Clarifying the “Fair and Reasonable” Standard for Attorney Charging Liens Under N.Y. Judiciary Law § 475: Commentary on Rasmy v. Diederich (2d Cir. Dec. 11, 2025)

Clarifying the “Fair and Reasonable” Standard for Attorney Charging Liens Under N.Y. Judiciary Law § 475: Commentary on Rasmy v. Diederich (2d Cir. Dec. 11, 2025)

I. Introduction

This Second Circuit summary order in Rasmy v. Diederich, No. 24‑3117‑cv (2d Cir. Dec. 11, 2025), arises out of a long-running employment discrimination action that ultimately produced a jury verdict for the plaintiff against an individual co‑worker, but not against the institutional employer, Marriott International, Inc.

The appeal here, however, is not about the merits of the discrimination or retaliation claims. Instead, it concerns a post‑trial fee dispute between plaintiff Gebrial Rasmy and one of his many former lawyers, Michael Diederich. Specifically, the Second Circuit reviews the Southern District of New York’s order granting Diederich a $100,000 charging lien under New York Judiciary Law § 475 for work he performed before being discharged and replaced by new counsel shortly before trial.

Although the decision is issued as a summary order without formal precedential effect under Second Circuit Local Rule 32.1.1, it provides a detailed and instructive application of New York law on:

  • When a discharged attorney is deemed to have been terminated “for cause” and thus forfeits fees;
  • When a federal court sitting in New York must hold an evidentiary hearing on that question; and
  • How a court must calculate the “fair and reasonable” amount of a charging lien under quantum meruit principles.

The Second Circuit:

  • Affirms the district court’s ruling that Diederich was not discharged for cause and thus is entitled to a charging lien; and
  • Vacates the $100,000 amount of that lien and remands for a more complete “fair and reasonable value” analysis under New York law.

The order therefore serves as a significant practical guide for lawyers and courts on how to apply New York Judiciary Law § 475 in federal practice, particularly in the frequent context of contingent-fee civil rights and employment litigation marked by multiple changes of counsel.

II. Summary of the Second Circuit’s Order

A. Factual and Procedural Background

Rasmy filed his employment discrimination lawsuit in 2016 and, by the time he retained Diederich in February 2022, he had already been represented by at least eleven different law firms. Litigation had advanced substantially: discovery was largely complete and various motions—including summary judgment and even appellate work—had been handled by prior counsel.

As trial approached (then scheduled for October 17, 2022), Marriott offered $250,000 to settle the case. Diederich strongly urged Rasmy to accept the offer, assessing that:

  • It was “highly unlikely” that Rasmy would prevail against Marriott; and
  • Any jury verdict was likely to be only against an individual co‑worker, Stamatis Efstratiu, who might well be “judgment proof” and lack the “deep pockets” of Marriott.

Around October 11, 2022—days before the scheduled trial—Rasmy discharged Diederich and retained new counsel. The trial ultimately occurred in March 2023. The jury returned:

  • A verdict for Rasmy on his retaliation claim against co‑worker Efstratiu, awarding $400,000 in damages; but
  • A verdict for Marriott on the claims against the company.

After the verdict, Diederich sought a charging lien under N.Y. Judiciary Law § 475 for his contribution to the case while he was counsel of record. Judge Jed S. Rakoff awarded him a lien of $100,000, payable out of Rasmy’s $400,000 recovery. Rasmy appealed, arguing:

  1. Diederich was discharged “for cause,” and thus was entitled to no fees;
  2. The district court erred by not holding an evidentiary hearing on that issue; and
  3. The $100,000 lien amount was neither fair nor reasonable.

B. Holdings

The Second Circuit, applying New York law under Itar‑Tass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442 (2d Cir. 1998), held as follows:

