of money at

issue, (4) the novelty and difficulty of the subject matter, (5) the attorney’s degree

of responsibility in managing the case, (6) the usual and customary charge for that

type of work in the community, and (7) the benefits resulting to the client). In

consideration of these factors and in reliance on Roades and Wegner and the expert

testimony, the circuit court determined that a reasonable attorney fee for the work

plaintiffs performed is equal to the contingency fee the parties had agreed to at the

outset of the representation. See DeLapaz v. Selectbuild Construction, Inc., 394 Ill.

App. 3d 969, 975-76 (2009) (after considering the necessary factors, the circuit

court exercised appropriate discretion in awarding a discharged firm a contingent

fee in quantum meruit where the firm performed much of the work and settlement

of the case occurred shortly after discharge). Thus, based on the evidence presented,

we cannot say that the opposite conclusion from that reached by the circuit court is

clearly evident. See Bernstein & Grazian, P.C., 402 Ill. App. 3d at 979. Yet the

appellate court reversed that part of the judgment, and we must evaluate its

reasoning for so doing.

¶ 62 2. Validity of Attorney-Client Agreement Ab Initio

¶ 63 While the appellate court recognized the general rule that it is an appropriate

use of a circuit court’s discretion to award fees in quantum meruit as reflected by

the contingency fee structure in a terminated attorney-client agreement in certain

circumstances, it reversed the award on the basis that the attorney-client agreement

is void ab initio as against public policy due to plaintiffs’ failure to enter into a

contemporaneous fee-splitting agreement pursuant to Rule 1.5(e). Ill. R. Prof’l

Conduct (2010) R. 1.5(e) (eff. Jan. 1, 2010). 2023 IL App (1st) 211638 ¶ 44.

Because the appellate court found the attorney-client agreement was void ab initio,

it concluded the circuit court erred in calculating the quantum meruit award on the

basis of the contingency fee set forth therein. Id. ¶ 45. We consider the issue of

whether a contract is void using a de novo standard of review. In re Estate of

Feinberg, 235 Ill. 2d 256, 263 (2009).

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¶ 64 We begin our review of the appellate court’s ruling by noting the general

principles applicable to a declaration that a private contract is void based on public

policy. This court has explained:

“Just as public policy demands adherence to statutory requirements, it is in the

public’s interest that persons not be unnecessarily restricted in their freedom to

make their own contracts. The power to declare a private contract void as

against public policy is therefore exercised sparingly. [Citation.] An agreement

will not be invalidated on public policy grounds unless it is clearly contrary to

what the constitution, the statutes or the decisions of the courts have declared

to be the public policy or unless it is manifestly injurious to the public welfare.

Whether an agreement is contrary to public policy depends on the particular

facts and circumstances of the case. [Citation.]” Progressive Universal

Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co., 215 Ill. 2d 121,

130 (2005).

¶ 65 When determining whether an attorney is entitled to recover for its services in

quantum meruit, Illinois courts recognize a distinction between an attorney-client

agreement that is unenforceable because it contains an illegal term or fails to

include a legally required term, on the one hand, and one that is void as against

public policy because the subject of the agreement is prohibited by law, on the

other. See Much Shelist Freed Denenberg & Ament, P.C. v. Lison, 297 Ill. App. 3d

375, 380-82 (1998) (distinguishing cases where the attorneys involved violated

statutes or rules associated with attorney fees or the attorney-client relationship

from those in which the attorneys were prohibited from entering into the agreement

itself). In the case of the latter, where the contract itself is considered illegal, the

courts will aid neither party but will leave them where they have placed themselves

so that neither party can recover anything under the contract, nor in quantum meruit.

See, e.g., Leoris v. Dicks, 150 Ill. App. 3d 350, 353 (1986) (fee-splitting agreement

violated public policy because referring lawyer was prohibited from receiving a

percentage-based fee that is not based upon the sharing of services or

responsibilities and thus referring attorney could not recover in law or equity from

former firm under agreement); see also Licciardi v. Collins, 180 Ill. App. 3d 1051,

1061-63 (1989) (attorney-client agreement violated public policy because

contingency fee was prohibited in domestic relations cases and thus attorney could

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not recover in law or equity from client where attorney-client relationship was

based on the agreement).

