A personal injury takes place, and is litigated. It goes to verdict which exceeds the insurance coverage. What is a defendant to do? Well, one solution is a bad faith litigation against the carrier, and an assignment to the plaintiff. Plaintiff gets the chance to obtain the balance (over the policy limits) from the insurer, and the defendant gets out from the excess money claims. So, the various attorneys enter into an agreement where they split portions of the fees. What happens when the Appellate Divisions INCREASES the award? Chaos.
Wolfe & Yukelson, PLLC v Davis, Saperstein & Salomon, P.C. 2017 NY Slip Op 05997
Decided on August 2, 2017 Appellate Division, Second Department determines that all the attorneys get paid.
“In October 2012, upon the defendant’s denial of the plaintiff’s request for payment pursuant to the fee-sharing agreement, the plaintiff commenced this action to recover damages for breach of contract seeking to enforce the fee-sharing agreement. The Supreme Court denied the defendant’s motion for summary judgment dismissing the complaint and the plaintiff’s cross motion for summary judgment on the complaint. Thereafter, the court granted the plaintiff’s motion for leave to reargue its prior cross motion for summary judgment and, upon reargument, granted the cross motion, finding that since the defendant violated rule 1.5(g) of the Rules of Professional Conduct (22 NYCRR 1200.0), it could not seek to void the fee-sharing agreement by which it agreed to be bound and of which it received the benefit. A judgment thereafter was entered in favor of the plaintiff and against the defendant in the principal sum of $208,257.94.
The appeals from the intermediate orders must be dismissed because the right of direct appeal therefrom terminated with the entry of the judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeals from the orders are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).
In fee-sharing disputes between attorneys, “the courts will not inquire into the precise worth of the services performed by the parties as long as each party actually contributed to the legal work and there is no claim that either refused to contribute more substantially” (Benjamin v Koeppel, 85 NY2d 549, 556 [internal quotation marks omitted]). This Court has held that such an agreement is enforceable as long as the attorney who seeks his or her share of the fee “has contributed some work, labor or service toward the earning of the fee” (Witt v Cohen, 192 AD2d 528, 529 [internal quotation marks omitted]; see Reich v Wolf & Fuhrman, P.C., 36 AD3d 885, 886; Rozales v Pegalis & Wachsman, 127 AD2d 577, 578). Here, the Supreme Court correctly determined that the plaintiff provided sufficient legal services toward the earning of the fees generated by settlement of the claims at issue. Contrary to the defendant’s contention, the commencement of a bad faith action against Imperium or a legal malpractice action against Wilson Elser was not a condition precedent to recovery under the fee-sharing agreement. Thus, the court, upon reargument, properly determined that the plaintiff established its prima facie entitlement to a share of the legal fee as allocated in the fee-sharing agreement (see Reich v Wolf & Fuhrman, P.C., 36 AD3d at 886; Edelstein v Pirrotti, 286 AD2d 660; Sickmen v Birzon, Szczepanowski & Quinn, 276 AD2d 689).
In opposition to the cross motion, the defendant failed to raise a triable issue of fact. Moreover, the defendant, which is bound by the same Rules of Professional Conduct (22 NYCRR 1200.0) as the plaintiff, cannot be heard to argue that the fee-sharing agreement and the obligations thereunder must be voided on ethical grounds, when it freely agreed to be bound by, and received the benefit of, the same agreement, particularly since there is no indication that the client was in any way deceived or misled (see Samuel v Druckman & Sinel, LLP, 12 NY3d 205, 210; Benjamin v Koeppel, 85 NY2d 549, 556).”