Ruby v. Abington Memorial Hospital
50 A.3d 128
| Pa. | 2012Background
- YRCH appeals a trial court order denying its Petition for Determination of Attorneys’ Fees and reducing Beasley’s share to 75% while awarding YRCH 25%.
- Two employment contracts signed by Erbstein at Beasley governed fee sharing: a 1996 Employment Agreement and a 2004 Operating Agreement.
- Erbstein left Beasley in 2006; Rubys chose to continue with Erbstein and signed an almost identical contingency fee with YRCH, with Erbstein retaining control of the file until 2008.
- Contingency fees for Erbstein’s cases, including the Ruby matter, were at issue when settlement occurred for about $643,333.32 in fees.
- Trial court held Beasley was entitled to 75% and YRCH to 25% of the fees under the contracts; court discussed unfinished business under partnership law.
- YRCH argued it was not bound by Beasley’s contracts since it was not a party to them; the court examined Uniform Partnership Act implications.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a nonparty law firm be bound by a partner’s fee-sharing contract? | YRCH Not bound; contract only binds Beasley and Erbstein. | Beasley’s contract governs fees and YRCH may claim share subject to agreement. | YRCH may take its share subject to the employment agreement terms. |
| May unfinished business and fee allocation be governed by Uniform Partnership Act/ fiduciary duties despite a written contract? | Beasley fee-splitting is a restrictive covenant harming competition. | Contractual fee-splitting is enforceable; quantum meruit not controlling. | Uniform Partnership Act framework governs unfinished business; contract governs allocation consistent with the agreement. |
| Is there any client-rights impact from fee-splitting or change of counsel? | Client’s right to choose counsel could be implicated by fee-sharing. | Client’s right to counsel is not affected; fee allocation occurs after settlement. | Client rights to choose counsel not impacted; fee allocation remains under contract terms. |
Key Cases Cited
- In re Estate of Barilla, 535 A.2d 125 (Pa. Super. 1987) (contracts can bind parties to performance, not third parties; relevance to nonparties)
- Rosenfeld, Meyer & Susman v. Cohen, 146 Cal.App.3d 200 (Cal. App. 3d 1983) (unfinished business and fiduciary duties when departing partners)
- Jewel v. Boxer, 156 Cal.App.3d 171 (Cal. App. 3d 1984) (unfinished business and distribution of fees among former partners)
- Mager v. Bultena, 797 A.2d 948 (Pa. Super. 2002) (distinguishes quantum meruit where a contract exists)
- Hess v. Gebhard & Co. Inc., 808 A.2d 912 (Pa. 2002) (restrictive covenants implications in employment contexts)