Opinion 89-28

You have asked the Professional Guidance Committee for an opinion concerning the division of fees following dissolution of a law firm. Firm A has executed a Dissolution Agreement, whereby the firm breaks into Groups B and C. Firm A has been completely dissolved and does not continue in any form. Under the Dissolution Agreement, Group B takes various files and Group C takes various files, with each group to pay the other a fee for work completed prior to the dissolution upon conclusion of the various cases. The type of cases contemplated by the Agreement are contingent fee matters, and the members of Groups B and C contemplate no payment to the other in any contingent fee matter that does not generate a fee.

Your first question to the Committee is what requirements, if any, exist regarding the obligation to inform a client of this arrangement? Second, where the client has been advised of the division of fees between Groups B and C and objects to the division, would such fee division violate Rule 1.5(e) of the Rules of Professional Conduct?

Rule 1.5(e) of the Pennsylvania Rules of Professional Conduct requires:

(e) A lawyer shall not divide a fee for legal services with another lawyer who is not in the same firm unless:

(1) The client is advised of and does not object to the participation of all the lawyers involved; and

(2) The total fee of the lawyers is not illegal or clearly excessive for all legal services they rendered the client.

Rule 1.5(e) applies to your situation, because the lawyers of B and C are no longer in the same firm. The Rule requires that you inform the client that the fee is to be divided, but it does not require a disclosure to the client of the share each lawyer is to receive. Implicit in the Rules of Professional Conduct is the additional requirement that you inform the client of his or her freedom to choose the lawyer who will represent him or her fol1owing dissolution of firm A. See Rule 5.6, Comment.

Rule 1.5(e) also requires the client's consent to a division of fees. If the client objects, you may not divide fees pursuant to the Dissolution Agreement, and must look to alternate remedies at law.

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.