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In the Matter of Katchatag, Kelley v. Donohue (12/8/95), 907 P 2d 458
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, telephone (907) 264-0607, fax (907) 276-
THE SUPREME COURT OF THE STATE OF ALASKA
IN THE MATTER OF THE ESTATE )
OF: ) Supreme Court No. S-6530
ELENA ROSE KATCHATAG, ) Superior Court No.
Deceased. ) 2NO-91-24 PR
LEONARD T. KELLEY, ) O P I N I O N
Appellant, ) [No. 4295 - December 8, 1995]
WILLIAM J. DONOHUE, )
Appeal from the Superior Court of the State
of Alaska, Second Judicial District, Nome,
Charles R. Tunley, Judge.
Appearances: Michaela Kelley, Kelley and
Kelley, Anchorage, for Appellant. William J.
Donohue, William J. Donohue, P.C., Anchorage,
Before: Moore, Chief Justice, Rabinowitz,
Matthews, Compton and Eastaugh, Justices.
This is a dispute between two attorneys regarding
division of attorney's fees following the successful prosecution
of a medical malpractice lawsuit for the death of Elena
Katchatag.1 Leonard Kelley claims he entered into a fee-
splitting agreement with William Donohue. Donohue denies any
such agreement. The probate court held that it had jurisdiction
to decide the dispute and concluded that Kelley had no legally
enforceable contingent fee contract. It later found that Kelley
had waived a quantum meruit claim. Kelley argues the probate
court had no jurisdiction to decide the dispute. We affirm.
II. FACTS AND PROCEEDINGS
In September 1990 Elena and Van Abel Katchatag
contacted Kelley regarding a possible medical malpractice claim
involving Elena. Kelley obtained releases for her medical
records and conducted legal research. She died in December 1990.
Kelley later explained in an affidavit that he decided it would
be best to bring into the "case" (no formal claim or suit had
then been filed) as co-counsel an attorney who specialized in
medical malpractice, and spoke in late December with Donohue
about co-counseling the Katchatag medical malpractice claim.
Kelley claimed that Donohue verbally agreed to co-
counsel the case. Donohue, however, denies the existence of such
an arrangement and instead claims that Kelley referred the
Katchatags to him. Kelley initially asserted that he and Donohue
agreed that Kelley would receive 20% of the attorney's fees, but
would advance no costs. He later affied that Donohue agreed that
costs would be divided on a fifty/fifty basis, that the
contingency fee would initially be divided on a fifty/fifty
basis, and that after the case was set for trial Kelley would
receive 8% of the recovery and Donohue would receive 17% of the
recovery (a thirty-two/sixty-eight division of fees).2
Kelley produced a copy of a letter, dated January 2,
1991, to Mr. Katchatag stating Donohue "has agreed to co-counsel
Elaine's [sic] claim with me." He affied that he subsequently
arranged a telephonic conference between Mr. Katchatag and
Donohue. Kelley contended that without his knowledge, Donohue
and Mr. Katchatag entered into a fee agreement which did not
refer to Kelley as co-counsel and did not include the fee
arrangement between Kelley and Donohue. Kelley affied that he
transferred his Katchatag file to Donohue.
Donohue states that the only documents Kelley prepared
which Donohue found in his file were two letters to the Nome
Hospital seeking medical records.3 Kelley states that he
forwarded to Donohue several excerpts of legal research relevant
to the Katchatag lawsuit.
Donohue entered into a contingent fee contract with Mr.
Katchatag in January 1991, opened Mrs. Katchatag's estate, filed
the FTCA administrative claim in May 1991, and when the
Government denied the administrative claim, filed an FTCA suit in
1992. In February 1993 attorney Jeffrey Haas and Donohue agreed
in writing that Haas and Donohue would share the work, expenses,
and attorney's fees equally. Mr. Katchatag agreed in writing to
that arrangement. Donohue moved for and obtained probate court
approval of the Donohue-Katchatag contingent fee contract in
Mr. Katchatag and his children prevailed in the
wrongful death case in the U.S. District Court, receiving damages
and costs totalling $1,053,475.15. Donohue and Haas advanced
$34,130.33 in costs during the case; Kelley contributed no costs.
