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					Matter of Levy (2007 NY Slip Op 51323(U))


  [*1]
                                                                   Matter of Levy

                                             2007 NY Slip Op 51323(U) [16 Misc 3d 1106(A)]

                                                            Decided on June 28, 2007

                                                              Sur Ct, Nassau County

                                                                      Riordan, J.

                       Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

                        This opinion is uncorrected and will not be published in the printed Official Reports.



  Decided on June 28, 2007
                                                          Sur Ct, Nassau County


                       In the Matter of the Estate of Scott C. Levy a/k/a Scott Levy, Deceased.




  330923



  The Appearances of Counsel are as follows:

  Genser Dubow Genser & Cona(for Administratrix)

  445 Broadhollow Road

  Suite 19

  Melville, NY 11747

  Parker & Waichman(for Petitioner)

  111 Great Neck Road

  Great Neck, NY 11021


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Matter of Levy (2007 NY Slip Op 51323(U))

  John B. Riordan, J.

       In this administrator's accounting proceeding of an insolvent estate, the decedent Scott Levy
  was a personal injury lawyer. One of the alleged creditors of the estate is the law firm of Parker &
  Waichman, LLP ("P&W"), which claims it is entitled to fees of $39,946.01 pursuant to fee-splitting
  agreements it had with the decedent; P&W's claim has been rejected by the administrator.

        P&W now moves the court for an order compelling the administrator to comply with a
  previously-served discovery demand. The administrator opposes the motion on two grounds; first,
  that it is "burdensome, overbroad, immaterial and irrelevant"; and second, that P&W's status as a
  creditor must be determined before discovery can be had and P&W has failed to establish that it
  provided some work, labor, or services which contributed to the earning of the fees, which the
  administrator contends is a necessary prerequisite for a valid and enforceable fee-splitting
  agreement.

  For the reasons that follow, P&W's motion is held in abeyance pending a determination that the
  fee-splitting agreements between P&W and decedent are binding and enforceable such that P&W
  may be deemed a creditor of decedent's estate.

          BACKGROUND

  On November 30, 1995, P&W sent the first of seven letters to Scott Levy, Esq. of Levy and
  Holmes, to confirm the fee-splitting arrangement to which the parties had agreed for negligence
  matters referred by P&W to Levy. According to the record, P&W sent its final letter to Levy
  decedent on February 6, 1998.

  Levy failed to pay petitioner promptly, and in the parties' Stipulation, dated May 22, 2003, Levy
  agreed to apply for a home equity loan or to refinance his house to pay off his debt. [FN1] Although
  Washington Mutual subsequently approved a residential mortgage loan for Levy's [*2]wife,
  administrator Meryl Levy, on November 25, 2003, Levy died before the closing on the loan took
  place. Thus, P&W never received the balance of the debt allegedly due.


                                                                  DISCUSSION




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Matter of Levy (2007 NY Slip Op 51323(U))

  Threshold Question of Standing

  Although the court has before it a motion to compel the administrator to comply with P&W's
  combined demand for discovery, there is a threshold question of standing, which must be
  considered first. P&W argues that it is a creditor of decedent's estate; however, absent sufficient
  proof that the fee-splitting agreements between P&W and Levy are legally binding and
  enforceable, P&W's claim lacks merit, and thereby renders its discovery motion moot. "The
  standing of a party to seek judicial review of a particular claim or controversy is a threshold matter
  which, once questioned, should ordinarily be resolved by the court before the merits are reached. . .
  . If, however, resolution of the standing issue would have no effect on the outcome of an action or
  proceeding, . . . a court may decline to address the standing question as academic"(Hoston v New
  York State Dep't of Health, 203 AD2d 826, 827 [3rd Dept 1994] [citations omitted]). Because the
  court's consideration of P&W's standing will determine whether it has a valid claim at all, P&W's
  motion is held in abeyance pending a determination that P&W and decedent entered into binding
  and enforceable fee-splitting agreements.

  Requirements for an Enforceable Fee-splitting Agreement

       Courts have held that "[a]ttorneys who share services and responsibility for a legal matter but
  who are not partners or associates may agree in advance on a division of fees based upon such
  responsibility and services" (Carter v Katz, Shandell, Katz and Erasmous, 120 Misc 2d 1009, 1016
  [Sup Ct Queens County 1983]; Model Code of Prof'l Responsibility DR 2-107[A] [1990],
  hereinafter referred to as NY-DR § 2-107[A]).