  1. Entitlement to a Lien (Discharge “for Cause”) – Affirmed.
    • The panel found no clear error in the district court’s factual conclusion that Diederich did not engage in misconduct or impropriety.
    • The discharge instead arose from “differences of opinion” about the strength of the case and the advisability of Marriott’s $250,000 settlement offer, combined with personality differences—insufficient as a matter of New York law to constitute discharge “for cause.”
  2. No Evidentiary Hearing – Affirmed (on waiver).
    • Although New York decisions state that, “in general,” a hearing is required to decide whether an attorney was discharged for cause, that requirement gives way when the issue can be decided on the written record.
    • Here, Rasmy never requested an evidentiary hearing and did not identify any specific factual disputes that required live testimony. By choosing to proceed solely on papers, he waived any right to such a hearing.
  3. Amount of the Charging Lien – Vacated and Remanded.
    • Under New York law, a lawyer discharged without cause from a contingent‑fee case is entitled only to the quantum meruit (fair and reasonable) value of services, not automatically to the contingent percentage in the retainer.
    • Judge Rakoff had noted:
      • One‑third of Rasmy’s $400,000 recovery was approximately $133,333;
      • Diederich’s billing records reflected about $122,185 in fees; and
      • Diederich requested only $100,000, less than both figures.
    • The Second Circuit held that this comparison was insufficient under New York law, which requires consideration of specific factors (from Smith v. Boscov’s Dep’t Store) such as the nature and difficulty of the case, time reasonably spent, the amount at stake, the result achieved, and customary fees in the locality.
    • The court vacated the $100,000 lien and remanded so the district court could explicitly and substantively apply those factors, and address Rasmy’s arguments that much of Diederich’s work was excessive or duplicative of prior counsel’s work.

III. Detailed Analysis

A. Statutory and Review Framework

1. New York Judiciary Law § 475 and Federal Courts

Section 475 provides that, from the commencement of an action, an attorney who appears for a party has a lien on the client’s cause of action and on any “verdict, report, determination, decision, award, settlement, judgment or final order” in the client’s favor, and the proceeds thereof. Crucially, the lien:

  • Attaches automatically upon counsel’s appearance; and
  • Cannot be defeated by a settlement between the parties without the attorney’s consent.

In Itar‑Tass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442, 448–49 (2d Cir. 1998), the Second Circuit held that § 475 governs attorney charging liens in federal courts sitting in New York and that federal courts must enforce such liens in accordance with New York courts’ interpretation of the statute. Rasmy follows that framework.

2. Standards of Appellate Review

The panel’s articulation of standards of review—though routine—matters, as the outcome turns heavily on the different levels of deference:

  • Abuse of Discretion for fee-related orders, including charging liens, per Lilly v. City of New York, 934 F.3d 222, 227 (2d Cir. 2019), and Lightbox Ventures, LLC v. Brem Moldovsky, L.L.C., 802 F. App'x 30, 31 (2d Cir. 2020).
    • A court abuses its discretion if its decision rests on an error of law or clearly erroneous facts, or if the result lies outside the range of permissible outcomes. See Slupinski v. First Unum Life Ins. Co., 554 F.3d 38, 47 (2d Cir. 2009).
  • Clear Error for findings of fact, including those based on documents and reasonable inferences. See Garcia v. Teitler, 443 F.3d 202, 211 (2d Cir. 2006); Siemens Energy, Inc. v. Petróleos de Venezuela, S.A., 82 F.4th 144, 153 (2d Cir. 2023) (clear error exists only when the appellate court is left with a “definite and firm conviction that a mistake has been committed”).
  • De Novo review for pure questions of law governing attorney’s fees, per Lilly, 934 F.3d at 227.

Applying these standards, the panel deferred to the district court on the fact‑heavy “for cause” determination but intervened on the method used to fix the amount of the lien, finding that the latter did not reflect the legal standards required by New York’s quantum meruit jurisprudence.

B. Discharge “For Cause” and Entitlement to a Fee

1. New York Rule: Misconduct vs. Mere Disagreement

New York law sharply distinguishes between:

  • An attorney discharged “for cause,” who forfeits all fees; and
  • An attorney discharged without cause, who is entitled to the fair value of services.

The underlying rule is drawn from cases like:

  • Universal Acupuncture Pain Servs., P.C. v. Quadrino & Schwartz, P.C., 370 F.3d 259, 263 (2d Cir. 2004), citing Teichner by Teichner v. W & J Holsteins, Inc., 64 N.Y.2d 977 (1985): if a lawyer is discharged for cause, he or she recovers no legal fees.
  • Maher v. Quality Bus Serv., LLC, 42 N.Y.S.3d 43, 46 (App. Div. 2016) (same principle).