By letter of March 3, 1994, Kelley congratulated Donohue on the
"Katachag" [sic] result and made comments Donohue took to be a
possible request for fees and costs. Donohue later argued that
this was the first time he heard from Kelley regarding the
Katchatag case since Donohue accepted representation of the
Katchatags three or four years previously. Thereafter, Kelley
and Donohue exchanged letters in which Kelley requested fees and
Donohue denied the existence of any fee-splitting arrangement and
accused Kelley of making fraudulent demands.4
After the United States satisfied the judgments,
Donohue moved for probate court approval of the costs and
attorney's fees, and shortly thereafter asked that court to delay
ruling to give Kelley an opportunity to submit any claim for
costs or fees.
Kelley submitted a "notice" to advise the probate court
that he denied that court's jurisdiction, that he was not making
a claim against the estate or the Katchatags, and that he should
be permitted to pursue his dispute with Donohue in another forum.
In response, Donohue submitted his affidavit, stating that he
never agreed to be co-counsel with Kelley in this case, that he
never received Kelley's letter to Mr. Katchatag, and that he
never agreed to a fee-splitting agreement with Kelley.
In May 1994 the superior court conducted a hearing in
the probate matter to approve, pursuant to Alaska Civil Rule
90.2, any attorney's fees and costs to be paid from the
children's recoveries, and to resolve the attorneys' dispute
about the appropriate division of fees. The court approved a
total fee of $254,836, representing 25% of the net recovery, the
maximum fee permitted under the FTCA, and approved the proposed
division of those costs and fees among Mr. Katchatag and his
three children in proportion to their individual federal
judgments. There was no dispute as to those matters.
Donohue then presented evidence that Kelley was not
entitled to any fee because Kelley did not enter into a written
fee agreement with Donohue or the Katchatags. The evidence
included the affidavit of Van Abel Katchatag. Donohue also
asserted that Kelley did little, if any, work on the case. He
argued that Kelley's claim was contrary to Alaska Bar Rule 35(e).
Kelley appeared through counsel and argued that the
probate court was not the proper forum to decide the Kelley-
Donohue dispute. He asserted that he had a direct claim against
Donohue for breach of contract and tort.
The superior court found that it had jurisdiction to
allocate attorney's fees pursuant to Alaska Civil Rule 90.2 and
AS 13.16.440. It found that there was no written fee agreement
with Kelley. In reliance on Alaska Bar Rule 35(e) and AS
13.16.440, the court denied any fees to Kelley. The court,
however, gave Kelley twenty days in which to make a quantum
meruit claim and submit supporting information. Kelley did not
file such a claim. Kelley objected to the proposed findings,
conclusion, and order on the ground they resolved Kelley's
dispute with Donohue; he also expressly conceded he had no
enforceable contingency fee contract with the estate or personal
representative. After the court entered the findings,
conclusions, and order, Kelley moved for reconsideration; he
submitted his affidavit in support. He there asserted for the
first time that his agreement with Donohue was actually for 32%
of the total fees (8% of the net recovery), not the 20% he had
previously discussed. The court denied the motion for
reconsideration, noting that Kelley had not filed a quantum
meruit claim and had consequently waived his right to make any
This appeal followed.
The appeal presents two issues: (1) whether the
probate court had jurisdiction over the Kelley-Donohue attorney's
fees dispute; and (2) whether the probate court erred in
concluding that Kelley had no valid, enforceable contingent fee
contract with the estate, the personal representative, or
The superior court relied on AS 13.16.440 and Civil
Rule 90.2 in determining that it had jurisdiction over the fee
allocation dispute between Donohue and Kelley.5
Kelley argues that the probate court erroneously
assumed subject matter jurisdiction over his claims for breach of
contract and tortious conduct by Donohue in conjunction with the
Katchatag case. He asserts that his claims are unrelated to the
Katchatag case and should be adjudicated in a separate forum.
The wrongful death action was brought for the benefit
of Mr. Katchatag and the Katchatags' three minor children.
Because minor children were involved, payment of any costs or
attorney's fees from the proceeds required compliance with Alaska
Civil Rule 90.2 and court approval. In re Estate of Brandon, 902
P.2d 1299 (Alaska 1995).
Civil Rule 90.2(a)(3) states:
(3) Attorneys' Fees and Costs. The court
shall approve any attorneys' fees and costs
that are to be paid from the settlement
proceeds when the minor claimant is
represented by counsel.
