Commercial Division Blog
Posted: July 18, 2018 / Categories Commercial, Law Firms and Professional Ethics
Court Refuses to Enforce Attorney Fee-Sharing Agreement
On July 5, 2018, the Second Department issued a decision in Ballan v. Sirota, 2018 NY Slip Op. 05014, affirming the dismissal of a claim to enforce an attorney fee-sharing agreement, explaining:
Judiciary Law § 491 prohibits any person, partnership, or corporation from sharing any fee or compensation charged or received by an attorney-at-law, in consideration of having placed in the hands of such attorney-at-law a claim or demand of any kind.
Under the purported fee-sharing agreement, the plaintiffs would provide the defendant attorneys with proprietary information regarding potential clients, investigate claims, interview potential plaintiffs, and otherwise assist with litigation. In exchange, the defendant attorneys would pay the plaintiffs 20% of their fee for each case. This purported fee-sharing agreement whereby the plaintiffs attempt to recover from the defendant attorneys is illegal, and the plaintiffs are proscribed from seeking the assistance of the courts in enforcing it. The plaintiffs' contention that they are entitled to equitable relief is without merit, since the contract was criminal in nature and not merely prohibited by statute.
(Internal citations omitted).
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