Court Opinion

ID: 4966626
Source: CourtListenerOpinion
Date Created: 2021-09-24 16:20:16.147676+00
Date Added: 2024-06-11T08:16:12.990616
License: Public Domain

DISSENTING OPINION BY
MUNDY, J.:
Based upon its interpretation of the Uniform Partnership Act (UPA),1 the Majority adopts the position that, absent agreement to the contrary, when a partnership that is engaged in legal practice dissolves, any unrealized contingent fees remain assets of the partnership subject to continued mutual fiduciary duties among the partners during a winding up period, and that such fees when realized are accountable to the partnership. Because I believe the Majority applies this default position of the UPA in a manner that erroneously supersedes the right of each client to determine his or her own representation, and because in my view the parties in the instant case acted with a contrary intent, I respectfully dissent.2
The Majority analyzes the provisions of the UPA relative to the rights and duties of partners upon dissolution of the partnership and winding up of partnership affairs in the absence of an agreement controlling those issues.3 In doing so, the Majority recognizes that, “the UPA’s definition of partnership property does not speak directly to contingency fees. Thus, no specific provision of the UPA applies to the instant situation.” Majority Opinion at 777. Nevertheless, the Majority accepts as persuasive the cases from other jurisdictions that base their holdings on the conclusion that the UPA does apply to contingent fees. See Frates v. Nichols, 167 So.2d 77 (Fla.Dist.Ct.App.1964); Resnick v. Kaplan, 49 Md.App. 499, 434 A.2d 582 (1981), cert. denied, 292 Md. 14 (1981); Jewel v. Boxer, 156 Cal.App.3d 171, 203 Cal.Rptr. 13 (1984); Ellerby v. Spiezer, 138 *783Ill.App.3d 77, 92 Ill.Dec. 602, 485 N.E.2d 413, (1985).4
I do not dispute the Majority’s basic contention that, absent an agreement to the contrary, the UPA presumes unrealized contingent fees are partnership assets subject to the partners’ continuing duty to the partnership during the winding up process. That presumption, however, imposes an obligation on the partnership and the partners to fully disclose to their contingency-fee clients each partner’s continuing duty to the partnership. In my view, the Majority’s position in this case fails to take into proper account the unique relationship between an attorney and his or her client and subordinates the rights of a client to decide his or her own representation. It is axiomatic that a client is the owner of his or her cause of action and of his or her case file. See Maleski by Chronister v. Corporate Life Ins. Co., 163 Pa.Cmwlth. 36, 641 A.2d 1, 6 (1994) (noting “it is the client, rather than the attorney who holds a proprietary interest in [file] document[s]”); Pa.R.Prof.Cond. 1.15(b). A client has the right to change representation at any time for any reason. Mager v. Bultena, 797 A.2d 948, 958 (Pa.Super.2002), appeal denied, 572 Pa. 725, 814 A.2d 678 (2002); see also Kenis v. Perini Corp., 452 Pa.Super. 634, 682 A.2d 845, 849 (1996). An attorney has no property rights to the cause of action or contractual right to an unrealized contingent fee or to continued representation of a client by virtue of a fee agreement. Mager, supra at 958.
No Pennsylvania appellate court has ever awarded a proportionate share of a contingency fee to a firm discharged by the client well prior to the occurrence of the contingency, for the simple reason that a client may discharge an attorney at any time, for any reason. Once the contractual relationship has been severed, any recovery must necessarily be based on the work performed pursuant to the contract up to that point. Where the contingency has not occurred, the fee has not been earned.
An attorney ... does not acquire a vested interest in a client’s action. To rule otherwise would make fiction of the oft-repeated rule that a client always has a right to discharge his attorney, for any reason or for no reason.
Id., at 957-958 (citations and footnotes omitted).
For a client to be able to exercise this right meaningfully, full candor and disclosure is necessary. To that end, the Pennsylvania Rules of Professional Conduct are replete with provisions establishing the ongoing duty of an attorney to advise a client of changes affecting his or her representation of the client.
Rule 1.4. Communication
(a) A lawyer shall;
(1) promptly inform the client of any decision or circumstance with respect to which the client’s informed consent, as defined in Rule 1.0(e), is required by these Rules;
(5) consult with the client about any relevant limitation on the lawyer’s conduct when the lawyer knows that the client expects assistance not permitted *784by the Rules of Professional Conduct or other law.
(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.
Pa. Rule of Prof. Conduct 1.4 (emphasis added).
(c) A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.
Pa. Rule of Prof. Conduct 1.2(c).
(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.
(e) A lawyer shall not divide a fee for legal services with another lawyer who is not in the same firm unless:
(1) the client is advised of and does not object to the participation of all the lawyers involved, and
(2) the total fee of the lawyers is not illegal or clearly excessive for all legal services they rendered the client.
Rules of Prof. Conduct 1.5(c), (e) (emphasis added).

