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                                         107 N.J.L.J. 281
                                        April 2, 1981


Appointed by the New Jersey Supreme Court


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.
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