Thursday, March 18, 2010

Fee Sharing Agreement Does Not Create Joint Venture

The Maryland Court of Appeals addressed the implications of a fee sharing agreement between two attorneys pursuing a medical malpractice case. Attorney One referred the matter to Attorney Two early in the prosecution of the case. They entered into an arrangement by which the division of fees was based on the "anticipated division of services to be rendered." Attorney Two had primary responsibility and Attorney One was to assist as requested by Attorney Two.

While the claim was in negotiations, Attorney Two advised the clients that they might have a legal malpractice case against Attorney One.  The underlying medical malpractice case then settled for $225,000. Attorney Two paid Attorney One one-half of the fee.

Attorney One then sued Attorney Two on a variety of contract and tort theories alleging breach of good faith, fair dealing and disclosure duties. The circuit court granted summary judgment to Attorney Two. The Court of Special Appeals affirmed. Here, the Court of Appeals agreed, concluding that Attorney Two fulfilled her covenant of good faith and fair dealing by delivering to Attorney One his proportionate share of the fee.

The court held that the fee sharing agreement did not establish a joint venture with the resulting fiduciary obligations that would apply to such ventures. The court agreed that the tort claims failed because, among other things, Attorney Two "could not tortiously interfere with an economic relationship to which she was a party." (Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2010/03/fee-sharing-agreement-does-not-create-joint-venture.html

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