Division of Fee

[4] A division of fee is a single billing to a client covering the fee of two or more lawyers who are not in the same firm. A division of fee facilitates association of more than one lawyer in a matter in which neither alone could serve the client as well, and most often is used when the fee is contingent and the division is between a referring lawyer and a trial specialist. Paragraph (e) permits the lawyers to divide a fee if the total fee is not illegal or excessive and the client is advised and does not object. It does not require disclosure to the client of the share that each lawyer is to receive.
Id. Explanatory Comment.
(e) “Informed consent” denotes the consent by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.
Rules of Prof. Conduct 1.0(e).
[4] A client has a right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyer’s services. Where future dispute about the withdrawal may be anticipated, it may be advisable to prepare a written statement reciting the circumstances.
Rules of Prof. Conduct 1.16, EXPLANATORY COMMENT [4].
Rule 1.17. Sale of Law Practice
A lawyer or law firm may, for consideration, sell or purchase a law practice, *785including good will, if the following conditions are satisfied:
(c) Actual written notice is given to each of the seller’s clients, which notice must include at a minimum:
(1) notice of the proposed transfer of the client’s representation, including the identity and address of the purchasing lawyer;
(2) a statement that the client has the right to representation by the purchasing lawyer under the preexisting fee arrangements;
(3) a statement that the client has the right to retain other counsel or to take possession of the file; and
(4) a statement that the client’s consent to the transfer of the representation will be presumed if the client does not take any action or does not otherwise object within 60 days of receipt of the notice.
Rules of Prof. Conduct 1.17(c).
In addition to the Rules of Professional Conduct, our Supreme Court has emphasized the importance of maintaining clients’ free and informed choice of representation in the context of lawyers’ competition for clients. In Adler, Barish, Daniels, Levin and Creskoff v. Epstein, 482 Pa. 416, 393 A.2d 1175 (1978), our Supreme Court recognized that certain conduct by former associates of a law firm, in enticing clients of the firm to discharge the firm and hire the former associates’ new firm, could support a claim of tortious interference with contractual relations where the alleged conduct “frustrates, rather than advances, [the] clients’ ‘informed and reliable decisionmaking.’” Id. at 1181. In Adler, several associates, planning to leave the Alder Barish firm that employed them, used anticipated fees from pending Alder Barish cases to secure a line of credit for their anticipated new firm. Upon leaving Alder Barish, the former associates engaged in a campaign of solicitation of Alder Barish clients to induce them to change representation. The Court noted as follows.
[Former Associates’] concern for their line of credit and the success of their new law firm gave them an immediate, personally created financial interest in the clients’ decisions. In this atmosphere, [Former Associates’] contacts posed too great a risk that clients would not have the opportunity to make a careful, informed decision.
Id. (emphasis added).
While these examples do not speak directly to the issue at hand, from them, I discern a clear public policy in this Commonwealth giving the rights of the client primacy regarding decisions affecting his or her representation. In turn, those rights are dependent on full and accurate disclosure of options to the client to insure a free and informed choice is made.
The UPA’s default position, regarding the rights and obligations of partners for winding up partnership affairs and the disposition of unrealized contingent fees, when there is no previous agreement among the partners relative to these issues, cannot operate to defeat the rights of a client to make an informed decision about future representation. Nor does the UPA’s default position preclude the partners from creating a contemporaneous agreement at the time of dissolution.5
