Joan Howard worked for Pacific Architects & Engineers for 18 years, rising to the level of assistant vice president and controller. In 1988, she was abruptly fired.

Three days earlier, her husband had quit the same Los Angeles firm to assume the presidency of a rival company. Although Howard was regarded as an exemplary employee, her bosses said they feared that she might disclose confidential information to her spouse.

Howard filed a lawsuit alleging that her firing by PAE, which manages government facilities, was an unfair and arbitrary breach of contract. She hoped to collect not only for lost earnings but also for the indignity she had suffered.

But then the law in California changed, limiting her potential damages to $75,000--the wages she lost until she was able to find another job. Howard and her lawyers felt she was entitled to more.

"We had to scramble to come up with another theory," said Raymond Kolts of Pasadena, one of Howard's attorneys. The lawyers found one. They argued that their client was a victim of marital status discrimination in violation of public policy. She had been hurt, they alleged, so the company could get back at her husband.

Last year, the case was settled for $390,000.

It has been nearly three years since a California Supreme Court case, Foley vs. Interactive Data Corp., sharply limited damages that non-unionized workers can claim when they feel they have been unjustly fired. Foretelling dire consequences, many lawyers specializing in representing employees predicted that they might have to find other work themselves.

The Foley decision has indeed kept a large class of workers out of court: lower-paid employees who would stand to recover a relatively small sum. By lowering the stakes, for lawyers as well as clients, the decision has dramatically cut down the number of cases that attorneys are willing to take.

Joseph Posner of Encino, a board member of the California Employment Law Assn., said many personal injury lawyers who used to handle employment cases shy away from them, leaving the field largely to specialists.

But wrongful termination is far from a lost cause in this state. As the Howard case illustrates, creative lawyers are finding ways to circumvent Foley's restrictions. In fact, jury awards in unjust firing cases appear to have increased since the Foley case was decided.