¶ 66 In contrast, where the attorney-client agreement itself is not illegal but some

aspect of the agreement violates a rule or statute, whether quantum meruit recovery

is barred depends on the egregiousness of the conduct involved in light of the

particular facts and circumstances. See Much Shelist Freed Denenberg & Ament,

P.C., 297 Ill. App. 3d at 381-82 (summarizing such cases); see also Seiden Law

Group, P.C., 2021 IL App (1st) 200877, ¶ 27 (summarizing cases allowing

quantum meruit recovery by attorneys even though their conduct violated ethical

rules because the underlying agreements did not violate public policy and the rule

violations were not sufficiently serious to bar such recovery).

¶ 67 This distinction, between a contract that is illegal versus one that is

unenforceable due to some illegality in its manner of execution (see The Carlton at

the Lake, Inc. v. Barber, 401 Ill. App. 3d 528, 535 (2010)), also impacts the standard

of review. The determination of whether a contract is void ab initio as violative of

public policy, thus precluding recovery under the contract or in quantum meruit, is

reviewed de novo. 1550 MP Road LLC v. Teamsters Local Union No. 700, 2019 IL

123046, ¶ 24. In contrast, if the subject of the contract itself is not void as against

public policy, but plaintiffs violated a rule or statute in the manner of its formation

or execution, the circuit court has broad discretion to determine whether recovery

in quantum meruit is precluded depending on the egregiousness of the particular

conduct involved. See Much Shelist Freed Denenberg & Ament, P.C., 297 Ill. App.

3d at 381-82. If the reviewing court finds that recovery in quantum meruit is not

precluded, the amount of the award is reviewed based on the manifest weight of the

evidence. See Wildman, Harrold, Allen, & Dixon v. Gaylord, 317 Ill. App. 3d 590,

598 (2000) (in determining the reasonableness of attorney fees after a bench trial,

the sole question on review is whether the trial court’s judgment for attorney fees

and costs was against the manifest weight of the evidence).

¶ 68 Based on a de novo review of the attorney-client agreement, we find that, on its

face, the agreement contains no provision that is contrary to public policy. It was

entered into jointly by all parties. Defendants do not argue that the contingency fee

structure set forth in the attorney-client agreement is excessive or the fee or type of

representation is prohibited by law. If this were the case, recovery under a theory

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of quantum meruit would be barred altogether, and there would be no reason to

consider any evidence of the value of the services rendered. See, e.g., First National

Bank of Springfield, 179 Ill. 2d at 359-64 (contract providing contingency fee to

expert witnesses was void as against public policy, and thus payment for work

performed in furtherance thereof is prohibited in quantum meruit).

¶ 69 While the appellate court found no illegal term or subject on the face of the

attorney-client agreement, it held that the absence of a concurrent fee-splitting

agreement between plaintiffs, with simultaneous written disclosure by plaintiffs of

the terms of that agreement to defendants and their assent thereto, as required by

Rule 1.5(e) (Ill. R. Prof’l Conduct (2010) R. 1.5(e) (eff. Jan. 1, 2010)), rendered the

attorney-client agreement void as against public policy. 5 See 2023 IL App (1st)

211638 ¶ 44. In order to review the appellate court’s decision to render the attorney-

client agreement void ab initio because there was no fee-splitting agreement that

complied with Rule 1.5(e), we turn to the language and history of the rule.

¶ 70 3. Rule 1.5(e) of the Rules of

Professional Conduct (2010)

¶ 71 This court extensively discussed Rule 1.5(e) in Ferris, Thompson & Zweig, Ltd.

v. Esposito, 2017 IL 121297:

“Rule 1.5(e) is one of five subsections of Rule 1.5, the portion of the Rules

of Professional Conduct governing fees attorneys may charge their clients.

[Citation.] Subsection (a) of Rule 1.5 requires fees and expenses to be

reasonable and sets out the factors to be considered in determining the

5

We reject defendants’ characterization of the attorney-client agreement itself as a fee-splitting

agreement. The fact that both plaintiffs and their respective firms are named as “attorneys” in the

agreement may give rise to an inference that they will divide the fee, but the attorney-client

agreement serves a separate purpose, which is to set forth the terms of the attorney-client

relationship. As explained further below, while there are requirements for agreements to divide fees

between lawyers of different firms, there is no requirement that such agreements be set forth in an

attorney-client agreement between the attorneys and the client. To hold otherwise would penalize

plaintiffs for disclosing their joint representation to the clients in the attorney-client agreement,

because in cases where the joint representation is not disclosed but is carried out in secret, courts

have invalidated the fee-splitting agreement but not the underlying attorney-client agreement. See,

e.g., Bennett v. GlaxoSmithKline LLC, 2020 IL App (5th) 180281, ¶ 77 (because fee sharing

agreement violated Rule 1.5, all fees reverted to attorney named in attorney-client agreement).

