Rule 1.5(e) Agreements Scrutinized By Tennessee Court
The Tennessee Court of Appeals held that one of two agreements concerning a fee split involving lawyers from different firms was valid and enforceable
This appeal concerns Tenn. Sup. Ct. R. 8, Rule of Professional Conduct 1.5(e), an ethics rule requiring that a division of fees between lawyers who are not in the same firm be agreed to by the client in writing. Trinity Clark (“Clark”) entered into a retainer agreement with attorney Troy Jones (“Jones”) on a 1/3 contingency fee. Jones brought Clark’s matter to attorney Lance Baker (“Baker”), who was not in a firm with Jones. Clark later entered an agreement with Baker on a 45% contingency fee. The Clark-Baker agreement provided, in writing, that Baker could associate other attorneys on the case, but that Clark’s overall fee obligation would not increase. The agreement neither identified any other attorneys nor specified how fees would be divided between them. After Clark’s case settled, Clark sued Baker in the Circuit Court for Knox County (“the Trial Court”), alleging Baker’s fee was unreasonable. Jones joined the lawsuit, arguing he was entitled to a share of the fees (“Plaintiffs,” Jones and Clark collectively). Baker filed a motion for summary judgment. The Trial Court denied Baker’s motion, finding that both the Clark-Jones agreement and the Clark-Baker agreement were invalid for noncompliance with Rule 1.5(e). This interlocutory appeal followed. We find the Clark-Jones agreement invalid. However, with respect to the Clark-Baker agreement, we find that the entire arrangement and Clark’s assent thereto satisfied Rule 1.5(e). We reverse on this issue and find that the Clark-Baker agreement is not invalid for failure of compliance with Rule 1.5(e). We affirm, in part, and reverse, in part.
The agreements
In the appeal at bar, no one disputes that the Clark-Jones agreement failed to comply with Rule 1.5(e), and no one argues for the validity of that agreement. The record bears this out. Jones sought to share attorney’s fees with Baker on the Clark case, so Rule 1.5(e) was implicated. However, there is no hint that the Clark-Jones agreement complied with Rule 1.5(e). Given the utter lack of compliance with Rule 1.5(e), we find the Clark-Jones agreement invalid.
By contrast, the parties dispute the validity of the Clark-Baker agreement. Plaintiffs contend, and the Trial Court found, that the Clark-Baker agreement is invalid for noncompliance with Rule 1.5(e). In their brief, Plaintiffs state: “Clark was not informed of how the fee sharing arrangement was to be conducted and thus was not able to consent to the fee sharing arrangement between Baker and Jones.”
As to the Clark-Baker agreement
The Clark-Baker agreement is quite clear that Baker had the right to associate other attorneys. Clark agreed to this provision, and the entire arrangement, as set out in the Clark-Baker agreement. Under this entire arrangement, endorsed by Clark with her signature, Baker had the right to associate other attorneys so long as Clark’s overall fee obligation did not increase. If Clark objected to this provision, she could have refrained from signing the agreement with Baker. She did not. It is unclear from Plaintiffs’ argument precisely what additional information Clark needed in order to give informed consent. While Clark argues she was unable to consent to the fee sharing arrangement between Baker and Jones, the Clark-Baker agreement provided for just such a scenario as that which transpired and that which Clark agreed to in writing. We find that the entire arrangement and Clark’s assent thereto satisfied Rule 1.5(e) and its requirement that a division of fees between lawyers who are not in the same firm be agreed to by the client in writing. We reverse on this issue and find the Clark-Baker agreement is not invalid for failure of compliance with Rule 1.5(e). We remand for further proceedings consistent with this Opinion.
Conclusion
We find the Clark-Jones agreement invalid. We affirm the Trial Court’s judgment to that extent. However, we reverse the Trial Court as to the Clark-Baker agreement, which we find is not invalid for failure of compliance with Rule 1.5(e). The judgment of the Trial Court is therefore affirmed in part, and reversed, in part. This cause is remanded to the Trial Court for collection of the costs below and further proceedings consistent with this Opinion. The costs on appeal are assessed against the Appellees, Trinity Clark and Troy Jones.
(Mike Frisch)