Alaska R. Civ. P. 90.2(a)(3). Assuming Kelley's characterization
of the fee allocation agreement is correct -- that he had a
separate contract with Donohue to work on the wrongful death case
even though Kelley had no agreement with the Katchatags -- Civil
Rule 90.2 gave the probate court jurisdiction over the fee
dispute because more than 90% of any fees owed to Kelley would
have come from the proceeds to be paid to the Katchatag children.7
Civil Rule 90.2 requires court approval of attorney's fees and
costs paid from children's proceeds. Thus, in order to approve
the allocation of any fees, the probate court had to have
jurisdiction over the attorney's fee allocation dispute.8
Moreover, Kelley submitted to the superior court's jurisdiction
by participating in the dispute, and had previously invited
Donohue to advise the court of the Kelley-Donohue "arrangement,"
apparently for the purpose of resolving their differences.9 We
conclude that the superior court did not err in deciding that it
had jurisdiction pursuant to Rule 90.2 over the fee allocation
B. Due Process
Kelley asserts that the probate court denied him due
process by assuming jurisdiction. He argues that he should have
the opportunity in a separate proceeding to prove the existence
of a contract through full application of the discovery rules,
including the use of depositions, interrogatories, and requests
for production and admissions.
Kelley's due process claim is without merit. Kelley
had actual notice of the issues before the probate court and he
participated in the proceedings. He was represented by counsel
at the hearing which addressed the fee dispute. He filed
motions, memoranda, and exhibits with the probate court. When he
moved for reconsideration, he filed his affidavit averring facts
regarding the pending fee dispute. The probate court permitted
Kelley to review Donohue's Katchatag file through 1992 for the
purpose of presenting a quantum meruit claim for attorney's fees.
Thus, the court provided him the opportunity to prove the value
of services he performed on the case.
Kelley cannot complain that the probate court denied
him an opportunity to engage in discovery in the probate
proceeding, because he never attempted to engage in any discovery
that might have supported a claim for a share of the attorney's
fees. Given the willingness of the court to permit a quantum
meruit claim and to allow him access to a portion of Donohue's
Katchatag file, we cannot assume that the court would have
precluded an attempt by Kelley to engage in discovery.
Further, Kelley has identified no specific evidence or
type of evidence that he would offer in a separate forum to prove
the existence of an enforceable fee allocation agreement. He
consequently fails to demonstrate how he was denied due process.11
C. Fee Contract
The probate court held that "Kelley has no legally
enforceable contingent fee contract requiring any payment of any
costs and/or attorney's fees." It held that such a contract must
be in writing and must be approved by the client pursuant to
Alaska Bar Rule 35(e).
Kelley argues that the court erroneously applied Bar
Rule 35. He claims that the rule presupposes that more than one
attorney enters into a fee arrangement directly with the client,
and consequently does not apply to the instant case because the
agreement here was between Kelley and Donohue, and did not
involve the clients, the Katchatags.12 Kelley reasons that
Donohue "constructively evicted Kelley from the process and
requirements of Bar Rule 35(e) by entering into a fee arrangement
with the client without advising the client or Kelley of the
circumstances and agreement."13 He claims that he has a separate
basis for substantive recovery against Donohue in contract and
In Citizens Coalition for Tort Reform, Inc. v.
McAlpine, 810 P.2d 162 (Alaska 1991), we implicitly held that Bar
Rules operate with the force of law.14 Furthermore, we
acknowledged that contingent fee agreements are treated
differently than other contracts.15 Thus, contrary to Kelley's
assertion otherwise, the Alaska Bar Rules apply to this case.
Alaska Bar Rule 35 states in relevant part:
(c) Contingent Fees. A fee may be contingent
on the outcome of the matter for which the
service is rendered, except in a matter in
which a contingent fee is prohibited by
Section (d) of this rule, or by other law or
court rules or decisions. A contingent fee
agreement will be in writing and will state
the method by which the fee is to be
determined . . . .
. . . .
(e) Fee Divisions Between Attorneys. A
division of fees between attorneys who are
not in the same law firm may be made only if:
(1) the division is in proportion to the
services performed by each attorney or, by
written agreement with the client, each
attorney assumes joint responsibility for the
(2) the client is advised of and does not
object to the participation of all the
attorneys involved; and
(3) the total fee is reasonable.
