## Facts

- Prince, Yeates & Geldzahler, a Salt Lake City law firm, hired Robert S. Young as an associate in 1995 under an oral agreement with a $70,000 salary.
- During hiring discussions, the firm’s president described typical compensation increases based on performance and a usual partnership track for lateral hires, but did not state fixed terms.
- Young originated and solely worked on two contingent-fee matters beginning in 1996: a Texas personal-injury case for Charles Krause and related federal litigation for Mountain West Helicopters.
- Because contingent matters reduced Young’s billed collections and increased work-in-process, some firm shareholders questioned his profitability and potential for shareholder status.
- In 1998, the firm proposed that Young receive one-third and the firm two-thirds of any Krause contingent fee; a memorandum reflecting that split was prepared, but Young did not sign it.
- In June 1999, Young learned the Krause matter settled and generated a $650,000 contingent fee, but he did not promptly disclose the settlement to the firm.
- Young counterproposed additional conditions and a modified fee arrangement after learning the settlement amount; the firm did not accept the counterproposal.
- Young indicated he would leave absent agreement, and the firm accepted his resignation.
- After Young left, the firm discovered Young had handled certain client matters without the firm’s knowledge while using firm resources and retaining the fees personally.
- The firm sued for breach of fiduciary duty (duty of loyalty). Young counterclaimed for breach of express contract for additional compensation, including a share of the Krause fee.
- The district court denied the firm’s summary-judgment motion on Young’s contract claim, granted Young partial summary judgment on the firm’s fiduciary-duty claim, and a jury later awarded Young about $280,000 tied to the Krause fee.

## Issues

1. Whether statements about typical raises, partnership timing, and proposed allocation of a contingent fee created an enforceable express contract for additional compensation.
2. Whether an associate attorney may be liable for breach of fiduciary duty of loyalty for undisclosed client work performed using firm resources while personally retaining the resulting fees, and whether such claim could be resolved against the firm on partial summary judgment.
3. Whether disgorgement of fees is an available remedy for disloyal conduct by an attorney-employee.

## Decision

- The Utah Supreme Court reversed the denial of summary judgment on Young’s express-contract counterclaim and held the firm was entitled to judgment as a matter of law on that claim.
- The court reversed the partial summary judgment entered in Young’s favor on the firm’s breach-of-fiduciary-duty claim.
- The court vacated the outcome premised on the contract theory and remanded for further proceedings consistent with its rulings, including trial-level adjudication of the fiduciary-duty issues.

## Legal Principles

- An express contract requires sufficiently definite essential terms and a meeting of the minds; generalized statements about future compensation or advancement based on performance are ordinarily too indefinite to be enforceable promises.
- A proposed division of fees is not an enforceable agreement absent mutual assent; an unsigned memorandum and unaccepted counteroffer do not establish contract formation.
- An attorney employed by a firm owes a fiduciary duty of loyalty, including a duty not to compete with the firm without the firm’s knowledge and consent.
- An associate’s undisclosed representation of clients, use of firm resources for private matters, and personal retention of fees can constitute a breach of the duty of loyalty.
- Disgorgement of profits or fees obtained through disloyal conduct is an available remedy for breach of fiduciary duty.

## Conclusion

The court held that indefinite employment assurances and incomplete fee negotiations did not create an express contract for additional compensation, and it further held that evidence of undisclosed outside client work using firm resources could support a fiduciary-duty claim for disloyalty, with disgorgement potentially available, requiring further proceedings on remand.


Prince, Yeates & Geldzahler v. Young, 2004 UT 26, 94 P.3d 179 (Utah 2004)