Wednesday, April 9, 2008

"Needless and Standardless Litigation"

In a lawsuit between three firms involved in the settlement of a medical malpractice action for $6.7 million, the New York Appellate Division for the First Judicial Department held that a lawyer who had "actually contributed to the legal work" and never refused a request to render more substantial legal services did not violate New York Code of Professional Responsibility DR 2-107(A) and was entitled to a one-third share of the amount recovered "under the statutory sliding scale applicable in malpractice cases" but not a share of the enhanced award over the normal sliding scale. The court's majority opines:

"Sinel made no contribution to the extraordinary services provided by Samuel and Pegalis that resulted in the trial court granting their application for an enhanced award of legal fees over the normal sliding scale. Under the circumstances, allowing Sinel to share in any portion of the enhanced award would result in a fee grossly disproportionate to the services rendered. It would result in defendants, the referring attorneys, being awarded a fee larger than plaintiffs, the attorneys who did the bulk of the work. Clearly, this could not have been the intent of the attorneys when they entered into their agreement nor can it be consistent with this Court's obligation to oversee the reasonableness of legal fees (citations omitted)."

A dissent would enforce the contractual provisions between the lawyers and warns that the majority approach "establishes a precedent that will encourage-and enmesh the judiciary in-needless and standardless litigation."

Further, the dissent notes:

" 'It has long been understood that in disputes among attorneys over the enforcement of fee-sharing agreements the courts will not inquire into the precise worth of the services performed by the parties as long as each party actually contributed to the legal work and there is no claim that either refused to contribute more substantially' (citations omitted). Moreover, it ill becomes defendants, who are also bound by the Code of Professional Responsibility, to seek to avoid on ethical grounds the obligations of an agreement to which they freely assented and from which they reaped the benefits (ABA Comm on Professional Ethics, Informal Opn No. 870).

This Court has repeatedly followed that 'well[-]settled' rule..." (Mike Frisch)

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