Donohue and Mr. Katchatag entered into a written
contingent fee agreement. Donohue also entered into a written
fee-splitting arrangement with Haas; Mr. Katchatag approved that
arrangement in writing.
It is undisputed that Kelley and Mr. Katchatag did not
enter into a written contingent fee agreement, and that Kelley
and Donohue did not enter into a written fee-splitting agreement.
Kelley claims that Bar Rule 35(e) should not prevent him from
enforcing the oral fee-splitting agreement he claims he had with
The probate court did not err in determining that the
alleged fee-splitting agreement was unenforceable. Mr. Katchatag
denied in his affidavit agreeing to let Kelley represent him or
the children in the case. Kelley did not aver in his affidavit
that Mr. Katchatag had consented to representation by Kelley.
Thus, it was undisputed that Bar Rule 35(e)(2) was not satisfied.
Further, because the alleged agreement for division of
fees was unwritten, Kelley could have enforced it and obtained a
portion of the fees only if the proposed division was "in
proportion to the services performed by each attorney." Alaska
Bar R. 35(e)(1). It was undisputed that any services Kelley
performed for the Katchatags were minimal. As Kelley described
it, however, the alleged agreement called for a division based on
fixed percentages that would have given Kelley a substantial
share of the fees. As Kelley described it, the agreement was
unenforceable because it called for a fee division that was not
in proportion to the services actually provided by Kelley and
Kaplan v. Pavalon & Gifford, 12 F.3d 87 (7th Cir.
1993), was factually similar to the instant case. Kaplan, an
attorney, agreed to represent a minor child in a medical
malpractice suit. Id. at 88. Kaplan referred the case to
Gifford, a medical malpractice attorney, and the child's parents
agreed to retain Gifford as additional counsel. Id. Kaplan
claimed that he and Gifford agreed that Kaplan would receive one-
third of the attorney's fees. Id. Gifford denied such an
agreement. Id. Gifford entered into a written contingency fee
agreement with the parents. Id. After the child received the
settlement, Kaplan demanded payment under the alleged oral fee-
sharing agreement. Gifford refused. Id. at 89. The court held
under Illinois law16 that the fee-sharing agreement, which was not
in writing and not signed by the client, was unenforceable as a
matter of public policy. Id. at 92. The court stated, "Our
paramount concern must be the effect these fee-sharing agreements
have on the clients, not the attorneys involved." Id. (quoting
Holstein v. Grossman, 616 N.E.2d 1224, 1236 (Ill. 1993)).
We conclude that the probate court did not err in
holding that no valid enforceable fee-sharing contract exists.
Kelley had the opportunity to receive compensation for
any work he did on the case on a quantum meruit basis, but waived
that claim.17 The Seventh Circuit's holding in Kaplan -- that
oral fee-splitting agreements between attorneys in contingency
fee cases are not enforced as a matter of public policy --
provides sound guidance in the instant case. The interest of the
client in knowing about all fee-splitting contracts which affect
his or her case outweighs the minimal burden imposed on the
attorneys to reduce their agreements to writing and obtain client
The superior court had jurisdiction to apportion the
attorney's fees and consider whether Kelley was entitled to a
part of those fees. The superior court did not err in applying
Bar Rule 135(e) to hold the alleged agreement was unenforceable.
Thus, we AFFIRM the judgment below.18
1 Through Donohue, Mr. Katchatag, for himself, his
wife's estate, and their three children, filed an administrative
claim under the Federal Tort Claims Act (FTCA) (28 U.S.C. ' 2671,
et seq. (1988)) alleging failure of Norton Sound Regional
Hospital (NSRH) to diagnose and treat Mrs. Katchatag's cervical
cancer, resulting in her death. The Department of Health and
Human Services denied the claim. Mr. Katchatag then sued the
NSRH and the United States in the U.S. District Court. In
February 1994 the court entered judgments awarding plaintiffs
approximately $1,000,000 on those claims.
2 The Federal Torts Claim Act imposes a 25% maximum on
attorney's fees. 28 U.S.C. ' 2678 (1988).
