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][2]). 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)

(Mike Frisch)