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reasonableness of a fee. [Citation.] Subsection (b) addresses the obligation of

attorneys to communicate to their clients the scope of the representation, the

basis or rate of the fee and expenses for which the client is responsible, and any

subsequent changes in the basis or rate of the fees and expenses. [Citation.]

Subsection (c) authorizes contingent fees, except in certain circumstances, and

lays out the procedures that must be followed when an attorney charges a client

on a contingent fee basis. [Citation.] Subsection (d)(2) specifies when

contingent fees are not permitted. [Citation.] Subsection (e), the provision at

issue in this case, addresses the division of fees between lawyers who are not in

the same firm. [Citation.]

The language of Rule 1.5(e) is simple and straightforward. It provides:

‘(e) A division of a fee between lawyers who are not in the same firm

may be made only if:

(1) the division is in proportion to the services performed by each

lawyer, or if the primary service performed by one lawyer is the referral

of the client to another lawyer and each lawyer assumes joint financial

responsibility for the representation;

(2) the client agrees to the arrangement, including the share each

lawyer will receive, and the agreement is confirmed in writing; and

(3) the total fee is reasonable.’ ” Id. ¶¶ 23-24 (quoting Ill. R. Prof’l

Conduct (2010) R. 1.5(e) (eff. Jan. 1, 2010)).

¶ 72 This court discussed the history and purpose of Rule 1.5(e) in Esposito:

“For much of its history, Illinois prohibited the sharing of fees between

lawyers who were not in the same firm where the only service provided by one

attorney was the referral of a client to the other. [Citation.] That changed when

this court adopted the Illinois Code of Professional Responsibility (Ill. S. Ct.

Code of Prof’l Resp. R. 1-101 et seq. (eff. July 1, 1980)) in 1980. [Citation.]

Section 2-107 of the Code of Professional Responsibility removed the outright

prohibition against fee sharing based solely on a client referral but made fee-

sharing arrangements in such cases permissible only if they satisfied various

safeguards designed to protect the client. [Citation.] ***

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***

In 1990, this court repealed the Illinois Code of Professional Responsibility

and adopted the Illinois Rules of Professional Conduct (Ill. R. Prof’l Conduct

R. 1.5 (eff. Aug. 1, 1990)) in its place. The Rules of Professional Conduct

combined fee-related issues into a single rule, as do the 2010 Rules under

examination in this case. The new rule, designated as Rule 1.5, included

successor provisions to Rule 2-107 of the Illinois Rules of Professional

Conduct. As with Rule 2-107, Rule 1.5 permitted fee sharing between lawyers

who are not in the same firm, but only under specified conditions.

***

As with Rule 2-107(a) of the Illinois Code of Professional Responsibility,

Rule 1.5 of the Illinois Rules of Professional Conduct required written client

consent to fee-sharing agreements. ***

When this court repealed the Illinois Rules of Professional Conduct in 2010

and replaced them with the Illinois Rules of Professional Conduct of 2010,

which remain in effect today, it again continued to permit division of fees

between lawyers who are not in the same firm provided that certain conditions

are met. The applicable conditions, however, have been reduced to three. First,

the division must be in proportion to the services each attorney actually

rendered or, in cases where the primary service provided by one lawyer was the

referral of the client to another lawyer, both lawyers must assume joint financial

responsibility for the representation as a whole. [Citation.] Second, the client

must agree in writing to the arrangement, including the share each attorney is

to receive. [Citation.] Third, the total fee charged to the client must be

‘reasonable’ [citation], a determination governed by factors set out in

subsection (a) of Rule 1.5 [citation].” Id. ¶¶ 26-32.