  When determining whether a fee-splitting agreement is enforceable, courts do not inquire into
  whether the division of the attorney's fee is proportionate to the work actually performed by each
  attorney (Oberman v Reilly, 66 AD2d 686, 687 [1st Dept 1978]; Aiello v Adar, 193 Misc 2d 649,
  656 [Sup Ct Bronx County 2002]). Instead, "an agreement between attorneys for the division of a
  legal fee is valid and enforceable in accordance with the terms set forth in the agreement so long as
  the attorney who seeks his share of the fee has contributed some work, labor or service toward the
  earning of the fee" (Witt v. Cohen, 192 AD2d 528, 529 [2nd Dept 1993] [citation omitted]; see also
  Reich v Wolf & Fuhrman, P.C., 36 AD3d 885, 886 [2nd Dept 2007]; Rozales v Pegalis &
  Wachsman, 127 AD2d 577, 578 [2nd Dept 1987]; In re Estate of Fuller, 122 AD2d 792 [2nd Dept
  1986]; Aiello v Adar, 193 Misc 2d 649, 655 [Sup Ct, Bronx County 2002]; Oberman v Reilly, 66
  AD2d at 687; but see Matter of Adoption of E.W.C., 89 Misc 2d 64, 77 [Sur Ct Nassau County
  1976]). Accordingly, "there must be a showing that the forwarding attorney did more than a mere
  recommendation of a lawyer" (Aiello v Adar, 193 Misc 2d 649, 656 [Sup Ct, Bronx County 2002];
  Benjamin v Koeppel, 85 NY2d 549, 556 [1995]).

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Matter of Levy (2007 NY Slip Op 51323(U))




  Although "[i]t has been observed that where reasonable and freely negotiated, . . . a contingent fee
  agreement, as with any contract' should be enforced in accord with the parties' intentions[,]" Lynn v
  Purcell, 11 Misc 3d 400, 406 [Sup Ct Nassau County 2005], quoting Alderman v Pan Am World
  Airways, 169 F3d 99, 102-104 [2d Cir 1999], "[a] fee sharing [*3]agreement which violates the
  Code of Professional Responsibility is void as against public policy"(Lynn v Purcell, 11 Misc 3d at
  406 [citation omitted]).


  Pursuant to NY-DR § 2-107(A),[FN2] if attorneys who are neither partners nor associates of the
  same firm enter into a fee-splitting arrangement, there must be proper disclosure to the relevant
  clients. "A client is simply to be made aware that another attorney is jointly or independently
  representing his or her interests at no additional expense to her therefor. Any further elaboration or
  specificity regarding the exact arrangement between the collaborating attorneys is not ethically
  mandated by this Code provision" (Carter v Katz, Shandell, Katz and Erasmous, 120 Misc 2d at
  1018; see NY-DR § 2-107[A][1]). The Model Code of Professional Responsibility also mandates
  that the attorney's fee be reasonable, in the aggregate, for the fee-splitting agreement to be
  enforceable (NY-DR § 2-107[A][3]; see also, Alderman v Pan Am World Airways, 169 F3d 99,
  102 [2d Cir 1999] [stating that courts have broad discretion "to refuse to enforce contingent fee
  arrangements that award fees that exceed a reasonable amount"]).

  Finally, NY-DR § 2-107(A) states that an attorney's fee "may be divided [among lawyers who are
  neither partners nor associates of the same firm] in proportion to the services performed by each
  lawyer . . . [or] the fee may be divided without regard to that proportion if each lawyer by a writing
  given the client . . . assumes joint responsibility [FN3] for the representation'" (Aiello v Adar, 193
  Misc 2d at 657;NY-DR § 2-107[A][2] [1990] [upholding fee-splitting agreement because
  proponent of agreement "took a more active role in the action than merely referring the case[,]"
  provided full disclosure to client regarding such agreement, and assumed joint responsibility of the
  case], quoting NY-DR § 2-107[A] [1990]; compare Ford v Albany Med. Ctr., 283 AD 843, 843-44
  [3rd Dept 2001] [concluding that because the attorney failed to assume joint responsibility for the
  case in question, and his fee-splitting share was not commensurate with the amount of work he
  performed, fee-splitting agreement was unenforceable, but he was entitled to his portion of the
  attorney's fee based on quantum meruit]; and Dugan v Dorff Const. Co., 281 AD2d 158, 159 [1st
  Dept 2001] [finding fee-splitting [*4]agreement unenforceable because fee allotted to proponent of
  agreement was not commensurate with services rendered to the client]; and Nicholson v Nason and