The Second Circuit has elaborated, in reliance on New York authority, that:

  • “Cause” generally means misconduct, impropriety, or a violation of a disciplinary rule. See Garcia, 443 F.3d at 212; Holcombe v. Matsiborchuk, 747 F. App’x 875, 877 (2d Cir. 2018) (summary order); Schultz v. Hughes, 971 N.Y.S.2d 536, 538 (App. Div. 2013).
  • Conversely, “poor client relations, differences of opinion, or personality conflicts do not amount to cause.” Garcia, 443 F.3d at 212; see also Klein v. Eubank, 87 N.Y.2d 459, 463 (1996) (many attorney–client relationships end over personality conflicts or differing opinions having nothing to do with impropriety).

Thus, the key inquiry is objective misconduct, not the client’s subjective unhappiness with strategy or personalities.

2. Application to Diederich’s Representation

Judge Rakoff, after “review of the entire record,” found that:

  • Diederich did not sabotage the case, tamper with files, or fail to file documents;
  • He did not abandon Rasmy; and
  • His communications with a key witness—though perceived negatively by Rasmy—reflected his honest assessment of case weakness and the wisdom of accepting Marriott’s settlement offer, not misconduct.

The district court concluded that the firing resulted from:

  • Disagreements over the strength of the case and settlement strategy; and
  • Personality and opinion differences.

On appeal, the Second Circuit found these factual determinations supported by the record and not clearly erroneous. It rejected the suggestion that the judge was required to march through every possible form of attorney misconduct catalogued by other cases:

The district court’s task was to determine whether the record showed misconduct, not to mechanically list all hypothetical types of misconduct and rule them out seriatim. The panel concluded that the district court adequately evaluated Rasmy’s allegations—including those accusing Diederich of sabotage, tampering, and demoralizing a witness—and reasonably found no conduct meeting the New York “for cause” threshold.

3. “Loss of Confidence” as Alleged “Cause”

Rasmy argued that Diederich’s own declaration acknowledged that Rasmy had “lost confidence” in him, and that under the governing test this alone established discharge for cause.

The Second Circuit expressly rejected this:

  • Simply put, loss of confidence, standing alone, is not cause under New York law.
  • Loss of confidence matters only if it is grounded in actual misconduct or inadequate representation.
  • Here, Diederich testified that the loss of confidence was triggered by his prediction that Rasmy would lose against Marriott and his advice to accept the settlement.

The panel agreed with the district court that this amounts to a professional disagreement on case assessment and strategy—not misconduct. The order also cites Marten v. BOCES, Bd. of Co‑op. Educ. Servs., 1999 WL 294801 (S.D.N.Y. May 11, 1999) (Chin, J.), where a client’s loss of confidence following rude behavior by counsel did not constitute cause; the lawyer was still entitled to fees because there had been no improper handling of the case.

Notably, subsequent events validated Diederich’s prediction: the jury rejected the claims against Marriott and awarded damages only against the individual co‑worker, whose ability to pay may well be less secure than Marriott’s. Far from “sabotaging” the case, Diederich’s advice appears consistent with a prudent risk assessment. The panel does not rest its legal conclusion on that hindsight, but the alignment underscores why the district court viewed his conduct as within the bounds of competent advocacy.

C. Need for an Evidentiary Hearing: The Waiver Point

1. General New York Rule and Its Exception

Under New York law, “In general, a hearing is required to determine whether a client has cause for discharging an attorney.” Doviak v. Finkelstein & Partners, LLP, 934 N.Y.S.2d 467, 471 (App. Div. 2011).

But this is not an invariable requirement. New York appellate courts have held that where the issue can be resolved on the record, no evidentiary hearing is necessary:

  • Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 865 N.Y.S.2d 14, 23–24 (App. Div. 2008) (no hearing required where papers and arguments resolve the dispute);
  • Hawkins by Hawkins v. Lenox Hill Hosp., 526 N.Y.S.2d 153, 154 (App. Div. 1988) (no hearing needed when record shows no unresolved factual dispute about attorneys’ conduct and parties vigorously litigated on papers and oral argument).

The Second Circuit aligns with this “record-sufficiency” exception in Rasmy, but more importantly, resolves the hearing issue on waiver grounds.

2. Waiver Through Litigation Strategy

The panel notes two critical points:

  • Rasmy never requested an evidentiary hearing in the district court; and
  • On appeal, he did not identify any specific factual dispute that could not be resolved from the written submissions.

