Groen, Laveson, Goldberg v. Kancher

827 A.2d 1163, 362 N.J. Super. 350
CourtNew Jersey Superior Court Appellate Division
DecidedJuly 22, 2003
StatusPublished
Cited by8 cases

This text of 827 A.2d 1163 (Groen, Laveson, Goldberg v. Kancher) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Groen, Laveson, Goldberg v. Kancher, 827 A.2d 1163, 362 N.J. Super. 350 (N.J. Ct. App. 2003).

Opinion

827 A.2d 1163 (2003)
362 N.J. Super. 350

GROEN, LAVESON, GOLDBERG & RUBENSTONE, a Pennsylvania Partnership, Plaintiff-Respondent,
v.
Mark S. KANCHER and Shaffer, Bonfiglio, Scerni, & D'Elia, L.L.C., Defendants-Appellants.

Superior Court of New Jersey, Appellate Division.

Submitted June 3, 2003.
Decided July 22, 2003.

Fox, Rothschild, O'Brien & Frankel, attorneys for appellants (Kathryn D. Portner, Atlantic City, and Ronald J. Shaffer, Philadelphia, PA, of counsel; Mr. Shaffer, on the brief).

Archer & Greiner, attorneys for respondent (Charles W. Heuisler, Haddonfield and Arthur H. Jones, Jr., on the brief).

Before Judges STERN, COBURN and COLLESTER.

The opinion of the court was delivered by STERN, P.J.A.D.

Defendants, a former partner of plaintiff law firm and his new firm, appeal from an order of March 5, 2002 entered in favor of plaintiff in the amount of $163,488.24, with interest, for contingent fees in cases taken by plaintiff's former partner, defendant Mark Kancher, Esq., upon his withdrawal from plaintiff firm, and for 50% of any future attorneys fees in such contingency cases. A motion for summary judgment on non-contingent fee cases was denied, without prejudice, pending an accounting. *1164 The matter was certified as final by order of May 31, 2002, and at a Civil Appeal Settlement Program conference, the open claims were dismissed. Hence, we deal only with the dispute relating to the contingent fees.

Defendants, Kancher and his new firm, argue that "the partnership agreement, as construed by the trial court, contains a financial disincentive to withdrawing partners, constitutes an unreasonable restriction on the practice of law and is unenforceable as a matter of law." They also claim that "the trial court's interpretation of the agreement was inconsistent with its plain meaning," and the trial court erred in granting summary judgment against Kancher's new firm and in denying that firm's cross motion for summary judgment.

Under plaintiff's partnership agreement executed by defendant Kancher, the contingent fees in cases he took with him upon withdrawal "shall be divided equally between the Partnership and the withdrawing Partner." The agreement provided in relevant part:

All clients shall be deemed to be clients of the Partnership, and not of the Partner or Partners who brought them to the Partnership or who provide services to them. Upon the withdrawal of a Partner from the Partnership for any reason, all client files shall remain with the Partnership, subject, however, to the wishes of the clients and the requirements of laws and regulations governing the conduct of attorneys-at-law. In the event any client requests that his file be transferred to the withdrawing Partner, then:
A. In the case of non-contingent fee matters, the earned but uncollected fees pertaining to the matter, together with all expenses advanced by the Partnership in respect of the matter, shall be paid to the Partnership either by the client or the withdrawing Partner when the file is delivered to the withdrawing Partner.
B. In the case of contingent fee matters, the fee eventually received for the matter, if any, shall be divided equally between the Partnership and the withdrawing Partner. The expenses advanced in respect of the matter shall be reimbursed dollar-for-dollar at the time the expenses or fee for the matter is received from the client or the adverse party. The first funds received from any source shall be applied to expenses advanced by the Partnership, then to expenses advanced by the withdrawing Partner, and finally on account of fees. In the event no fee or expenses are received, then the withdrawing Partner shall have no responsibility for the expenses advanced by the Partnership before the transfer of the file.[1]

The terms of an agreement concerning fee splitting on termination of a partnership or an attorney's relationship with a law firm could well impact on the decision of the partner or associate to leave a firm, or to do so with cases. Such agreement can affect an attorney's decision, or that of his or her potential new firm, to take cases notwithstanding a client's desire to remain *1165 represented by the attorney who left the previous firm. And if the disengaging attorney has spent considerable work on the case, the client can be disadvantaged if he or she cannot retain the departing lawyer who may be unwilling to devote his resources, or those of the new firm, to such a case when the benefits of his work effort will go elsewhere. Under this view, the partnership agreement both has a "financial disincentive" not to withdraw from a firm, or not to take firm clients, and could impact on the clients' "freedom of choice" with respect to representation. See Rules of Professional Conduct ("RPC") 5.6. See also, e.g., Jacob v. Norris, McLaughlin & Marcus, 128 N.J. 10, 607 A.2d 142 (1992); Leonard & Butler, P.C. v. Harris, 279 N.J.Super. 659, 653 A.2d 1193 (App. Div.), certif. denied, 141 N.J. 98, 660 A.2d 1196 (1995).

However, we are not dealing with an agreement that has the same impact on the client's right to counsel of choice as in Jacob v. Norris, McLaughlin, supra, or any other case involving a restriction on the withdrawing attorney's ability to continue the representation of a client. Moreover, a partner or associate cannot be permitted to devote firm time and resources on a case with a potentially large contingency and then leave without owing the firm for its services. On balance, we uphold the agreement in dispute and the judgment against Kancher. However, there is at least a question as to the knowledge of the Shaffer firm regarding the scope of the agreement, independent of the ability to enforce it against a non-party, and we reverse the judgment against the Shaffer firm and remand for further proceedings against it.

I.

In mid-July of 1999, Kancher decided to leave plaintiff Groen and join defendant Shaffer, Bonfiglio, Scerni & D'Elia (Shaffer).[2] He brought with him several cases originally with the Groen firm on a contingent fee basis (Groen cases). Kancher entered an agreement with the Shaffer firm (Shaffer Agreement) to give Shaffer 60% of all contingent fees received by Kancher in his cases. When he received fees in the Groen cases, Shaffer retained 60% of the fee, and Kancher sent Groen 50% of his 40% share. Therefore, Groen received 20% of the fees collected in the Groen cases.

Groen filed a complaint against Kancher for violating their Agreement and against Shaffer for the fees to which Groen was entitled.[3] Groen asked the court to require Kancher and Shaffer to provide a full accounting of the fees received and to "compel[ ] said defendants to pay over to plaintiff an amount equal to reimbursement of all costs incurred by plaintiff while it was counsel of record in the matter and 50% of the total fee remaining after deduction of expenses." Similar demands were made with respect to completed and pending non-contingent fee cases.

Following discovery, each party moved for summary judgment. Groen claimed that it was "shorted" $163,488.24 from the fees received in completed cases involving a contingent fee arrangement. The judge concluded that Jacob v. Norris, McLaughlin, supra, "is certainly not factually apposite *1166

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Cite This Page — Counsel Stack

Bluebook (online)
827 A.2d 1163, 362 N.J. Super. 350, Counsel Stack Legal Research, https://law.counselstack.com/opinion/groen-laveson-goldberg-v-kancher-njsuperctappdiv-2003.