The opinion of the court was delivered by: Pigott, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Elliot Sinel, Esq. was retained to represent a client and her infant daughter in a medical malpractice action. After conducting an investigation into the merits of the case, Sinel advised the client that he would find suitable trial counsel and eventually contacted Steven B. Samuel, Esq., who agreed to serve in that capacity. On January 16, 2002, Sinel, on behalf of his firm, Druckman & Sinel, LLP, sent Samuel a letter memorializing their fee-sharing arrangement:
"It is agreed that your firm . . . will undertake the prosecution of the medical malpractice case against Bellvue Hospital on behalf of [the client]. It is also agreed that [your firm] will advance the costs of the litigation of this matter. Druckman & Sinel, LLP will be compensated at the rate of one-third of the entire legal fee recovered for our participation in this matter, upon its conclusion by settlement, verdict or otherwise" (emphasis supplied).
Samuel executed the agreement as written.
Sinel then notified the client, in writing, that his firm had retained Samuel's firm as trial counsel and, although that firm would be handling most of the litigation, he would be "assisting and consulting with [Samuel's firm] on a regular basis." Sinel assured the client that she would not incur any additional legal fees for having both firms working on the case. The client consented to this arrangement in writing.
Due to difficulty in prosecuting the case, including responding to an application for a Frye hearing, Samuel, of his own volition, brought in another attorney, Steven Pegalis, Esq. from the law firm of Pegalis & Erickson, LLC, to assist in defeating that application. Thereafter, Pegalis assisted Samuel in trying the case and, during the third week of trial, the case settled for $6.7 million, resulting in an attorneys' fee, under the "sliding scale" provision, Judiciary Law Section 474-a (2), of $805,767.30.
Pursuant to Judiciary Law § 474-a (4), which allows a successful attorney in a medical malpractice action to be awarded fees in excess of those set forth in subsection (2), Samuel and Pegalis moved for an enhanced fee. On June 10, 2005, Supreme Court approved the overall settlement and awarded Samuel and Pegalis attorneys' fees in the amount of $1.9 million, or $1,137,826.41 and $762,173.59, respectively. Samuel forwarded a check to Sinel in the amount of one-third of his firm's enhanced fee, but did not include any portion of the fees awarded to the Pegalis firm. Sinel rejected this amount, demanding one-third of the entire fee recovered as per their agreement.
Samuel then commenced this declaratory judgment action against, among others, Sinel and Druckman & Sinel, LLP, seeking a declaration that the Sinel firm was not entitled to any attorneys' fees due to Sinel's purported violation of Code of Professional Responsibility DR 2-107 (22 NYCRR 1200.12 [a]). That Rule provides that:
"(a) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of the lawyer's firm, unless:
(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made.
(2) The division is in proportion to the services performed by each lawyer or, by a writing given to the client, each lawyer assumes joint responsibility for the representation.
(3) The total fee of the lawyers does not exceed reasonable compensation for all legal services they rendered the client."
In his complaint, Samuel claimed that, in failing to advise his client that both firms would be responsible for the representation, Sinel had violated that ...