This triggers a straightforward waiver analysis:

  • Under Drywall Tapers & Pointers of Greater N.Y., Local 1974 v. Local 530 of Operative Plasterers & Cement Masons Int’l Assoc., 954 F.2d 69, 77 (2d Cir. 1992), parties who are “content in the district court to rest on affidavits” waive any right to an evidentiary hearing.
  • Under Norton v. Sam’s Club, 145 F.3d 114, 117 (2d Cir. 1998), issues not sufficiently argued in briefs are deemed waived and will not normally be addressed on appeal.

Applying those principles, the Second Circuit held that Rasmy waived any argument that the district court was required to hold a hearing before ruling that Diederich was not discharged for cause. This portion of the order is an important reminder that:

  • Litigants who want an evidentiary hearing must ask for it and explain why live testimony is necessary; and
  • Silence or acquiescence in a paper‑only procedure is likely to foreclose appellate relief later.

D. Determining the Amount of the Charging Lien

1. Governing New York Principles: Quantum Meruit for Discharged Contingent-Fee Counsel

Once a lawyer is found to have been discharged without cause, New York law entitles the lawyer to a fee computed on a quantum meruit basis—that is, a fee equal to the fair and reasonable value of the services actually rendered—rather than strictly enforcing the contingent-percentage provision in the original retainer.

Key authorities cited by the Second Circuit include:

  • Smith v. Boscov’s Dep’t Store, 596 N.Y.S.2d 575, 576 (App. Div. 1993):
    • When a client discharges an attorney without cause, the attorney may recover “the fair and reasonable value of the services rendered whether that be more or less than the amount provided in the contract or retainer agreement.”
    • The terms of the contingent-fee agreement are only one factor in determining value and are not dispositive.
    • Other factors include:
      • Nature of the litigation;
      • Difficulty of the case;
      • Time spent;
      • Amount of money involved;
      • Results achieved; and
      • Amounts customarily charged for similar services in the same locality.
  • Universal Acupuncture Pain Servs., 370 F.3d at 263:
    • Quantum meruit recovery is appropriate even when the attorney was engaged under a contingent fee, so long as the discharge was without fault.
  • Sutton v. N.Y.C. Transit Auth., 462 F.3d 157, 161 (2d Cir. 2006), which likewise incorporates these New York factors.
  • Nabi v. Sells, 892 N.Y.S.2d 41, 43–44 (App. Div. 2009), recognizing that after termination, the client and discharged attorney may agree to a new contingent arrangement in lieu of a fixed quantum meruit amount—but none was shown here.

These cases collectively make clear that:

  • A prior contingent percentage is relevant but not controlling; and
  • The court must look closely at what work the lawyer actually performed, its difficulty, its contribution to the outcome, and whether the hours expended were reasonable in context.

2. What the District Court Did—and What It Didn’t

Judge Rakoff’s order acknowledged that Diederich was entitled to the fair and reasonable value of his services. The court then observed:

  • Rasmy had paid only a $4,000 retainer to Diederich, nothing more;
  • The retainer agreement provided a fee of the greater of:
    • One‑third of any sums recovered (by settlement, suit, or otherwise); or
    • Diederich’s accrued fees.
  • One‑third of the $400,000 jury award was about $133,333;
  • Diederich’s billing records showed about $122,185 in fees; and
  • Diederich requested only $100,000, which was less than both the contingent percentage and the billed total.

On that basis, the district court concluded that $100,000 was “fair and reasonable” and granted a lien in that amount.

However, Rasmy argued that the billing was “excessive” because:

  • “Nearly all discovery was complete” when Diederich came into the case; and
  • Other motion practice (including summary judgment and appellate work) had already been completed by prior attorneys, leaving Diederich primarily with the motion in limine and pre‑trial tasks.

He therefore urged the court to “sharply reduce” the lien to account for allegedly excessive work. The district court did not address these arguments in any detail.

3. The Second Circuit’s Critique: Need for Smith-Factor Analysis

The Second Circuit vacated the $100,000 lien because the record did not show that the district court had actually applied the Smith factors. The panel emphasized:

  • Although the retainer’s contingent percentage is one factor, New York law requires consideration of:
    • Nature of the litigation;
    • Difficulty of the case;
    • Time spent (and whether it was reasonable);
    • Amount of money involved;
    • Results achieved; and
    • Customary fees for similar services locally.
  • The district court neither cited Smith nor clearly analyzed those factors, nor did it grapple with Rasmy’s challenge that much of Diederich’s work was duplicative or excessive in light of the posture of the case when he took over.
  • There was no indication that the district court evaluated whether the hours billed for particular tasks were reasonable—as opposed to simply accepting the billed total because it was less than the contractual contingent share.

