The Florida Bar
(July 15, 1994)
(July 15, 1994)
An agreement between a law firm and an attorney employed by the firm concerning division of the fee from a case brought to the firm by the attorney is not subject to the rules governing divisions between attorneys in different firms when the attorney leaves the firm before the case is concluded.
CPR: DR 2-107(B)
RPC: 4-1.5(f)(4)(D), 4-1.5(g)
Cases: The Florida Bar Re Amendments to the Rules Regulating The Florida Bar , 519 So.2d 971 (Fla. 1987); Barwick, Dillian & Lambert, P.A. v. Ewing , 646 So.2d 776, (Fla 3d DCA 1994)
Misc.: Rule 2, Florida Bar Procedures for Ruling on Questions of Ethics; Wolfram, Modern Legal Ethics
A member of The Florida Bar has requested an advisory ethics opinion. The operative facts as presented in the inquiring attorney's letter are as follows.
Before leaving her employ at a law firm, the inquiring attorney entered into the following written agreement with the firm regarding a particular client's case that the inquirer brought to the firm:
The law firm of [name omitted] (the "Firm") hereby acknowledges and agrees that fifty percent (50%) of any and all attorneys' fees, settlement awards, or other disposition of funds arising out of any and all claims, whether personal injury or otherwise, of [client name omitted] are owned outright by [inquiring attorney].
In the event that [inquiring attorney] terminates her employment with the Firm, or is terminated by the firm, [inquiring attorney] shall nevertheless be entitled to the 50% interest in the sums referenced above, provided, however, that in the event [inquiring attorney] terminated her employment with the firm [inquiring attorney] will also be responsible for 50% of the costs of the Firm incurred in connection with such case or cases. Any cost incurred, shall be mutually agreed upon by [inquiring attorney] and the Firm prior to expending the same. Costs shall include hiring trial counsel on an hourly basis.
This Acknowledgment of Interest is a confirmation of verbal agreements by the Firm and [inquiring attorney] and is made in consideration of the fact that [inquiring attorney] has originated this business for the Firm.
After the inquirer's departure from the firm, the firm settled the particular personal injury case covered by the Acknowledgment of Interest. The firm now takes the position that it cannot pay the inquirer the 50% fee set forth in the above agreement because to do so would violate Rule 4-1.5(f)(4)(D), Rules Regulating The Florida Bar. Under that rule, a lawyer assuming secondary responsibility on a personal injury case may not, absent court approval, receive more than 25% of the total fee. The firm therefore asserts that it cannot ethically pay the inquirer more than 25% of the total fee. The inquirer, on the other hand, takes the position that Rule 4-1.5(f)(4)(D) does not apply to situations such as this where the attorney sharing in the fee was employed by the firm at the time the contract for representation was entered into with the client.
The inquirer asks whether she may ethically receive payment from her former firm as provided for in the Acknowledgment of Interest.
Rule 4-1.5(g) governs all fee divisions between attorneys who are not in the same firm. That rule provides:
(g) Division of Fees Between Lawyers in Different Firms . Subject to the provisions of subdivision (f)(4)(D), a division of fee between lawyers who are not in the same firm may be made only if the total fee is reasonable and:
(1) the division is in proportion to the services performed by each lawyer; or
(2) by written agreement with the client:
(A) each lawyer assumes joint legal responsibility for the representation and agrees to be available for consultation with the client; and
(B) the agreement fully discloses that a division of fees will be made and the basis upon which the division of fees will be made.
Where an action or claim is "for personal injury or for property damages or for death or loss of services resulting from personal injuries based upon tortious conduct of another," the fee division between attorneys in different firms is limited by the following provisions of Rule 4-1.5(f)(4)(D):
As to lawyers not in the same firm, a division of any fee within subdivision (f)(4) shall be on the following basis:
1. To the lawyer assuming primary responsibility for the legal services on behalf of the client, a minimum of 75% of the total fee.
2. To the lawyer assuming secondary responsibility for the legal services on behalf of the client, a maximum of 25% of the total fee. Any fee in excess of 25% shall be presumed to be clearly excessive.
3. The 25% limitation shall not apply to those cases in which two (2) or more lawyers or firms accept substantially equal active participation in the providing of legal services. In such circumstances counsel shall apply for circuit court authorization of the fee division in excess of 25%, based upon a sworn petition signed by all counsel which shall disclose in detail those services to be performed.
DR 2-107(B), part of the fee division rule under the old Florida Code of Professional Responsibility, specifically exempted payments to a former partner or associate pursuant to a law firm separation agreement. For reasons not clear, the exemption provision was not retained when the Florida Rules of Professional Conduct, which are based on the ABA Model Rules, became effective on January 1, 1987. "The lack in the Model Rules of a precisely correlative provision to DR 2-107(B) is confusing and regrettable but appears to have been inadvertent." C. Wolfram, Modern Legal Ethics , 880 n.14 (1986).
What is clear, however, is that a primary purpose of Rules 4-1.5(g) and 4-1.5(f)(4)(D) is to regulate the "brokering" of cases in referral situations. See The Florida Bar Re Amendments to the Rules Regulating The Florida Bar , 519 So.2d 971, 972 (Fla. 1987). In this regard, the fee division rules attempt to ensure client consent and prior "agreement on the roles, responsibilities, and financial arrangements for the respective law firms that will participate" in a fee on a particular client's case. Barwick, Dillian & Lambert, P.A. v. Ewing , 646 So.2d 776 (Fla. 3d DCA 1994). When an attorney leaves a firm, these ethical considerations are not triggered. Thus, the specific requirements of Rule 4-1.5(g) and Rule 4-1.5(f)(4)(D) need not be satisfied in such situations. Rather, the proper fee split arrangement between a law firm and a departing lawyer is matter of contract to be decided by the parties, in accordance with applicable law. See Ewing ; Florida Ethics Opinion 84-1 [withdrawn] .
Based on the foregoing and assuming all other ethical requirements have been satisfied, the inquiring attorney may, without regard to the fee division rules, ethically receive from her former firm any compensation to which she is entitled. Whether the inquirer is entitled to receive 50% of the total fee in the instant case requires a factual/legal determination that is beyond the scope of an ethics opinion. See Rule 2, Florida Bar Procedures for Ruling on Questions of Ethics.