3 Donohue notes that Kelley later produced two documents
with his motion for reconsideration which were not in Donohue's
file, but which Kelley found after the probate judge ruled
against him. Kelley produced a copy of a letter he allegedly
wrote to Mr. Katchatag and a handwritten memo to his file
regarding his alleged fee-splitting agreement with Donohue.
4 Donohue, in response to Kelley's March 3 letter, wrote
that he understood Kelley had expended no time or costs in the
case and requested a detailed billing demonstrating otherwise.
Kelley wrote in response that he had no costs in the case, but
that they had "a deal" and suggested that one of them advise the
probate court of their arrangement. He also inquired about Haas
and his involvement in the case. He expressed his intention that
Donohue pay Kelley "the agreed upon fee." Donohue wrote back
denying the existence of an arrangement and asked how much Kelley
was claiming. Kelley responded that they had agreed Donohue
would handle most of the case, but Kelley would handle client
contact and accept 20% of the attorney's fees. After Kelley
telephoned Mr. Katchatag during this exchange of correspondence,
Donohue wrote Kelley, stating that Kelley had no right to contact
Donohue's client and accusing Kelley of making fraudulent
demands. In an April letter, Mr. Katchatag told Kelley that he
never agreed to the arrangement alleged by Kelley, that Kelley
was not his lawyer, that Kelley did no work in the case, and that
Kelley should get no fee.
5 Whether a court has jurisdiction is a question of law
which we review using our independent judgment. See Alaska
Workmen's Compensation Bd. v. Marsh, 550 P.2d 805, 807 (1976)
(reviewing as a question of law whether the Board had
jurisdiction to hear a claim when a suit for the same injuries
was pending in the superior court). We also apply our
independent judgment when reviewing rulings which present
questions of law. See Disciplinary Matter Involving Wiederholt,
877 P.2d 765, 767 (Alaska 1994) (applying standard in
interpreting Alaska Bar Rule 22(n)); Novak v. Orca Oil Co., 875
P.2d 756, 759 n.4 (Alaska 1994) (applying standard in
interpreting Civil Rule 41(e)). On questions of law, our "duty
is to adopt the rule of law that is most persuasive in light of
precedent, reason, and policy." Guin v. Ha, 591 P.2d 1281, 1284
n.6 (Alaska 1979).
6 Although Rule 90.2(a)(3) refers to "settlement" and
not "judgment," it applies to proceeds recovered as a result of a
judgment in favor of a minor. Rule 90.2(d) provides that
"[p]roceeds resulting from a judgment in favor of a minor must be
disbursed as set forth in paragraph (b)." Rule 90.2(b) applies
to disbursement of settlement proceeds, and requires an order for
payment of attorney's fees and costs. Alaska R. Civ. P.
90.2(b)(1). Because the rule treats disbursements of proceeds
from judgments the same as disbursements of proceeds from
settlements, attorney's fees and costs may not be paid from the
proceeds of a judgment without court approval.
7 The checks satisfying the judgments for the three
children totalled $967,500. The check satisfying Mr. Katchatag's
judgment was $85,975. The children's judgments represented more
than 90% of the total recovered.
8 The Ohio Supreme Court addressed an argument similar
to that made by Kelley. In Re Guardianship of Jadwisiak, 593
N.E.2d 1379 (Ohio 1992). The court there held:
[A] probate court, in order to maintain
control over any personal injury settlement
entered into on behalf of a ward under its
protection, has subject matter jurisdiction
over the entire amount of settlement funds,
which includes attorney's fees to be drawn
therefrom. . . . In addition, as already
stated, although attorney fees are
appropriate, they may be drawn from the
ward's estate only after the probate court
approves the fees. . . . Appellant's
argument that his portion of the attorney
fees was never a part of the ward's estate
is, therefore, without merit.
Id. at 1383-84.
9 Kelley's March 23, 1994 letter to Donohue acknowledged
the probate court's jurisdiction: "Feel free to advise Judge
Tunley of our arrangement, if you want me to contact him, I will
. . . . "
10 Because we hold that the probate court had
jurisdiction under Civil Rule 90.2, we need not determine
whether, as Donohue argues, AS 13.16.440 also conferred
jurisdiction. That statute states:
Proceedings for review of employment of
agents and compensation of personal
representatives of employees of estate.
