APPEAL from the Circuit Court of Cook County; the Hon. JOHN E.
PAVLIK, Judge, presiding.
MR. JUSTICE BURMAN DELIVERED THE OPINION OF THE COURT:
This is a citation proceeding brought by the Northern Trust Company of Chicago, executor of the estate of Joseph Barbera, deceased, against Earle E. Friedlander, the surviving partner of a law partnership, for an accounting. After a trial, judgment was entered in favor of the Northern Trust Company, as executor, and against Earle E. Friedlander, in the amount of $31,830,21, from which judgment the executor appeals.
The record reveals that in 1940, Joseph Barbera and Earle E. Friedlander entered into an oral agreement to practice law as partners under the name of Barbera & Friedlander. Their practice was limited to plaintiffs' personal injury and workmen's compensation cases. Joseph Barbera was the trial man, and Friedlander handled all of the workmen's compensation cases and the initial work on the personal injury matters. Generally, Barbera did not begin to work on a case until after the answer had been filed. The evidence showed that of the partnership cases pending at the time of Barbera's death, approximately 80-85% were brought in through Friedlander's connections.
In addition to the partnership cases, each partner, at the beginning of the partnership, had cases in which he was the sole attorney, but these cases gradually diminished in numbers. Although there was no written partnership agreement, the two men shared in the net profits after payment of all expenses on a 50-50 basis. During the year prior to Barbera's death, each partner drew $200 to $250 per week. Although Barbera tried no partnership cases in the two years before his death, he was paid up until the date of his death. All of the firm's fees on partnership cases were based on contingent fee contracts. Barbera and Friedlander did not maintain any time sheets or other records to show how much time was spent on any file.
In 1957, Barbera had a heart attack, and in 1964, he suffered from cancer. Barbera died on August 28, 1965.
In September, 1965, the Barbera estate was opened. On December 7, 1965, Friedlander filed a partnership inventory, including assets, liabilities and partnership equity. It showed Joseph Barbera's capital interest in the firm as $63,418.63. On July 10, 1967, a petition for citation was filed. A corrected inventory showed the capital interest of each partner as $57,153.40. On January 18, 1969, an order was entered giving the Executor leave to hire an outside accountant to work with the accountant employed by Barbera and Friedlander.
The executor contends (1) that the trial court erred in allowing a recovery of only $31,830.21 when the record shows that Friedlander collected $445,601.53 in fees from partnership and Barbera's personal cases and the adjusted accounting filed by Friedlander showed the amount due the Executor from the capital assets as $57,153.40; (2) that the court erred in refusing to hold that Friedlander, as a surviving partner, was a trustee for the Estate, and that the burden of proof was upon him as a fiduciary to account for all monies which he had received and to show performance of his trust; (3) that the court erred in granting compensation to Friedlander for winding up the affairs of the partnership, and (4) that the court erred in refusing to enter judgment against the respondent for costs and expenses.
Both the Barbera and Friedlander partnership cases and Barbera's personal cases were based on contingent fee contracts. Black's Law Dictionary defines a contingent claim as "one which has not accrued and which is dependent upon some future event that may never happen." In practical terms, contingent fee contracts give an attorney a pecuniary interest only in the event there is a successful prosecution of the litigation. Should there be no recovery, no fees are received and all costs and expenses incurred are lost. There is some question as to whether the Estate has a right to participate in proceeds from contingent fee contracts which were concluded after Barbera's death.
The record reveals that at the time of Barbera's death, his interest in the firm's capital assets was $57,153.40, and there were 741 partnership cases pending and undisposed. In approximately four years following Barbera's death, Friedlander collected $394,286.92 in fees and $47,699.52 in costs recovered on partnership cases. In addition, he collected $51,314.61 in fees and $6,291.90 in advances recovered on Barbera's personal cases. Petitioner contends that these figures alone demonstrate the inadequacy of the trial court's award. But these figures do not reflect allowance for additional costs advanced by Friedlander, the overhead costs of running a law office, salaries for employees and compensation to the surviving partner in winding up the partnership affairs. The breakdown of these figures, as allowed by the trial court, is as follows:
1. Overhead expenses, salaries and other expenses.
Percentage Allowance to allowed surviving Year Expenditure by Court partner
9/1/65 to 12/31/65 $ 39,669.28 95% $ 37,685.92 1966 112,572.45 90% 101,315.21 1967 125,719.39 85% 106,861.48 1968 100,257.12 80% 80,206.10 1969 47,919.20 75% 35,939.40 ___________ Total allowance for overhead, salaries and other expenses ................................................ $362,008.01
2. Reasonable compensation to Earle Friedlander for winding up the partnership affairs 4 1/3 years at $20,000 per annum ............................................... 86,666.67
3. Costs advanced by Friedlander on cases on appeal ........ 7,168.22 ___________ Total credits allowed to Friedlander ....................... $455,842.90
The total fees collected on the cases pending at Barbera's death were $445,601.53. Since the total credit allowed to Friedlander by the trial judge amounted to $455,842.90, there was a deficit of $10,241.37. After deducting certain advances which were outstanding at the time the adjusted inventory was filed, but subsequently lost, when cases were concluded without recovery, and after giving Friedlander credit for advances made after Barbera's death on partnership cases subsequently lost, the trial judge found that the total capital account was $81,639.44, of which Barbera's interest was one-half or $40,819.72. Taking ...