In a case arising out of the Deepwater Horizon Litigation and the Court-Supervised Settlement Program established in connection therewith, a Louisiana attorney who had been representing oil spill claimants accepted a job as a staff attorney with the Settlement Program and withdrew from representation of anyone with a claim in the Settlement Program. That lawyer referred one of his prior clients to a law firm in which Appellant was a partner. Although their ‘Attorney Referral Agreement’ was never formally executed, approximately $40,000 was sent from Appellant’s law firm to the client’s previous lawyer and Settlement Program employee.  The Eastern District of Louisiana, sitting en banc, found that Appellant had (among other things) violated Louisiana Rule of Professional Conduct 1.5(e). Finding the Rule ambiguous as applied to the circumstances, however, the U.S. Fifth Circuit disagreed:

Louisiana’s Rule, which differs from the ABA Model Rule, only allows for the division of fees between lawyers who are not in the same firm where: (1) the client agrees in writing to the representation by all of the lawyers involved, and is advised in writing as to the share of the fee that each lawyer will receive; (2) the total fee is reasonable; and (3) each lawyer renders meaningful legal services for the client in the matter.

“Appellant contends that the rule solely applies where two or more attorneys remain jointly responsible to a client, not in situations where a successor attorney splits a fee with a predecessor…. Rule 1.5(e)(1)’s requirement that the client agree to representation by all of the lawyers involved can reasonably be understood to mean all lawyers presently involved in the matter. Similarly, 1.5(e)(3) is written in present, not past, terms: ‘Each lawyer renders meaningful legal services.’ This too implies that the rule was intended to apply when multiple attorneys render legal services at the same time.

“At minimum, the text of the rule leaves some ambiguity as to whether it applies in this context. This ambiguity is seemingly resolved in Appellant’s favor by advisory opinions from both the Louisiana State Bar Association (LSBA) and American Bar Association (ABA). In a footnote of a publicly published advisory opinion, the LSBA Rules of Professional Conduct Committee stated: ‘Rule 1.5(e) would not apply’ ‘where lawyers never worked together simultaneously on the case.’ LSBA Public Opinion No. 12-RPCC-018, at 2 n.3 (2012).  Similarly, the ABA’s Committee on Ethics and Professional Responsibility issued a formal advisory opinion … stating that the rule ‘is limited to situations where two or more lawyers are working on a case simultaneously – not sequentially.’ ABA Formal Opinion No.487 (2019).

“Still, there are factors that muddy the water. The single strongest factor weighing against Appellant’s interpretation is that, when faced with identical facts, the same party, the same application of Rule 1.5(e), and a similar proceeding below in Appellant’s first appeal of the MDL court’s sanctions order, we held squarely that ‘the district court properly applied Rule 1.5(e).’ In re Deepwater Horizon, 824 F.3d at 582. As support, we cited the district court’s statement during its oral findings in the MDL that Rule 1.5(e) is intended to ensure that attorneys ‘can’t just get a fee for referring a case to another lawyer without doing some work.’  Precedent from Louisiana courts, while not conclusive, also weighs against Appellant. For instance, in Bertucci v. McIntire, the court applied Rule 1.5(e)’s close predecessor to a referral fee situation in which the referring attorney ‘maintained an attorney client relationship’ after referral to another attorney but only performed a small proportion of tasks on the matter. No.96-933 (La. App. 5 Cir. 3/25/97), 693 So.2d 7. And in Dukes v. Matheny, the court went a step further, indicating that Rule 1.5(e)’s predecessor rule would apply to a fee arrangement in a situation where ‘the attorneys had not been jointly involved in the representation of the client.’ No.2002-0652, p.5 (La. App. 1 Cir. 2/23/04), 878 So.2d 517, 520. These cases suggest that the current version of Rule 1.5(e) would apply to fee splitting between successive attorneys.

“The principal cases Appellant relies on are not particularly illuminating in either direction. Saucier v. Hayes Dairy Products and O’Rourke v. Cairns together stand for the proposition that when a predecessor attorney signs a contingency-fee contract with a client before being discharged, he is entitled to share in the contingency fee that a successor attorney earns, with the fee apportioned based on several factors, including the work performed by the predecessor attorney. This holding is not necessarily inconsistent with the application of Rule 1.5(e) to fee splitting between successive attorneys. In fact, neither Saucier nor O’Rourke mentions Rule 1.5(e). And there is no clear indication that the fee splitting between successive attorneys mandated by the court in those cases failed to comply with Rule 1.5(e), as it existed at the time.

“Given the compelling arguments on both sides, we conclude that Rule 1.5(e) is ambiguous as applied to this set of facts.  Because attorney suspension is a quasi-criminal punishment in character, any disciplinary rules used to impose this sanction on attorneys must be strictly construed resolving ambiguities in favor of the person charged. Thus, we hold that the en banc court erred by failing to apply the rule of lenity in favor of Appellant.”

 

In re Andry, No.22-30231, 2022 U.S.App.LEXIS 32882 (5^th Cir. Nov. 29, 2022)