By Maia E. Jerin, Timothy T. BrickLawyers cannot litigate fee disputes between lawyers at different firms, Eighth District Court of Appeals says
March 19, 2024 – An Ohio appellate court confirmed on Friday that state courts lack jurisdiction over fee disputes arising between lawyers at separate firms. Such fee disputes must be mediated or arbitrated by a local bar association or the Ohio State Bar Association.
The lawsuit arose from a concealment action filed in the Cuyahoga County Probate Court concerning the division of legal fees between lawyers who had once been part of the same law firm. In 2019, several lawyers from the Landskroner Law Firm, LLC (“LLF”) resigned and formed a new law firm. The lawyers and their law firms negotiated a separation agreement which, among other things, set forth how fees would be split on cases for which the new firm would be taking over representation. When the membership interests of LLF were subsequently transferred to a trust, which is prohibited by the Rules of Professional Conduct, a dispute arose as to whether lawyers are permitted to share attorney fees with a law firm owned by a trust. The executor of the Estate of Jack Landskroner continued to demand the payment of co-counsel fees and eventually filed two concealment actions pursuant to R.C. 2109.50, which were dismissed for lack of jurisdiction because the local bar association, not the courts, has jurisdiction over fee disputes between lawyers at separate firms.
The Eighth District Court of Appeals affirmed the dismissal, holding that, even though the lawyers had once been part of the same firm, their separation agreement was an agreement between two law firms — not between lawyers of the same firm. As a result, pursuant to Professional Conduct Rule 1.5(f), the fee dispute has to be resolved through bar association dispute resolution, not the courts. The appellate court further held that the probate court lacked jurisdiction over related disputes concerning the division of case expenses and other monetary provisions in the separation agreement because they related to and were not independent from the fee dispute.
The decision highlights the differences in fee disputes between law firms and disputes between lawyers at the same firm, which are treated entirely differently under the Rules of Professional Conduct.
Questions? Contact Maia Jerin or Tim Brick.