May 12, 2009
Honor Among Fee-Sharers
The New York Appellate Division for the First Judicial Department has held that an oral fee-sharing agreement between non-affiliated lawyers is enforceable in the courts:
Plaintiff attorney alleges that he assisted defendants in a contingency fee case for which they paid him 20% of the fee they realized on settlement, in breach of an oral agreement calling for a division of the fee as the parties "had done in the past," and that in all previous contingency-fee cases procured by defendants on which plaintiff had worked, they had paid him 50% of the fee. Contrary to the motion court's ruling, the complaint alleges a course of dealing sufficient to establish the terms of the parties' oral contract. Equally unavailing is defendants' argument that the parties' alleged fee-sharing agreement would be void under Code of Professional Responsibility DR 2-107(a)(2) (22 NYCRR 1200.12[a]). Defendants are also bound by the Code of Professional Responsibility, and cannot avoid a fee-sharing agreement on ethical grounds if they freely agreed to be bound by and received the benefit of same. (citations omitted)
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Too bad. As I recall from my days teaching Remedies, there is plenty of law that voids a contract in violation of legal regulations, sometimes on "public policy" grounds and sometimes on "illegality" grounds. I think the judge was trying to say that the Rules of Professional Conduct aren't real law, but just "ethics" and grounds (solely) for professional disciplin. Too bad.
Posted by: Dennis Tuchler | May 12, 2009 12:37:00 PM