Font Size: 
Fee-Sharing Agreement Found to Apply to Enhanced Award
New York Law Journal
April 02, 2009
An attorney who initiated a medical malpractice claim is entitled to one-third of the enhanced fees awarded to two other attorneys who contended they did the bulk of the work involved in the settlement of the case for $6.7 million five years later, the New York Court of Appeals ruled Tuesday.
Attorney Elliot Sinel of Druckman & Sinel had a valid fee-sharing agreement with attorney Steven B. Samuel calling for Druckman & Sinel to be compensated "at the rate of one-third of the entire legal fee recovered" during the case, and that share must include the enhanced fees Samuel and Steven Pegalis, an attorney Samuel retained on his own volition, were ultimately awarded, a 6-0 court determined in Samuel v. Druckman & Sinel, LLP, 39.
"Where, as here, an agreement 'is complete, clear and unambiguous on its face [it] must be enforced according to the plain meaning of its terms,'" Judge Eugene F. Pigott Jr. wrote, quoting Greenfield v. Philles Records, Inc., 98 NY2d 562 (2002). "Because the language 'one-third of the entire fee recovered' is subject to no interpretation other than the one proffered by Sinel, he is entitled to recover that amount."
Under the sliding scale for attorney's fees contained in Judiciary Law §474-a(2), the lawyers were entitled to $805,767 on the $6.7 million settlement with the New York City Health & Hospitals Corp. on behalf of a child who suffered brain injury during birth at Bellevue Hospital.
Samuel and Pegalis subsequently sought enhanced fees due to the complexity and difficulty of the litigation. Samuel and his firm, Samuel & Ott, were awarded $1.13 million by the trial court and Pegalis and his firm, Pegalis & Erickson, were awarded $762,173 in Manhattan Supreme Court.
It is one-third of that $1.9 million in enhanced fees that Sinel argued he is entitled to under his agreement. Sinel was retained in 2000 to bring the malpractice action and he referred the case to Samuel for trial in 2002.
The case settled in May 2005 in its third week of trial.
At one point, Samuel wrote a check to Sinel for one-third of Samuel's enhanced award but Pegalis did not, and Sinel rejected the payment as not being all the money he was entitled to under his contract with Samuel, according to Tuesday's ruling.
Samuel then sued Sinel and Druckman & Sinel, contending that Sinel was not entitled to any legal fees because Sinel allegedly violated the Code of Professional Responsibility DR 2-107. Specifically, Samuel contended that Sinel failed to inform their client that both firms would be responsible for their representation, a contention that both the Appellate Division and the Court of Appeals rejected.
The Court of Appeals steered clear of an issue that shaped the ruling by the 1st Department, which found in a 3-2 ruling that Sinel was entitled to $268,589, a one-third share of the unenhanced fee, but no more because Sinel "made no contribution to the extraordinary services provided by Samuel and Pegalis" that earned them the enhanced fees in the latter stages of the litigation.
Pigott wrote that it is not a court's job to weigh the respective contributions of parties in valid fee-splitting arrangements.
"It is of no moment that Sinel did not contribute to that part of the work that resulted in the award of the enhanced fee," Pigott wrote. "In the realm of fee-sharing disputes, 'courts will not inquire into the precise worth of the services performed by the parties.'"
The court also found unpersuasive Samuel's arguments that the fee-sharing arrangement should be invalidated on ethical grounds.
"Samuel, who is bound by the same Code of Professional Responsibility as Sinel, cannot be heard to argue that the fee-sharing agreement and the obligations thereunder must be voided on ethical grounds, when he freely agreed to be bound by and received the benefit of the same agreement, particularly where, as here, there is no indication that the client was in any way deceived or misled," Pigott wrote.
The court's reasoning Tuesday mirrored that of the two dissenting justices in the First Department ruling in Samuel v. Druckman & Sinel, 50 AD3d 322 (2008). They held that limitations on Sinel's one-third share of the fees would be tantamount to "effectively rewriting" the fee-splitting agreement in contradiction of contract law.
Brian J. Isaac of Pollack Pollack Isaac & Decicco represented Sinel and Druckman & Sinel.
Barbara D. Goldberg of Mauro Goldberg & Lilling in Great Neck argued for the plaintiffs.
