Fee Sharing and Legal Malpractice

The Court of Appeals decided an interesting attorney fee sharing case today, in which the successful attorneys called their referring attorneys "unethical" and then promptly lost the case.  Samuel v Druckman & Sinel, LLP   2009 NY Slip Op 02447   Decided on March 31, 2009
Court of Appeals   Pigott, J. determined the following problem.  Attorney A refers a medical malpractice case to Attorney B.  Client agrees to fee and responsibility sharing in writing.  Attorney B later brings in Attorney C to help.  Med mal case is settled and Attorney A is paid his 1/3.  Attorney
B and C ask the court, successfully, for enhanced fees, and get them.  Attorney A asks for his 1/3 and is rebuffed.

"Moreover, contrary to the holding of the Appellate Division, it is of no moment that Sinel did not contribute to that part of the work that resulted in the award of the enhanced fee. In the realm of fee-sharing disputes, "courts will not inquire into the precise worth of the services performed by the parties" (Benjamin v Koeppel, 85 NY2d 549, 556 [1995]). DR 2-107 also makes clear that, regardless of any division of services, where "by a writing given to the client, each lawyer assumes joint responsibility for the representation", attorneys are free to negotiate such division of fees as they deem appropriate (Code of Professional Responsibility DR 2-107 [a] [2] [22 NYCRR 1200.12 [a] [2]; see Lynn v Purcell, 40 AD3d 729, 730-731 [2d Dept 2007]; see also Simon's New York Code of Professional Responsibility Annotated at 439 [2008]). Further, Samuel, who is bound by the same Code of Professional Responsibility as Sinel, cannot be heard to argue that the fee-sharing agreement and the obligations thereunder must be voided on ethical grounds, when he freely agreed to be bound by and received the benefit of the same agreement, particularly where, as here, there is no indication that the client was in any way deceived or misled (see Benjamin, 85 NY2d at 556).

Based on the foregoing, Sinel is entitled to one-third of the entire legal fee of $1.9 million, with interest from June 10, 2005, the date of the entry of the compromise order, the "earliest ascertainable date" the claim existed ..."
 

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