Plaintiff referring lawyer sought a declaration regarding the duties of defendant class action specialists under a class-action fee-splitting agreement. Following a bench trial, the Superior Court of Orange County, California, entered judgment for defendants, ruling that noncompliance with Rules Prof. Conduct, rule 2-200, rendered the referral fee agreement nonexistent. The trial court approved attorney fees of $13.5 million. Plaintiffs appealed.
Overview: international joint venture
The court of appeal held that an attorney may be equitably estopped from claiming that a fee-sharing contract is unenforceable due to noncompliance with Rules Prof. Conduct, rule 2-200, or Cal. Rules of Court, rule 3.769, where that attorney is responsible for such noncompliance and has unfairly prevented another lawyer from complying with the rules’ mandates. In the current case, the trial court should have allowed a trial on whether the contract applied to the class action and whether defendants were equitably estopped from claiming the contract was unenforceable due to noncompliance with rule 2-200. Plaintiff offered to prove that it tried to comply with rules 2-200 and 3.769, but that defendants prevented it from doing so, specifically, that defendants changed the named class representatives—made a calculated switch of clients—in order to use rule 2-200 as a sword to escape a written referral fee agreement approved by the originally referred proposed class action representatives.
The court reversed the judgment.