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California Legal Ethics

Client’s Mere Acknowledgement Insufficient to Satisfy Fee Splitting Rule

Posted by David Carr | Mar 24, 2020 | 0 Comments

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.)

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David Carr

Biography David C. Carr ~ Ethics Lawyer   David C. Carr, an attorney in private practice in Las Cruces, New Mexico, specializes in ethics advice to California lawyers, California State Bar discipline defense, and California attorney licensing.

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