Wednesday, August 18, 2004
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C.A.: Client’s Consent to Fee-Split Arrangement May Be Retroactive
By KENNETH OFGANG, Staff Writer/Appellate Courts
A client may consent to a fee-splitting arrangement between attorneys after the representation has been completed, the Court of Appeal for this district ruled yesterday.
Div. Five, overturning a ruling by Los Angeles Superior Court Judge Emilie H. Elias, reinstated attorney Dan Maccabee’s cross-complaint to a suit brought against him by fellow Century City practitioner Lyle R. Mink.
Mink sued for fees that Maccabee alleged incurred for his defense in a civil suit.
Plaintiff’s Charge
Mink alleged that Maccabee agreed to pay a $20,000 retainer against a $300 hourly rate, with any fees in excess of the retainer to be collected solely from a court award. Maccabee claimed in response that the parties had orally agreed that Mink’s fee would be limited to approximately 26 percent of any court award, with the rest of the award to be paid to other lawyers, including Maccabee himself, who had worked on the case before Mink was retained.
Maccabee prevailed at trial, and the court awarded approximately $30,000 in fees. Mink alleged in his complaint against Maccabee that he was entitled to the entire award, Maccabee alleged that Mink was only entitled to 26 percent of that amount.
In his cross-complaint, Maccabee alleged that in an unrelated matter, he referred a client to Mink, for which Mink orally agreed to pay a referral fee. The matter, he alleged, was closed in 2001 and Mink received a $400,000 fee.
Maccabee further alleged that the client gave written consent to the fee division in February 2002. Mink demurred to the cross-complaint, contending that the alleged agreement was unenforceable because it was not in writing and because the client did not consent at the time of the representation.
Elias sustained the demurrer and dismissed the cross-complaint. Mink’s complaint went to trial. The jury found for Maccabee, but the judge granted judgment notwithstanding the verdict in the amount of $9,719.
Justice’s Opinion
Justice Orville Armstrong, writing for the Court of Appeal, said the dismissal of the cross-complaint was erroneous because the fee-splitting restriction in Rule 2-200 of the State Bar Rules of Professional Conduct makes no requirement of a writing between attorneys and says only that the client’s written consent must be obtained after full disclosure.
“Thus, while we agree with Mink that written agreements are preferable to oral ones, and that written consents obtained early in the process are preferable to those obtained after-the-fact, those preferences are not contained in Rule 2-200, and therefore cannot invalidate a written consent which complies in all respects with the plain language of the rule,” the justice wrote.
Armstrong went on to point out that under Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453, which came down while the appeal was pending, Maccabee is entitled to seek quantum meruit even if the fee agreement cannot be enforced.
The justice elaborated:
“Mink argues on appeal that Huskinson & Brown does not apply to the facts of this case because ‘The trial court implicitly found that Mr. Maccabee’s cause of action for quantum meruit was not a genuine attempt to recover for services rendered but instead was a subterfuge to recover a prohibited referral fee.’ However, since a demurrer does not permit the trial court to make any factual findings at all, including ‘implicit’ ones, the argument is not persuasive.”
In an unpublished portion of his opinion, Armstrong said the trial judge was correct in granting judgment notwithstanding the verdict on Mink’s complaint. The justice noted that Maccabee acknowledged that he owned Mink something, and said the judge’s ruling conformed the judgment to the minimum amount that he must have owed.
Mink and Maccabee represented themselves on appeal. Maccabee was also represented by Peter A. Schwartz.
The case is Mink v. Maccabee, B166764.
Copyright 2004, Metropolitan News Company