Mark R. Leeds sued Reino & Iida, a Professional Corporation, and individual lawyers Donald Reino and Myles Iida, claiming that defendants breached an agreement to pay him 25 percent of attorney fees earned for workers’ compensation cases plaintiff referred to them. According to the complaint, plaintiff and his law firm separated from defendants in October 2010, and a controversy arose regarding plaintiff’s entitlement to fees for cases plaintiff had referred to defendants.
This is the second time this case has been before the Court of Appeal. In the first review, the trial court sustained defendants’ demurrer to the complaint. In 2013, the Court of Appeal reversed and remanded for further proceedings, concluding that plaintiff and his law firm should be given leave to amend their complaint to state a cause of action for breach of contract.
After remand, the trial court granted defendants’ motions for summary judgment, reasoning that the fee splitting agreement was illegal under Rules of Professional Conduct, rule 2-200 because the parties had not obtained written client consent. Leeds again appealed. Following a second review, the Court of Appeal affirmed the trial court in the unpublished case of Leeds v. Reino and Iida.
State Bar Rule 2-200, captioned “Financial Arrangements Among Lawyers,” provides that “[a] member shall not divide a fee for legal services with a lawyer who is not a partner of, associate of, or shareholder with the member unless: [¶] (1) The client has consented in writing thereto after a full disclosure has been made in writing that a division of fees will be made and the terms of such division; and [¶] (2) The total fee charged by all lawyers is not increased solely by reason of the provision for division of fees and is not unconscionable as that term is defined in rule 4-200.” (Rule 2-200(A).)
The Supreme Court has held that rule 2-200 unambiguously directs that a member of the State Bar ‘shall not divide a fee for legal services’ unless the rule’s written disclosure and consent requirements and its restrictions on the total fee are met. Rule 2-200 “encompass[es] any division of fees where the attorneys working for the client are not partners or associates of each other, or are not shareholders in the same law firm,’ and a lawyer’s failure to comply with rule 2-200 precludes him from sharing fees pursuant to a fee splitting agreement.”
It is undisputed that the parties have not obtained written client consent for the division of fees among them. Leeds contended that client consent was not required, because he performed all of the work on the cases under defendants’ control, and he did not merely refer the cases to defendants. Plaintiff argues that rule 2-200 was not intended to apply to this type of situation.
The Court of Appeal concluded that “no authority supports plaintiff’s contentions.”