On Dec. 19, 2017, the Pennsylvania Supreme Court held in SCF Consulting, LLC v. Barrack, Rodos & Bacine, that a fee-sharing agreement between a law firm and non-lawyers was not per se unenforceable. Given the commonality of the general prescription of ABA Model Rule 5.4 against sharing legal fees with a non-lawyer, subject to certain limited exceptions, the decision by the highest court in Pennsylvania warrants attention. New Jersey’s version of the rule, R.P.C. 5.4, is essentially comparable to that of Pennsylvania.
The facts were that a law firm had an oral contract with a consulting firm, pursuant to which the law firm would pay the consultant a percentage of the law firm’s annual profits for those matters originated by the consultant or on which the consultant performed substantial work. The law firm purportedly breached the agreement, leading to the suit. The law firm argued such a contract was unenforceable based on public policy and, in particular, the prohibitions of Pennsylvania’s Rule 5.4 and the inapplicability of its exceptions.
