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West Virginia Supreme Court of Appeals Refuses to Enforce Unethical Fee-Splitting Agreement, by Jeremy Telman, Contracts Prof Blog

http://tinyurl.com/pxrloyc

Gary Rich and Joseph Simioni met in connection with an asbestos case involving West Virginia University. Rich is an attorney. Simioni has a J.D. but was never admitted to the bar. Starting in the 1990s, the two men collaborated on two additional asbestos cases and contracted with out-of-state law firms to help them class action litigation. It appears that until 2002, the men agreed that they would split the proceeds of their work 50/50. but then Rich announced there would be an 80/20 split in his favor. The parties then proceeded on this basis and committed their agreement to writing in 2005.

Rich now contends that he was under the impression that Simioni was a licensed attorney, and he did not realize that Simioni was not licensed until 2000 or 2001. He consulted with the former Chief Lawyer Disciplinary Counsel of the West Virginia State Bar, who told him that Sinioni ‘might not be able to get paid ethically.’

Simioni eventually filed sued in District Court against the out-of-state law firms, seeking recovery based in quantum meruit, unjust enrichment and breach of an implied contract. The District Court certified the following question to the Supreme Court of Appeals:

Are the West Virginia Rules of Professional Conduct statements of public policy with the force of law equal to that given to statutes enacted by the West Virginia State Legislature?

The Supreme Court of Appeals answered in the affirmative, at least with respect to Rule 5.4 of the Rules of Professional Conduct. which prohibits fee-sharing between lawyers and non-lawyers. The Court held for the first time (but based on numerous authorities) that fee-sharing agreements between lawyers and non-lawyers violate public policy. . . .

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