*786Accordingly, upon dissolution of the Et-kin and Huber (E & H) and Yankowitz, Etkin and Huber partnerships in this case, in the absence of a prior agreement, the parties had three options upon which they could have agreed in winding up the affairs of the partnership. They could have advised each client that unless they hired new counsel, the former partner the client chose to continue with the case would do so, 1) on behalf of the partnership in winding up partnership matters (the UPA default position); 2) in his individual capacity subject to fee sharing; or 8) individually, independent of the partnership.6 In each case, the client would be in a position to make an informed decision whether to continue with either attorney or to seek alternative representation. As noted in the summary of the facts by the trial court, the parties agreed to send letters to all clients, advising them of the dissolution of the partnerships and presenting them with options for future representation. Those letters provided each client with the third option described above, to wit, that the client could choose continued representation by either former partner through their respective new firms or hire new counsel.7 Importantly the letters sent to *787the clients did not advise them that the continued representation by either party would be in the capacity of a partner winding up partnership business or that any realized fee would be divided accordingly. Therefore, the parties are bound by the representation options they agreed to present to the clients. See In re Berlant, 458 Pa. 489, 328 A.2d 471, 480 (1974) (Manderino, J., concurring and dissenting) (noting, “[contingent fee agreements] have been subjected to careful scrutiny to see that no unfair advantage is taken of the clients’ position or lack of knowledge”). Appellant cannot now raise a claim based upon the UPA, having agreed to a notice to the clients that foreclosed that option as a choice for the clients.8
In response to concerns about a client’s rights respecting representation, the Majority accepts the reasoning of jurisdictions finding the default position of the UPA dispositive, including Jewel. The Jewel court, in an unsupported and conclusory fashion, dismissed that concern as follows.
[T]he right of a client to the attorney of one’s choice and the rights and duties as between partners with respect to income from unfinished business are distinct and do not offend one another. Once the client’s fee is paid to an attorney, it is of no concern to the client how that fee is allocated among the attorney and his or her former partners.
Jewel, supra at 178, 203 Cal.Rptr. 13.
Accordingly, the Majority concludes that the clients of E & H “chose to work with an attorney who owed a continuing duty to his former partner. The client’s choice did not alter that duty.” Majority Opinion at 781. The Majority’s conclusion ignores the attorneys’ duty to fully inform their clients of their continuing partnership obligation. It also ignores the fact that the parties in this case agreed to the letter describing the representation options available to their clients, which did not include representation as “an attorney who owed a continuing duty to his former partner.” Id. In these circumstances, I conclude the clients’ choices did extinguish that continuing duty.
I believe the view expressed by the Missouri Court of Appeals better reflects this Commonwealth’s clear emphasis on the supremacy of the rights of a client to make informed decisions about who will represent him or her.
The decision as to whether the contingent-fee contract remains an asset of the dissolved partnership is solely the decision of the informed client who has the free choice to further engage the services of the former partners, the withdrawing partner — either individually or as a partner in a new partnership — or *788an entirely different attorney or law firm.
Welman v. Parker, 328 S.W.3d 451, 456 (Mo.Ct.App.2010).
The Majority oversimplifies the holding in Welman as follows. “In essence, the Missouri court treated the case not as a dissolution of a partnership in which the partners had a fiduciary duty to one another, but as a situation in which a client merely chose to leave one firm and hire another.” Majority Opinion at 781. To the contrary, the Missouri court recognized the continuing fiduciary duty of former partners. However, it also recognized that the rights of the clients temper that duty, “which requires both the law firm and the withdrawing partner to advise the client of this material change in representation and to obtain the client’s informed direction as to how the client desires to be represented from that point forward.” Welman, supra at 456 (emphasis added). The client in Welman had not been advised of any ongoing fiduciary duty to the former law firm when he chose the departing partner and her new firm to continue his representation. Id. at 454. If an attorney from a dissolved partnership is precluded by agreement or operation of law from representing a partnership client independent of his or her obligations to the former partnership, a client must be so advised in order for him or her to make an informed choice of representation.9 As noted, in my view the parties in the instant case did not offer their clients the choice of continuing with either partner acting for the partnership in winding up the partnership affairs.
Further, I disagree with the cases relied on by the Majority and their conclusion that the issue of continued partnership fiduciary duty and division of the contingency fee is “of no concern” to a client’s decision about continued representation.
