Severson & Werson v. Bolinger

Opinion

KING, J.

—In this case we hold that when a law firm quotes specific hourly rates for the services of named attorneys to a prospective client who then agrees in writing to pay the firm’s “regular hourly rates,” the law firm cannot raise the rates charged by the named attorneys without first notifying the client.

[1571]

Kenneth W. and Myra Sue Bolinger appeal from a judgment in favor of Severson & Werson (Severson), challenging both the amount of the judgment and the award of prejudgment interest, costs and attorney fees.

Between 1980 and 1984, Severson represented the Bolingers, their partners Robert and Darleen Smith, and Collection Computers, Inc., in litigation against Sperry Corporation under the terms of an August 28, 1980, fee agreement letter.

1

In January 1985, Severson sued its former clients for $138,584.97 in unpaid fees. The defendants requested nonbinding arbitration (Bus. & Prof. Code, § 6200 et seq.) which resulted in an award to Severson in the requested amount. The defendants rejected the award and requested a trial after arbitration (Bus. & Prof. Code, § 6204, subd. (b)).

Before; the trial began, the Smiths settled with Severson for $50,000. On November 6, 1989, after a bench trial, the court filed a tentative decision dated October 20 (Code Civ. Proc., § 632) awarding Severson “$138,584.97 as prayed (subject to stipulated reduction, credit or offset), together with interest and attorneys’ fees,” and ordering Severson’s counsel “to prepare, serve and submit to court a proposed statement of decision and judgment (Rule 232).”

On November 9, Collection Computers filed a notice of pending bankruptcy resulting in an automatic stay of proceedings against it (11 U.S.C. § 362 (a)(1)) as of September 12. On November 21, the Bolingers and Collection Computers filed a detailed request for statement of decision (Code Civ. Proc., § 632). On December 1, Severson served its proposed statement of decision and judgment, and a memorandum of costs. The trial court signed the statement of decision and judgment on December 9. On December 14, the Bolingers filed a notice of pending bankruptcy resulting in an automatic stay of proceedings against them as of December 11. On December 18, the trial court filed its statement of decision and judgment.