Enforceability of Legal Fee Sharing Contract with Non-Lawyer
SCF presents the issue of whether a law firm may avoid an alleged oral contract with a non-lawyer consultant to share fees as void for public policy solely because Rule of Professional Conduct 5.4 prohibits a lawyer from sharing fees with a non-lawyer, or whether the contract should be enforced so as to prevent the law firm from profiting by violating the rules of professional conduct.
SCF Consulting, an LLC with a single member who is a non-lawyer, alleges an oral contract to originate securities litigation clients for Barrack Rodos, a securities litigation law firm, in exchange for an annual consulting fee plus 5% of the law firm’s profits derived from SCF-originated litigation. The complaint alleges that the law firm paid the annual consulting fee but not the agreed 5% of profits. The Court of Common Pleas of Philadelphia (Glazer, J.) dismissed the complaint on preliminary objections, holding that the alleged arrangement “violates public policy” as expressed in Rule of Professional Conduct 5.4 and that “all of plaintiff’s legal claims based on that arrangement fail, including the claims for breach of contract, unjust enrichment, breach of fiduciary duty, and for an accounting of fees allegedly due.” 2015 WL 351232. The Superior Court (Fitzgerald, J.) affirmed on the same basis in a non-precedential memorandum opinion.