After notice to all interested persons or on
petition of an interested person or on
appropriate motion if administration is
supervised, the propriety of employment of
any person by a personal representative
including any attorney, . . . the
reasonableness of compensation of any person
so employed, or the reasonableness of the
compensation determined by the personal
representative for the personal
representative's services, may be reviewed by
the [probate] court.
AS 13.16.440 (emphasis added).
11 Kelley also complains that he was denied due process
because Judge Tunley was involved in the Katchatag case and had
access to unrelated information that created a bias against
Kelley. Because Kelley fails to demonstrate any facts that would
permit a finding of bias on the part of Judge Tunley, we conclude
that this claim is without merit.
Additionally, Kelley argues that he was denied equal
protection because he "received unequal application of the law by
the Court system." Kelley, however, fails to support that claim.
Arguments not sufficiently supported are waived. Gates v. City
of Tenakee Springs, 822 P.2d 455, 460 (Alaska 1991).
12 Kelley also argues that the superior court erred in
applying the Alaska Rules of Professional Conduct to this
dispute. The court's findings, conclusion and order, however,
applied Alaska Bar Rule 35, not the Rules of Professional
13 Kelley did not assert in the probate court that he had
contacted Donohue or the Katchatags between the time he referred
the Katchatags to Donohue in December 1990 and the time he
learned of the judgments in March 1994 for the purpose of
demanding that he be permitted to participate in the prosecution
of the claim.
14 We there acknowledged our extensive rule-making
authority arising from the Alaska Constitution. Citizens
Coalition for Tort Reform, Inc. v. McAlpine, 810 P.2d 162, 164-65
(Alaska 1991). We noted that we have repeatedly exercised our
inherent judicial power to regulate the practice of law in the
state: "In exercise of our inherent power, we have adopted rules
that govern beyond the 'administration . . . practice and
procedure' limitations of article IV, section 15, most notably
the Alaska Bar Rules and the Code of Professional
Responsibility." Id. at 165.
15 We stated, "Both the Alaska Bar Rules and the Code of
Professional Responsibility already contain court rules that
regulate contingent fees." Id. at 165. We later concluded "a
limit on attorneys' contingent fees is properly classifiable as a
rule of court." Id. at 167. We also noted, "Bar Rule 35 is
essentially equivalent to Model Rules of Professional Conduct
Rule 1.5. In addition to the reasonableness limit, the Rule also
imposes requirements for the actual form a contingent fee
agreement must take." Id. at 166 n.6.
16 The court relied on Rule 2-107 of the Illinois Code of
Professional Responsibility. Kaplan v. Pavalon & Gifford, 12
F.3d 87, 89 (7th Cir. 1993). Rule 2-107 essentially stated that
for a lawyer to divide a fee with another lawyer who is not in
his law firm, the client must consent in writing to the
employment of the other lawyer, and the writing must disclose
that a division of fees will be made, the basis upon which the
division will be made, including the economic benefit to be
received by the other lawyer, and the responsibility to be
assumed by the other lawyer. Id.
17 To the extent he may have sought a fee
disproportionate to the services he performed, Bar Rule 35(e)
would have controlled.
18 Although we hold that Bar Rule 35(e) precludes
enforcement of that portion of the alleged Kelley-Donohue
contract calling for a division of fees not in proportion to the
services actually performed, Kelley was not necessarily
foreclosed from claiming damages he may have incurred in reliance
on the contract he claims to have made with Donohue. Considering
the record before the probate court and this court, however, it
appears unlikely that Kelley relied on the alleged agreement to
his detriment. Further, such reliance damages could not include
the value of any services Kelley provided in the Katchatag case,
because Kelley waived an opportunity to seek a quantum meruit
recovery in the probate court. Res judicata consequently would
bar any later attempt to recover the value of services performed
in that case. See North Star Terminal and Stevedore Co. v.
State, 857 P.2d 335, 337 (Alaska 1993) (quoting Restatement
(Second) of Judgments ' 17 (1982)) ("A judgment [between parties
in a former adjudication] . . . is conclusive in a subsequent
action between [the parties] on the same or a different claim,
with respect to any issue actually litigated and determined if
its determination was essential to that judgment.").
We express no opinion about whether Kelley could have
asserted that Donohue breached duties to Kelley by failing to
involve Kelley with the prosecution of the case.