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Thursday, May 26, 2016

Lack of Enforceability of Fee Sharing Arrangments

A NJ Appellate Court ruled that an agreement to share fees between lawyers, not holding NJ Supreme Court Certification, was unenforceable without the informed consent of the client and written acknowledgement of the client and all participating attorneys.
“Viewing the facts in a light most favorable to plaintiffs, we accept LaPorta's representation that he informed the client that he would receive a referral fee for referring the client's case. Even so, plaintiffs concede that they failed to inform the client of Weiner & Mazzei's participation in the alleged fee-splitting arrangement, and failed to solicit the client's consent to Weiner & Mazzei's participation. Thus, there is no genuine dispute that plaintiffs failed to satisfy the requirements of R.P.C. 1.5(e)(2) by failing to fully notify the client regarding the parameters of the fee arrangement in this case. Likewise, there is no genuine dispute whether the client consented to the participation of 'all the lawyers involved[,]' as required by R.P.C. 1.5(e)(3).”
The Court cited R.P.C. 1.5(e) which sets forth the following requirements for the sharing of fees:
Except as otherwise provided by the Court Rules, a division of fee between lawyers who are not in the same firm may be made only if:
  1. the division is in proportion to the services performed by each lawyer, or, by written agreement with the client, each lawyer assumes joint responsibility for the representation; and
  2. the client is notified of the fee division; and
  3. the client consents to the participation of all the lawyers involved; and
  4. the total fee is reasonable.
WEINER & MAZZEI, P.C., and PHILLIP A. LAPORTA, ESQ., v. THE SATTIRAJU LAW FIRM, PC,, DOCKET NO. A–1079–14T3, (NJ App Div 2016) 2016 WL 2993123, Decided January 12, 2016.