Lawyer Referral Fees and the (Unintended?) Legacy of Noris.

• Author: Sullivan, Mark J.

If a Florida attorney retains a fee interest in a referral, does he or she assume unlimited liability for the potential legal malpractice of the working attorney or is his or her liability governed by Florida's comparative fault statute, which is intended to prevent damage awards against a party that are not proportional to that party's actual fault? (1) Rule 4-1.5 of the Rules Regulating The Florida Bar provides that when one lawyer refers a matter to another, "each lawyer assumes joint legal responsibility for the representation."(2) The Third District, in its 1997 decision, Noris v. Silver, 701 So. 2d 1238 (Fla. 3d DCA 1997), interpreted this language literally to suggest that if the referring attorney and working attorney agreed to divide the attorneys' fees as expressly permitted by the rule, then the referring attorney "would be liable" for the malpractice committed by the working attorney.

This article argues that the phrase "joint legal responsibility" in Rule 4-1.5 and as applied by the Noris court is not synonymous with traditional "joint and several liability," and that rather than being co-extensive, the liability between the referring and working lawyer should be subject to a comparative negligence analysis pursuant to F.S. [section]768.81. To date, no Florida appellate court has ruled on the applicability of a comparative negligence analysis in this context, perhaps because the legislature abolished pure joint and several liability in 2006--years after the Third District decided Noris. (3) However, because Noris has never been overruled, yet may still be technically wrong, its uncertain legacy likely frustrates rather than promotes the policy goals it presumably seeks to advance.

Rule 4-1.5

Rule 4-1.5 of the Rules Regulating The Florida Bar, titled, "Fees and Costs for Legal Services," governs the ethical considerations of various fee agreements, through subsections (f) "Contingent Fees," and (g) "Division of Fees Between Lawyers in Different Firms." Rule 4-1.5(g) reads:

(g) Division of Fees Between Lawyers in Different Firms. Subject to the provisions of subdivision (f)(4)(D), a division of fee between lawyers who are not in the same firm may be made only if the total fee is reasonable and:

(1) the division is in proportion to the services performed by each lawyer; or

(2) by written agreement with the client:

(A) each lawyer assumes joint legal responsibility for the representation and agrees to be available for consultation with the client; and

(B) the agreement fully discloses that a division of fees will be made and the basis upon which the division of fees will be made.4

The Third District relied upon this rule and prior Florida Supreme Court precedent to reach the conclusion in Noris that Rule 4-1.5 renders any referring attorney who retains a financial interest in the matter liable for the potential malpractice of the working attorney:

[W]hen fees are divided pursuant to Rule 4-1.5(g)(2), "each lawyer assumes joint legal responsibility for the representation...." Therefore, if Silver and Falk agreed to divide the attorney's fee, Silver would be liable for the malpractice committed by Falk.... Accordingly, we hold that if Falk and Silver agreed to divide the attorney's fees, then Silver is legally responsible for the malpractice committed by Falk (emphasis added).

In the 20 years since, Noris has been cited extensively by secondary authorities as one of the few reported decisions in the country directly addressing attorney liability in the context of Model Rule 4-1.5's "joint responsibility" language. (5) Indeed, a 2005 Texas Law Review note described Noris as the "seminal case" on the issue. (6) But analysis of Noris suggests that the opinion should be revisited for two reasons: First, although arguably couched in dicta, the court's analysis may have misapplied the controlling law at the time. Second, the court's perception at the time Noris was decided, that both attorneys could be found jointly and severally liable, may no longer be viable given the Florida Legislature's decision to adopt comparative negligence in lieu of joint and several liability in the years since the opinion. In either case, the authors believe that the decision frustrates the public policy concerns typically advanced in support of referral fees and, in so doing, potentially harms rather than protects those who seek representation.

The Road to Noris

The Third District decided Noris in 1997 on the heels of the 1995 landmark decision, Chandris, S.A. v. Yanakakis, 668 So. 2d 180, 185-6 (Fla. 1995). In Chandris, the Florida Supreme Court reviewed two legal questions certified by the U.S. Court of Appeals for the 11th Circuit related to the enforceability of a contingency fee contract to provide legal services in Florida by an attorney not authorized to practice in the state. The Chandris court would ultimately find that Florida contingent fee agreements entered by attorneys not subject to the state's professional regulations are unauthorized legal services and are void as against public policy, and further, that contingency agreements that do not comply with the regulations generally are also void as against the public interest. (7)

This holding, and the court's express disapproval of a line of cases that permitted the enforcement of noncompliant contingent fee contracts by attorneys seeking fees, effectively shattered any remnants of what was once considered the wall between disciplinary rules and civil remedies. In dissent, Justice Anstead presciently complained about the "broad sweep of the blanket rule adopted by the majority in making the Rules of Professional Conduct rules of law," writing that it was not only contrary to caselaw, (8) but also contrary to the rules themselves. (9) Specifically, Justice Anstead cited a portion of the preamble to Florida's Rules of Professional Conduct, that provides:

Violation of a rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached. In addition, violation of a rule does not necessarily warrant any other nondisciplinary remedy, such as disqualification of a lawyer in pending litigation. The rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability. Furthermore, the purpose of the rules can be subverted when they are invoked by opposing parties as procedural weapons. The fact that a rule is a just basis for a lawyer's self-assessment, or for sanctioning a lawyer under the administration of a disciplinary authority, does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the rule. Accordingly, nothing in the rules should be deemed to augment any substantive legal duty of lawyers or the extra-disciplinary consequences of violating such duty. Nevertheless, since the rules do establish standards of conduct by lawyers, a lawyer's violation of a rule may be evidence of a breach of the applicable standard of conduct. (10)

Justice Anstead closed his dissent by cautioning that "[w]e are venturing into uncharted territory today based on a factual situation that simply does not appear to justify such a drastic pronouncement." (11)

Shortly thereafter, the First District decided Smith v. Bateman Graham, P.A., 680 So. 2d 497 (Fla. 1st DCA 1996), which rejected a law firm's efforts to seek an injunction against a former employee prohibiting him from soliciting the firm's clients, based on a lack of standing. In so doing, the court cited the preamble, just as Justice Anstead had in his Chandris dissent, for the idea that "violation of a rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached," and that although they can be used for sanctioning or self-assessment, the rules do "not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the rule." (12)

The Smith court then concluded that it "[did] not read Chandris as authorizing a private cause of action for the ethics rules," and, candidly acknowledging that it may have read...