In a telling footnote, the Second Circuit pointed to the “inexplicable billing of 26.25 hours in a single day,” suggesting that at least some entries may require closer scrutiny on remand. While the panel did not decide that the billing was improper, this reference underscores the need for a granular assessment of the billing records when determining a fair quantum meruit award.

Functionally, the Second Circuit is requiring district courts to:

  • Do more than compare the requested lien amount to the retainer’s contingent percentage and the aggregate billed total; and
  • Provide enough reasoning—anchored in the Smith factors and tailored to the specific work performed—to permit meaningful appellate review.

E. State Law in Federal Court: Substantive vs. Procedural Elements

Rasmy illustrates a familiar federal pattern under Erie‑type principles:

  • Substantive law of the lien (entitlement, “for cause” standard, quantum meruit factors, fee reasonableness) comes from New York decisions interpreting N.Y. Judiciary Law § 475 (Itar‑Tass, Smith, Universal Acupuncture, etc.).
  • Procedural aspects—standards of review, waiver doctrine, and appellate practice—are governed by federal law (Drywall Tapers, Norton, Slupinski).

The Second Circuit is thus applying New York’s definition and measure of charging liens, but doing so within a federal procedural framework: a classic illustration of state substantive rights enforced in a federal forum using federal procedural rules.

F. Role of the Precedents Cited

The order is rich with citations that collectively map the doctrinal terrain:

  • Lilly v. City of New York, 934 F.3d 222 (2d Cir. 2019) – Confirms abuse-of-discretion review for fee awards and de novo review for legal standards governing fees.
  • Lightbox Ventures, LLC v. Brem Moldovsky, L.L.C., 802 F. App’x 30 (2d Cir. 2020) – Reaffirms abuse-of-discretion review in the specific context of charging liens.
  • Slupinski v. First Unum Life Ins. Co., 554 F.3d 38 (2d Cir. 2009) – Defines abuse of discretion (error of law, clear error, or decision outside permissible range).
  • Garcia v. Teitler, 443 F.3d 202 (2d Cir. 2006) – Key authority on “for cause” discharge (misconduct vs. personality conflicts) and clear-error review of factual findings.
  • Siemens Energy, Inc. v. Petróleos de Venezuela, S.A., 82 F.4th 144 (2d Cir. 2023) – Provides the modern articulation of the “definite and firm conviction” clear-error standard.
  • Itar‑Tass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442 (2d Cir. 1998) – Establishes that § 475 governs charging liens in New York federal courts and must be interpreted in line with New York state decisions.
  • Universal Acupuncture Pain Servs., P.C. v. Quadrino & Schwartz, P.C., 370 F.3d 259 (2d Cir. 2004) – Clarifies that a lawyer discharged for cause gets no fees, and that otherwise the fee is measured by quantum meruit even in contingent-fee cases.
  • Teichner by Teichner v. W&J Holsteins, Inc., 64 N.Y.2d 977 (1985); Maher v. Quality Bus Serv., LLC, 42 N.Y.S.3d 43 (App. Div. 2016) – New York authorities for the “no fee if discharged for cause” rule.
  • Holcombe v. Matsiborchuk, 747 F. App’x 875 (2d Cir. 2018); Schultz v. Hughes, 971 N.Y.S.2d 536 (App. Div. 2013); Klein v. Eubank, 87 N.Y.2d 459 (1996) – Flesh out the line between legitimate cause (misconduct, rule violations) and mere disagreements or personality clashes.
  • Marten v. BOCES, Bd. of Co‑op. Educ. Servs., 1999 WL 294801 (S.D.N.Y. 1999) – Example where loss of confidence and rude behavior, absent case mishandling, did not amount to “for cause” discharge; cited to support rejecting Rasmy’s “loss of confidence” argument.
  • Doviak v. Finkelstein & Partners, LLP, 934 N.Y.S.2d 467 (App. Div. 2011); Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 865 N.Y.S.2d 14 (App. Div. 2008); Hawkins by Hawkins v. Lenox Hill Hosp., 526 N.Y.S.2d 153 (App. Div. 1988) – New York authorities on when an evidentiary hearing is or is not required to decide whether a discharge was for cause.
  • Smith v. Boscov’s Dep’t Store, 596 N.Y.S.2d 575 (App. Div. 1993) – Central case on quantum meruit assessment of fees after discharge, including the multi‑factor test adopted by the Second Circuit in Sutton.
  • Nabi v. Sells, 892 N.Y.S.2d 41 (App. Div. 2009) – Recognizes that after termination, the parties may renegotiate a new fee structure in lieu of quantum meruit, a possibility not at issue here.
  • Sutton v. N.Y.C. Transit Auth., 462 F.3d 157 (2d Cir. 2006) – Incorporates the Smith factor framework into Second Circuit law on fee valuation.
  • Drywall Tapers & Pointers of Greater N.Y., Local 1974 v. Local 530 of Operative Plasterers & Cement Masons Int’l Assoc., 954 F.2d 69 (2d Cir. 1992) – Establishes that proceeding solely on affidavits waives a claim to an evidentiary hearing.
  • Norton v. Sam’s Club, 145 F.3d 114 (2d Cir. 1998) – Confirms that inadequately briefed issues are deemed waived on appeal.