The clients of the partnership were free to be represented by any member of the dissolved partnership or by other attorneys of their choice. This right of the client is distinct from and does not conflict with the rights and duties of the partners between themselves with respect to profits from unfinished partnership business since, once the fee is paid to an attorney, it is of no concern to the client how the fee is distributed among the attorney and his partners.
Ellerby, supra at 416, citing Jewel, supra at 17 (emphasis added).
*789In my view, the continuing obligations an attorney may have to a dissolved partnership is a concern of the client before the contingency occurs and the fee is paid. Certainly, whether an attorney acts individually or as a partner winding up partnership affairs implicates issues relevant to a client’s informed choice of representation. The fact that an attorney may receive only a portion of a fee may, in the client’s view, affect his or her confidence in the attorney’s incentive to optimally pursue the case. A client may also be concerned about divided loyalty between the client and the former partnership, about potential animosity connected with the dissolution, and about the effects on privilege and sharing of information between the former partners.
In EUerby, the Illinois court opined that allowing a client to continue with a former partner independent of continued partnership duties
would encourage partners of a law partnership facing dissolution to make attempts to convince clients with cases having the most lucrative potential to hire them individually and discharge the partnership. This sort of case-chasing by attorneys should not be encouraged. Moreover, it places the clients of the dissolved law partnership precisely where they should not be placed; in the middle of a dispute among the partners over money.
Ellerby, supra at 417. However, the rule espoused by the Majority would encourage a converse competition. If an attorney’s expected return on a case is diminished due to partnership obligations, the attorney may encourage clients to proceed with the other partner, knowing they will profit without having to expend a concomitant effort. In addition, as noted, there is nothing preventing a partnership from agreeing to an allocation of cases per the clients’ choices without regard to winding up or division of fees. There is no rule or policy preventing such an agreement, which could equally subject the clients to competition between the attorneys over money.10
Professor Herbert M. Kritzer, of the University of Wisconsin School of Law has described factors affecting an attorney’s decision to engage in contingency fee cases.
The popular image of the contingencies involved in the contingency fee does not fully represent the way the fee works. The obvious contingency is that the lawyer risks receiving nothing if he or she fails to recover for the client. For most contingency fee lawyers this is probably the least important contingency. Rational lawyers want to screen out eases with a low probability of obtaining a recovery. The more important contingencies facing lawyers are the uncertainties over the amount of the recovery and amount of investment by the lawyer that will be necessary to obtain the recovery.
Herbert M. Kritzer, The Wages of Risk: The Returns of Contingency Fee Legal Practice, 47 DePaul L.Rev. 267, 270-271 (1998) (emphasis added).11
*790To reiterate my point, it is for the client to determine the relative importance these factors will bear on his or her decision about future representation when faced with the dissolution of their existing counsel’s partnei'ship. It is the attorneys’ obligation to ensure the clients possess a full awareness of their options in order to make an informed choice.
In sum, I believe that the default position directed by the UPA with respect to the treatment of contingent fee cases where the contingency is unrealized at the time a partnership engaged in legal practice dissolves, is subordinated to the rights of the client to make an informed decision relative to continued representation by the partnei'ship, by any one partner, or by other counsel. In the instant case, the parties agreed on the language contained in the letters advising E & H’s clients of the options they had relative to future representation after the dissolution of the partnerships. That language did not include the default position of the UPA, Le., that either partner, if continuing with supervision of the case, did so on behalf of the pai'tnership in winding up partnership affairs. Rather the clients were given the choice of hii’ing either partner in his respective new firm or hiring alternative counsel. Appellant cannot now invoke the UPA to undermine the informed choices made by E & H’s clients. For these reasons, I would reverse the decision of the trial court granting Appellee’s post-trial motion and direct the reinstatement of the trial court’s July 1, 2010 verdict.

