Lawyers in Illinois who benefit from clients sent their way under referral agreements with other lawyers will still need to pay the referring attorneys, even if the referral agreements don’t include language explicitly declaring the lawyers agree to share “joint financial responsibility” for the case, the Illinois Supreme Court has declared.
On May 18, the justices of the state’s high court unanimously sided with a decision from the Illinois Second District Appellate Court in finding a Libertyville lawyer has to honor his referral agreement with a Gurnee-based personal injury law firm, and pay them their cut of more than $109,000 in attorney fees earned from referred workers compensation cases.
“We note, moreover, that if the clients in this case had retained a single law firm with multiple partners, our Rules of Professional Conduct would not have required the retainer agreements to expressly notify the clients, in writing, as a precondition to enforcement of the fee agreement, that the partners would be subject to liability along with the attorney providing the actual legal services if that attorney committed malpractice,” the justices wrote. “Defendant has not explained, and we do not see, why the situation should be any different where, as here, the lawyers involved have agreed to assume the very same joint financial responsibility but simply do not practice in the same firm.”
The court’s opinion was authored by Chief Justice Lloyd A. Karmeier. Justices Charles E. Freeman, Robert R. Thomas, Thomas L. Kilbride, Rita B. Garman, Anne M. Burke and Mary Jane Theis all concurred in the decision.
The dispute at the heart of the case has been at issue in various Illinois courts for years. In 2012, the firm of Ferris, Thompson & Zweig, which has offices in Chicago, Deerfield, Gurnee and Waukegan, sued Waukegan lawyer Anthony Esposito in Lake County Circuit Court for breach of contract, claiming Esposito didn’t pay them the 45 percent of fees they asserted the firm was owed under a referral agreement between the Ferris firm and Esposito.
The case ultimately landed before the Illinois Supreme Court , which found in 2014 that circuit courts had jurisdiction to resolve disputes between attorneys bickering over fees owed for work on workers compensation cases.
However, the parties remained at odds, now over fees allegedly owed for at least 10 worker compensation cases referred by the Ferris firm to Esposito. According to court records, those cases brought in more than $109,000 in fees for Esposito.
Esposito has refused to pay the Ferris firm from those cases, claiming the contract is unenforceable, because it did not explicitly dictate the two law practices would share “joint financial responsibility.”
A Lake County judge sided with Esposito, but that decision was overturned on appeal by justices at the Illinois Second District Appellate Court in Elgin, which said the Lake County court’s interpretation of Illinois Supreme Court Rules of Professional Conduct, which govern such fee-sharing arrangements, was flawed.
Esposito then appealed that decision to the state high court. But justices there also told him the fee-sharing rules don’t say what he claimed they did.
The rules, the justices explained, lay out three criteria for valid fee-sharing agreements. The first provision requires that “each lawyer assumes joint financial responsibility for the representation.”
However, the justices said, this does not mean the fee-sharing agreements must include language explicitly requiring lawyers to assume such joint financial responsibility in order for the agreements to be valid and enforceable.
The justices noted, for instance, the Rules of Professional Conduct in Indiana do require such language in their fee-sharing contracts.
“Our version of the rule, by contrast, contains no such language,” the justices wrote. “To read it as if it did would require us to depart from the rule’s plain language and insert a condition we did not express when the rule was adopted. Under basic rules of construction, that is something we may not do.”