IV. Complex Concepts Simplified

1. Charging Lien (N.Y. Judiciary Law § 475)

A charging lien is a legal right that attaches to a client’s recovery in a lawsuit—such as a judgment or settlement—to secure payment of the client’s attorney. Under § 475:

  • The lien arises automatically when the attorney appears in the case;
  • It attaches to any favorable outcome and the proceeds of that outcome; and
  • A party cannot escape the lien by settling the case behind the attorney’s back.

2. Discharge “For Cause” vs. Without Cause

When a client fires a lawyer, there are two basic possibilities under New York law:

  • Discharge “for cause”: The client can show that the lawyer committed misconduct—such as serious neglect, conflict of interest, ethical violations, fraud, or other improper behavior that undermined the representation. In that case, the lawyer forfeits all fees.
  • Discharge without cause: The client simply does not want to continue with the lawyer—due to disagreement, personality conflict, or loss of confidence not tied to misconduct. In that case, the lawyer is still entitled to be paid the fair value of the work performed up to that point.

3. Quantum Meruit

Quantum meruit is a Latin phrase meaning “as much as he has deserved.” In this context, it refers to the reasonable market value of services actually provided, rather than any particular contractual formula.

Courts look at factors like:

  • Time reasonably spent;
  • Complexity and difficulty of the case;
  • Amount at stake and result achieved;
  • Quality of work; and
  • Typical rates or fees for similar work in the relevant legal market.

4. Contingent Fee vs. Hourly Billing

In a contingent-fee arrangement, the lawyer is paid a percentage of the amount the client ultimately recovers (e.g., one-third of any settlement or judgment). In an hourly arrangement, the lawyer is paid for each hour worked at an agreed rate.

When a lawyer hired on contingency is discharged without cause, New York law does not automatically award the contractual percentage. Instead, the lawyer gets the quantum meruit value of the services, though the percentage in the retainer may be one factor among many.

5. Evidentiary Hearing

An evidentiary hearing is a proceeding in which parties present testimony and exhibits, and witnesses can be cross‑examined. It is used when key facts are genuinely disputed and cannot be resolved just from written submissions.

In attorney-fee disputes, a hearing may be required to resolve conflicting accounts of what the lawyer did, how the lawyer behaved, or whether there was misconduct. However, if both sides rely solely on papers, and the judge can resolve factual questions from those papers, a hearing is not required—and may be deemed waived if not requested.

6. Standards of Appellate Review: “Abuse of Discretion” and “Clear Error”

An appellate court reviewing a fee order is highly deferential:

  • Abuse of discretion means the trial judge made a serious mistake in the legal standard, in the factual findings, or chose an outcome outside the reasonable range of options.
  • Clear error in factual findings means the appellate court is firmly convinced the trial judge was wrong based on the record—not merely that another conclusion was possible.

These standards explain why the Second Circuit in Rasmy deferred to the district court’s “no cause” finding but intervened when the legal methodology for computing the fee did not reflect New York’s quantum meruit framework.

