Reeve v. Meleyco, Third App. Dist., case no. C085867, filed 3/24/20. Client contacts lawyer 1 about a serious traffic accident inuring the client’s wife and child. Client and lawyer 1 meeting with lawyer 2 about the case and discuss a division of fees, 35% to lawyer 1. Lawyer 2 and client sign a fee agreement without any discussion of the fee division. Lawyer 1 continues to work on the case. Client becomes nervous that he will have to pay lawyer 1 in addition to paying lawyer 2 his contingent fee. Lawyer 2 sends client a document that asks him to certify his “understanding” that lawyer 1 would receive 25% of the fees and that the total fee would not be increased because of the division. Client signs the following acknowledgment “I, [client], acknowledge receipt of this letter and understand the contents.” The case settles, the money is disbursed but lawyer 1 is not paid. He files an action against lawyer 2 and recovers a judgment based on breach of the fee splitting agreement and quantum meruit. On appeal, the judgment is reversed. The Court of Appeal finds the fee-splitting agreement is unenforceable because the client did not expressly approve the terms of the division, as required by former Rule of Professional Conduct 2-200 (now Rule 1.5.1. It also found that the quantum meruit claim was barred by the two-year statute of limitations (Code Civ. Proc. §339.)
Client’s Mere Acknowledgement Insufficient to Satisfy Fee Splitting Rule
Published by David Cameron Carr
David C. Carr ~ Ethics Lawyer David C. Carr, an attorney in private practice in San Diego, California, specializes in ethics advice to lawyers, California State Bar discipline defense, and attorney licensing. Mr. Carr is a 1986 graduate of Loyola Law School in Los Angeles. Following several years of practice in commercial law and business litigation, Mr. Carr joined the State Bar of California as a staff attorney in 1989, where he served as a staff attorney, a discipline prosecutor and a manager in discipline enforcement office before returning to private practice in 2001. Mr. Carr is a member of the San Diego County Bar Association, where he is active on the Legal Ethics Committee. He is a member of the Association of Professional Responsibility Lawyers (APRL), the ABA Center for Professional Responsibility, and the Association of Discipline Defense Counsel (ADDC), where he served as president from 2008 through 2011. He is also a member of the State Bar's Standing Committee on Professional Responsibility and Conduct (COPRAC) for the 2018-2021 term. Mr. Carr is an adjunct faculty member at Thomas Jefferson School of Law, where he has taught professional responsibility. View all posts by David Cameron Carr