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Matter of Levy (2007 NY Slip Op 51323(U))

  Cohen, P.C., 192 AD2d 473 [1st Dept 1993] [determining that fee-splitting agreement was
  unenforceable because proponent "admittedly gave no [written disclosure] to any of the clients, and
  whose work, the record establishes, was merely that of a finder, searching for potential clients and
  conducting non-investigative interviews"]).



  CONCLUSION

       P&W alleges that it is entitled to its share of the attorney's fees recovered by decedent on the
  matters P&W referred to him, pursuant to their fee-splitting arrangements. P&W contends that
  because it had joint responsibility over the cases in question, it "equally owned'" the cases, and is
  therefore entitled to its share of the attorney's fee recovered for each case.

        However, there is insufficient evidence in the record for the court to determine that the fee-
  splitting agreements between P&W and decedent are binding and enforceable, and therefore, that
  P&W has a valid interest in decedent's estate. Most notably, it is unclear from the records whether
  P&W contributed at all to the attorney's fees recovered by decedent or simply referred the cases to
  decedent, and whether the relevant clients were informed of the fee-splitting arrangements agreed
  to by petitioner and decedent, pursuant to NY-DR § 2-107(A).

      Unless there is evidence presented to support the conclusion that P&W is a creditor of
  decedent's estate, the court will find that P&W lacks standing to pursue this matter. Therefore,
  P&W's discovery motion is held in abeyance pending a showing that the fee-splitting agreements
  between P&W and decedent are binding and enforceable.

  P&W is therefore directed to serve and file affirmations detailing the services it claims it performed
  to earn a portion of the fees at issue not later than July 11, 2007. Failure to provide such proof will
  result in denial of the instant motion and dismissal of its claim. The administrator may submit
  opposing affidavits no later than July 25, 2007, on which date the instant motion will be resubmitted
  for decision.

  This constitutes the decision and order of the court.

          Dated: June 28, 2007

          JOHN B. RIORDAN


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Matter of Levy (2007 NY Slip Op 51323(U))


          Judge of the

          Surrogate's Court

  The Appearances of Counsel are as follows:

  Genser Dubow Genser & Cona(for Administratrix)

  445 Broadhollow Road

  Suite 19

  Melville, NY 11747

  Parker & Waichman(for Petitioner)

  111 Great Neck Road

  Great Neck, NY 11021

                                                                     Footnotes


  Footnote 1:On May 22, 2003, P&W and Levy signed a Stipulation, in which P&W agreed to
  withdraw its motion for attorney's fees in the matter of Naum Rosenfeld against Edmund Sweeney
  in exchange for Levy's acknowledgment that he owed petitioner $42,779.34, and any additional fees
  due in relation to two pending cases.

  Footnote 2: "There are three requirements that must be satisfied for a fee-splitting agreement to be
  enforceable between attorneys who are neither partners nor associates of the same firm:

  A lawyer shall not divide a fee for legal services with another lawyer who is not a partner or
  associate of the lawyer's law 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 the

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Matter of Levy (2007 NY Slip Op 51323(U))

  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
  render the client." NY-DR § 2-107(A).

  Footnote 3: In Aiello, the Bronx County Supreme Court concluded:

  [J]oint responsibility is synonymous with joint and several liability. When lawyers assume joint

  responsibility' in order to share a fee under NY-DR § 2-107 without regard to work performed,

  they are ethically obligated to accept vicarious liability for any act of malpractice that occurs

  during the course of the representation. Although the harsh financial consequences of NY-DR §

  2-107 create a strong incentive for the referring lawyer to keep himself/herself abreast of the

  manner in which the matter is being handled by the receiving lawyer, the rule does not create an

  ethical obligation to supervise the receiving attorney's work.

  Aiello v Adar, 193 Misc 2d 649, 660 [Sup Ct, Bronx County 2002].



                                                                     Return to Decision List




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