Client’s Mere Acknowledgement Insufficient to Satisfy Fee Splitting Rule

Reeve v. Meleyco, Third App. Dist., case no. C085867, filed 3/24/20.  Client contacts lawyer 1 about a serious traffic accident inuring the client’s wife and child.  Client and lawyer 1 meeting with lawyer 2 about the case and discuss a division of fees, 35% to lawyer 1.  Lawyer 2 and client sign a fee agreement without any discussion of the fee division.  Lawyer 1 continues to work on the case. Client becomes nervous that he will have to pay lawyer 1 in addition to paying lawyer 2 his contingent fee.  Lawyer 2 sends client a document that asks him to certify his “understanding” that lawyer 1 would receive 25% of the fees and that the total fee would not be increased because of the division.  Client signs the following acknowledgment “I, [client], acknowledge receipt of this letter and understand the contents.”  The case settles, the money is disbursed but lawyer 1 is not paid.  He files an action against lawyer 2 and recovers a judgment based on breach of the fee splitting agreement and quantum meruit.  On appeal, the judgment is reversed. The Court of Appeal finds the fee-splitting agreement is unenforceable because the client did not expressly approve the terms of the division, as required by former Rule of Professional Conduct 2-200 (now Rule 1.5.1. It also found that the quantum meruit claim was barred by the two-year statute of limitations (Code Civ. Proc. §339.)