V. Practical Impact and Broader Significance

A. For Attorneys

  • Strategic advice—especially about settlement—is not misconduct. Lawyers can candidly advise clients that a case is weak or that settlement is prudent, even if the client disagrees or later proves them partially wrong. Honest professional judgment is not “sabotage” and will not typically justify a finding of “for cause” discharge.
  • Careful billing matters. The Second Circuit’s reference to an “inexplicable” 26.25‑hour day starkly signals that billing records will be scrutinized on remand. Lawyers seeking a § 475 lien should expect that:
    • Time entries will be examined for reasonableness and internal consistency;
    • Duplicative or excessive hours may be disallowed; and
    • Courts may discount or reject entries that appear implausible or undocumented.
  • Contingent percentages are not self‑enforcing. A lawyer discharged before a recovery cannot rely solely on a one‑third retainer agreement. The court will instead look to quantum meruit factors and may award more or less than that percentage, depending on the total circumstances.
  • Explain contributions in context. Where prior counsel handled major phases (discovery, summary judgment, appeal), a subsequent lawyer who takes over near trial should be prepared to:
    • Show what distinct value he or she added;
    • Differentiate work from that of prior counsel; and
    • Justify the hours expended in light of the litigation’s stage.

B. For Clients

  • You can change lawyers freely—but not always without cost. New York permits clients to discharge attorneys at will. However, absent “cause,” the discharged lawyer retains a statutory lien and is entitled to the fair value of the work already done.
  • Mere dissatisfaction is not enough to avoid paying fees. Loss of confidence not tied to genuine misconduct, strategic disagreement, or personality clashes will not shield a client from a charging lien.
  • To challenge fee amounts effectively, be specific. As Rasmy shows, clients can and should:
    • Identify portions of the case that prior counsel already completed;
    • Highlight duplicative work or seemingly excessive time entries; and
    • Request that the court reduce the lien accordingly under New York’s quantum meruit factors.
  • If you believe a hearing is needed, ask for it early. A client who wants a live hearing to prove misconduct or contest factual issues must request it in the trial court and explain why papers are not enough.

C. For Judges

  • Explain the quantum meruit analysis in terms of the Smith factors. Even in routine fee disputes, courts should explicitly or clearly:
    • Identify the nature and difficulty of the case;
    • Evaluate the reasonableness of the time spent and tasks performed;
    • Relate the fee to the amount in controversy and the result achieved; and
    • Consider customary local fees and the role of any contingent percentage.
  • Address substantive objections to billing. Where a client specifically alleges that hours were excessive, duplicative, or unnecessary, a reasoned response is required to support the conclusion that the resulting lien amount is “fair and reasonable.”
  • Record sufficiency can obviate an evidentiary hearing, but waiver is key. Courts can rely on written submissions where the factual disputes are resolvable on the papers and no party requested a hearing. But when serious factual issues are flagged, a brief hearing may be warranted to create an adequate record.

D. Persuasive, Though Nonprecedential

While this order is formally nonprecedential under the Second Circuit’s summary‑order rules, it will likely be cited in practice for its clear and structured restatement of New York standards governing charging liens and quantum meruit evaluations. District courts in the Southern and Eastern Districts of New York, in particular, may look to it for guidance when crafting fee decisions that can survive appellate review.

VI. Conclusion

Rasmy v. Diederich reinforces several core aspects of New York charging lien law as applied in the federal courts of the Second Circuit:

  • A lawyer is not discharged “for cause” simply because the client disagrees with case strategy, dislikes negative assessments, or loses confidence not rooted in actual misconduct. Misconduct or rule violations—not personality conflicts—are required to forfeit all fees.
  • The right to an evidentiary hearing on “for cause” discharge can be waived when parties litigate on papers without requesting a hearing or identifying unresolved factual disputes.
  • When a discharged attorney is entitled to a fee, the amount of a charging lien must be grounded in New York’s quantum meruit framework, articulated through the Smith v. Boscov’s factors. A court cannot simply accept the requested amount because it is lower than the contingent percentage and the total of billed hours.

By affirming the entitlement to a lien but vacating the amount for lack of a sufficiently reasoned quantum meruit analysis, the Second Circuit signals to trial courts that fee determinations under N.Y. Judiciary Law § 475 demand both substantive fidelity to New York law and enough explanation to permit informed appellate review. For litigants and counsel in New York’s federal courts, the order offers a detailed, if technically nonbinding, roadmap for litigating and adjudicating future attorney‑client fee disputes.

Case Details

Year: 2025
Court: Court of Appeals for the Second Circuit

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