Link to original WordPerfect Document
107 N.J.L.J. 281
April 2, 1981
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the New Jersey Supreme Court
OPINION 474
Division of Fees
Professional Association
and Withdrawing Member
The inquirer asks about the propriety of a proposed agreement
for the division of legal fees between a professional association
of attorneys as defined by the Professional Service Corporation Act
(N.J.S.A. 14A:17-1 et seq.) and a withdrawing member. The
provisions in question are apparently intended to establish a
comprehensive plan for the division of categories of files of the
parties and the predetermined division of fees generated by these
files without regard to the work performed by the parties. We note
that in this inquiry, as in the inquiry which resulted in our
Opinion 420, 103 N.J.L.J. 194 (1979), the inquirer has used the
word "files." There is a distinction between a client's file which
may continue to be open for years, and the performance on behalf of
a client of legal services in any given matter which will
ultimately come to a conclusion. Lest there be any confusion
arising from the use of this word, we assume that the inquirer
means "matters requiring legal services" within the meaning and
intent of DR 2-107.
The specific question is couched in the following terms:
The work contemplated to be performed by the
withdrawing shareholder, although related to work done
for the client prior to withdrawal is a separate and
distinct project.
By way of example the inquirer indicates that it is anticipated
that many of the clients of the new firm will be real estate
developers and that work for some of these clients may include
representation in connection with contract negotiations,
representation before planning boards and boards of adjustment,
site plan applications, representation of developers at title
closings on tracts and representation of sellers at title closings
to ultimate purchasers.
DR 2-107(C) appears to permit existing firm matters to be the
subject matter of a predetermined fee arrangement with no relation
to the work performed, either by the withdrawing shareholder or the
surviving professional corporation. So this Committee in Opinion
420, 103 N.J.L.J. 194 (1979), determined that "old files," i.e.,
matters which were then in process, could be the subject matter of
a predetermined fee arrangement. However, "new files," i.e., new
matters which require legal services after withdrawal, would be
barred by the general provisions of DR 2-107. Here the distinction
the inquirer attempts to make is "new legal services" performed for
an old client. A reading of Opinion 420, supra, and DR 2-107
compels the result that truly "new legal services" could not be the
subject matter of a predetermined fee arrangement between the
withdrawing partner and the professional corporation. It should be
emphasized that the determination of what constitutes a truly "new
legal service" is a factual one, and this Committee makes no
comment on the hypothetical question posed concerning real estate
developers, for, under certain circumstances, the variety of work
desired by the developer could be considered as "one project"
rather than a series of new projects.
* * *
This archive is a service of
Rutgers University School of Law - Camden