The recent decision in Chong v. Mardirossian Akaragian LLP, B341157 (Cal. Ct. App. Jan. 8, 2026) takes up the issue of how to determine contingency fee arrangements when an attorney is fired before the end of a case. This case concerns a settlement agreement negotiated by the attorney but unratified by the client until after the termination of the attorney-client relationship. The precedent established by the case of Fracasse v. Brent (1972) 6 Cal.3d 784 governs attorney fee disputes when a client terminates before the conclusion of a case, but the court offered additional clarification in its recent decision. Collectively, Fracasse and Chong protect attorneys from clients seeking to terminate counsel to avoid payment of a contingency fee.

The Fracasse Precedent

In Fracasse, attorney George Fracasse had a contingency fee agreement with his client Ray Raka Brent to handle a personal injury case. The agreement provided for a 33% fee if settled early, or 40% if resolved later through settlement or judgment. Before any recovery was obtained, Brent discharged Fracasse and retained new counsel. In response, Fracasse sued, claiming he was entitled to the full contingency fee percentage of the recovery. The California Supreme Court rejected this argument, holding that a client retains the right to fire their attorney at any time and an attorney discharged, whether with cause or without, is not entitled to the contingency fee as outlined in the original retainer agreement. Instead, the attorney is entitled to the reasonable value of the services rendered up to the point at which they were fired. The measure of this value was established as the quantum meruit basis.

In Fracasse, the court held that allowing full contingency fee recovery would hinder a client from exercising their right to discharge an attorney at any time. Clients must be free to change counsel without facing a disastrous financial consequence from doing so. The Fracasse decision states that, in the event “the discharge of an attorney occurs ‘on the courthouse steps,’ in an action in which the client executes a settlement obtained after much work by the attorney,” (Fracasse v. Brent, 6 Cal. 3d 784 at 789), the reasonable value is the “entire fee contracted for” (Id. at 789) in the contingency agreement. With this caveat, the quantum meruit basis allows for a payment of the value of the work performed instead of the ultimate recovery, and for fifty years, California attorney fee disputes have been determined on this basis.

The Ratification Exception

Chong presented a situation not provided for in Fracasse: what happens when the attorney negotiates a settlement without the authorization of a client, the client then fires the attorney, but the client accepts that “unauthorized” settlement after termination? In the underlying case, Christopher Chong suffered injuries in a freeway accident and retained the Mardirossian firm under a 40-45% contingency fee agreement. The retainer agreement allowed for Chong to discharge the attorney at any time, providing the firm would be in that case entitled only to the “reasonable value” of its services (i.e., the Fracasse quantum meruit measure). After several years of work, the case had changed significantly, and there were over $2 million in medical liens threatening the hoped-for recovery. After attempting to mediate, the firm negotiated a settlement for just over $6 million (the policy limit). The firm did not get the client’s authorization for this settlement.

Chong’s family learned of the settlement and brought in new counsel, who advised against proceeding with the settlement. Chong fired the Mardirossian firm. Under Fracasse, the firm would be limited to quantum meruit recovery. However, just before trial, the defendant filed to enforce the settlement agreement. The client’s new attorney advised that there would be no point in trying to argue over the agreement, and Chong signed the settlement agreement, feeling he had no choice.

The Mardirossian firm claimed its full contingency fee (the 45% of settlement plus costs), arguing that their former client’s acceptance of the settlement constituted a ratification that related back to the time immediately before Chong discharged the client. The client had, in this view, discharged the attorney “on the courthouse steps,” when most of the work had already taken place.

The Court of Appeal sided with the Mardirossian firm on this matter, though the court’s decision also makes some clarifications. Explaining that the attorney-client relationship is governed by agency law, the court argued a principal can ratify an agent’s unauthorized act by adopting it after the fact. When a ratification like this takes place, it relates back to the time of the original act. This ratification makes it as if the act had been authorized all along. This ratification must be truly voluntary, though, which means it cannot be adopted due to duress or misrepresentation.

Chong argued the ratification was not voluntary because on the eve of trial, he was “left with no choice” or “reasonable alternative” to approving the settlement. The court disagreed, finding no economic duress in the case because economic duress requires wrongful threats or coercion. The firm’s conduct did not constitute duress under these standards. Chong had legal remedies, including the option to rescind the unauthorized settlement and go to trial. Instead, Chong made the “business” decision to secure the settlement rather than risking trial. Additionally, the unauthorized settlement did not cause a loss that would need to be minimized. Instead, it conferred a multimillion-dollar gain. Finally, Chong was represented by new counsel and knew he could oppose the defendant’s motion to enforce the settlement and rescind it. He chose not to and therefore was not under duress.

Key Takeaways

Chong presents an exception to the rule established by Fracasse. For law firms, this includes the fact that ratification of a settlement agreement can restore contingency fees. If an attorney is discharged on the courtroom steps, if the client later ratifies a settlement negotiated by the original attorney, that attorney is possibly entitled to full contingency fees and not quantum meruit only. Attorneys dealing with similar situations must document the timeline and determining whether the settlement was negotiated before or after settlement, and the ratification must be voluntary.

Rescission Is an Option: If your former attorney negotiated a settlement without authorization, you have the legal right to rescind that settlement—don’t feel compelled to accept it just because the other side files a motion to enforce.

Chong v. Mardirossian refines our understanding of attorney fee recovery in complex termination scenarios. It confirms that Fracasse remains the general rule: discharged attorneys get quantum meruit, not contingency fees. But it creates a meaningful exception: when clients voluntarily ratify unauthorized settlements negotiated before discharge, the retroactive effect of ratification entitles the attorney to the contractual fee.

Litigators should obtain proper authorization before negotiating settlements, document their communications, and understand that clients retain significant power to rescind unauthorized agreements. Failure to do so might result in the loss of a contingent fee.

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