¶ 73 Noting that Rule 1.5’s subdivisions constitute three separate conditions that

must be satisfied in order for a fee-sharing agreement to be enforceable (id. ¶ 35),

this court explained that “Rule 1.5 and its predecessor provisions have required

disclosure of fee-sharing arrangements in order to preserve a client’s right to be

represented by an attorney of his or her choosing” (id. ¶ 38). Here, defendants admit

they were aware that plaintiffs would jointly represent them and that both would be

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fully responsible for their case. In fact, both plaintiffs and their respective firms

were named in the attorney-client agreement. Importantly, while the existence of a

fee-splitting agreement, including how the fees were to be divided, is required to

be disclosed to and assented by the client in writing, nothing in Rule 1.5(e) requires

that these provisions be included in the attorney-client agreement itself. In addition,

while Rule 1.5(e) indicates that failure to abide by these requirements renders a fee-

splitting agreement unenforceable, it does not indicate that any related attorney-

client agreement is likewise unenforceable. Thus, the attorney-client agreement is

valid on its face. For these reasons, plaintiffs’ failure to enter into a fee-splitting

agreement in compliance with Rule 1.5(e) does not render the attorney-client

agreement void ab initio as violative of public policy but, rather, renders the

agreement unenforceable, making quantum meruit recovery a matter of the circuit

court’s discretion. See Much Shelist Freed Denenberg & Ament, P.C., 297 Ill. App.

3d at 381. As such, the appellate court’s stated reason for reversing the quantum

meruit award is incorrect. 6

¶ 74 We recognize there are appellate decisions, as well as the California decision

cited by the appellate court, that have held that a violation of Rule 1.5(e) renders

the offending fee-division agreement void as against public policy, foreclosing an

attorney’s ability to recover, at law or in equity, under that agreement. See Donald

W. Fohrman & Associates, Ltd., 2014 IL App (1st) 123351; see also Bennett v.

GlaxoSmithKline LLC, 2020 IL App (5th) 180281; Chambers, 56 P.2d 645. Our

decision in this case does not disturb this precedent, as the plaintiffs are not seeking

to enforce a contract between themselves and did not seek to have the circuit court

divide the money judgment it entered jointly in plaintiffs’ favor. Nor does this court

condone any violation of the Rules of Professional Conduct, which attorneys must

follow or face disciplinary action and risk forfeiture of related attorney fees, where

the equities require such forfeiture in the discretion of the circuit court. See

Anderson v. Anchor Organization for Health Maintenance, 274 Ill. App. 3d 1001,

6

As previously mentioned, the appellate court found that the plaintiffs could recover in quantum

meruit because defendants did not argue they were barred from such recovery. 2023 IL App (1st)

211638, ¶ 39. However, it reversed the amount of the award on the basis that the attorney-client

agreement is void as against public policy. Id. ¶ 44 However, if the attorney-client agreement were

void as against public policy, plaintiffs would be barred from any quantum meruit recovery. See,

e.g., Leoris, 150 Ill. App. 3d at 353.

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1007 (1995). We simply conclude that the attorney-client agreement at issue, on its

face, does not violate public policy, and the appellate court erred in so holding.

¶ 75 Because the attorney-client agreement was not void ab initio, the standard of

review as to the amount of the award is deferential to the circuit court’s judgment

and is not to be disturbed unless it is against the manifest weight of the evidence.

See Wildman, Harrold, Allen & Dixon, 317 Ill. App. 3d at 598. Thus, whether this

court would have awarded an amount in line with the contingency fee structure in

the attorney-client agreement is of no import if, based on the record before it, the

circuit court could have reasonably made the award. We find the record supports

the value determination based on the testimony of the parties as well as the expert

testimony. Thus, we affirm the circuit court’s determination as to the amount of the

award.

¶ 76 CONCLUSION

¶ 77 For the foregoing reasons, we find that, under the circumstances presented,

plaintiffs’ failure to memorialize a fee division agreement between them and to

obtain defendants’ written consent thereto, as required by Rule 1.5(e) of the Rules

of Professional Conduct (Ill. R. Prof’l Conduct (2010) R. 1.5(e) (eff. Jan. 1, 2010)),

does not preclude plaintiffs from recovering the reasonable value of their services

from defendants in quantum meruit. In addition, we find that, based on the evidence

presented, the amount of the award is not against the manifest weight of the

evidence. Accordingly, we affirm that part of the appellate court judgment that

found plaintiffs were entitled to recover from defendants in quantum meruit but

reverse that part of the appellate judgment that reversed the amount of the award

and remanded for a recalculation thereof. For the same reasons, we deny the relief

defendants request in their cross-appeal and affirm the judgment of the circuit court.

¶ 78 Appellate court judgment affirmed in part and reversed in part.

¶ 79 Circuit court judgment affirmed.

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