SCF Consulting, LLC, Aplt. v. Barrack Rodos
7 EAP 2017
| Pa. | Dec 19, 2017Background
- SCF Consulting (non‑lawyer) sued law firm Barrack, Rodos & Bacine to enforce an alleged fee‑sharing agreement; the firm denied such an agreement but the complaint’s allegations are taken as true at the preliminary‑objections stage.
- The fee arrangement, if it existed, would violate Pa. R. Prof. Conduct 5.4(a), which generally forbids lawyers from sharing legal fees with non‑lawyers.
- The Superior Court sustained the law firm’s preliminary objections, holding the agreement unenforceable as against public policy; the Superior Court decision was affirmed below.
- The Supreme Court’s Opinion Announcing the Judgment of the Court (OAJC) held that a fee‑sharing agreement in violation of RPC 5.4(a) is not per se unenforceable on public‑policy grounds, but the non‑lawyer’s relative culpability could affect enforceability.
- Justice Baer (concurring and dissenting) agrees the contract is not per se void but argues non‑lawyers are not bound by the RPC and thus cannot share responsibility; he would hold the agreement enforceable and instead refer the lawyer for disciplinary proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a fee‑sharing agreement between a lawyer and non‑lawyer that violates RPC 5.4(a) is void as against public policy | SCF: Agreement is enforceable; law firm cannot invoke its own ethical breach to avoid payment | Firm: Agreement is unenforceable because it violates RPC 5.4(a) and public policy | OAJC: Not per se unenforceable on public‑policy grounds; enforceability may depend on non‑lawyer’s culpability; Justice Baer would hold enforceable and refer lawyer for discipline |
Key Cases Cited
- In re Estate of Pedrick, 482 A.2d 215 (Pa. 1984) (ethical rule violations do not by themselves alter substantive law or invalidate agreements)
- Commonwealth v. Chmiel, 738 A.2d 406 (Pa. 1999) (ethical rules governing attorneys are not substantive law)
- Donald J. Weiss & Assoc. v. Tulloch, 961 A.2d 862 (Pa. Super. 2008) (RPC cannot be used as substantive basis to render an agreement illegal and unenforceable)
- Ballow, Brasted, O’Brien & Rusin P.C. v. Logan, 435 F.3d 235 (2d Cir. 2006) (attorney may not avoid contractual obligations by invoking ethical rules when he freely consented and benefitted)
- Potter v. Pierce, 688 A.2d 894 (Del. 1997) (public policy bars attorneys from escaping contract obligations by citing rules of conduct)
- Shimrak v. Garcia‑Mendoza, 912 P.2d 822 (Nev. 1996) (unfair to allow attorneys to claim pari delicto against laypersons who are not bound by professional rules)
- Wishnefsky v. Riley & Fanelli, P.C., 799 A.2d 827 (Pa. Super. 2002) (Superior Court held unethical fee‑sharing agreements unenforceable; OAJC declined to follow this rule)