. 15 Pa.C.S.A. §§ 8301-8365.

. I agree with the Majority that Appellant’s reliance on Solo v. Padova, 21 Phila.Co.Rptr. 22 (Pa.Com.Pl.1990), is misplaced as the case law relied on by the Solo court involved either a specific controlling agreement or the necessity of dividing assets prior to the occurrence of the contingency upon which the fee could be realized. Solo does not address the issue I deem dispositive and hence is unhelpful.

.See 15 Pa.C.S.A. § 8352 (providing that dissolution does not terminate a partnership until the winding up of partnership affairs is completed).

. Several states have applied these principles to other types of business entities. See Fox v. Abrams, 163 Cal.App.3d 610, 210 Cal.Rptr. 260, 263 (1985) (professional corporation); Sullivan, Bodney & Hammond v. Bodney, 16 Kan.App.2d 208, 820 P.2d 1248, 1250 (1991)(law corporation); Hurwitz v. Padden, 581 N.W.2d 359, 362 (Minn.Ct.App.1998) (LLC); Gull v. Van Epps, 185 Wis.2d 609, 517 N.W.2d 531, 536 (App.1994) (LLC); and LaFond v. Sweeney, — P.3d -, 2012 WL 503655 (Colo.Ct.App.2012) (LLC).

. In the case where partners have agreed that uncompleted partnership contingent fee cases shall belong to the partnership and be subject to winding up obligations, the clients should be advised that neither attorney may be retained independent of the partnership much the same way that an attorney may be precluded from representing either of two former *786clients when a conflict of interest arises. See Pa. Rule of Prof. Conduct 1.7 cmts. [4], [29]. As discussed herein, the parties, per agreement, in their letters to their clients did not communicate any such limitation.

. If the parties upon dissolution of the partnerships disagreed about the status of outstanding contingent fee cases and the proper options to present to their clients, it was incumbent upon them to resolve their dispute before advising their clients, or at a minimum to advise their clients of the ongoing disagreement and its potential outcomes.

. The letters contained the following language.
[ETKIN AND HUBER LETTERHEAD]
RE Your case
Dear
Please be advised that the partners of Etkin & Huber, LLP are discontinuing their law practice together. As of June 15, 2007, Robert A. Huber, Esquire will have a new law practice at the firm of Huber and Pal-sir, LLC, 201 Spring Garden Street, Suite 201, Philadelphia, PA 19123. Michael A. Etkin, Esquire, together with Jennifer R. Etkin, Esquire will continue their law practice at the firm's office located at 4961 Oxford Avenue, Philadelphia, PA 19124. Because Mr. Huber is most familiar with your file and has primarily handled your case, your tile will be transferred to him at his new office for continued work and handling from June 15, 2007 on.
Attached for your use is a checklist to select the attorney that you want to handle your case. Kindly return the form either by facsimile transmission or in the envelope provided. If we do not receive the selection of attorney form back within thirty (30) days your file will continue to be handled by Mr. Huber from his new office location. The fee arrangements will remain the same. Please feel free to contact Mr. Huber or Mr. Etldn/Ms. Etkin with any questions as follows.
Robert A. Huber, Esquire
Huber and Palsir, LLC
[address and phone]
Michael A Etkin, Esquire
Jennifer R. Etkin, Esquire
[address and phone]
Very truly yours
N.T., 5/27/10, at 5, Exemplar of Letter Sent to Clients, Plaintiff’s Trial Exhibit P-3. The selection of attorney form contains the following language.

ATTORNEY CHOICE

_ I wish to be represented by Robert A. Huber, Esquire and authorize transfer of all
paper and electronic files to Mr. Huber at his new Huber and Palsir, LLC.
_ I wish to be represented by Michael A. Etkin, Esquire or Jennifer R. Etkin, Esquire and authorize transfer of all paper and electronic files to Mr. Etkin or Ms. Etkin.
*787- I wish to be represented by Jack Yan-kowitz, Esquire and authorize transfer of all paper and electronic files to Mr. Yan-kowitz.
_ I wish to be represented by_ and authorize transfer of all paper and electronic files to him/her at the firm of
[identification and signature lines] Id.

. The Majority suggests that I argue "that by sending letters to the partnership’s clients that did not advise that the partners had a continuing duty to each other for unrealized contingency fees, the parties agreed not to consider such fees as partnership assets.” Majority Opinion at 777, n. 4. To the contrary, I recognize that the parties may not have reached a meeting of the minds on this issue. However, by agreeing to the form of the letter advising the partnership clients of their representation options, the parties may not now undermine the informed choices of those clients to resolve a dispute, about which they neglected to inform their clients.

. I believe this obligation of the attorneys to inform applies equally to instances where there is a partnership agreement providing that unrealized contingent fees remain partnership assets subject to a continuing obligation of the partners to one another during the winding down of partnership affairs. Accordingly, if, contrary to such an agreement, the partners upon dissolution provide their clients with representation options that do not inform them of the continuing duties to the partnership, the client's choice of representation will prevail. In such case, the partner not selected by the client cannot belatedly invoke the partnership agreement to enforce his or her participation in the division of after-realized contingent fees. But see Ruby v. Abington Mem. Hosp., 50 A.3d 128, 136-37 (Pa.Super.2012) (applying the Jewel court’s rationale, that duties among partners in a dissolved firm are inapposite to a client’s choice of representation, to an employment agreement between a firm and an associate separated from that firm). The Ruby Court did not focus on what options had been presented to the client in that case when he chose to retain the departing associate's new firm, or on whether the original firm acquiesced in presenting those options. To the extent that Ruby is inconsistent with my interpretation of the duty of attorneys to inform their clients of the options available for continued representation when the attorneys’ relationship with their firm alters and with our Commonwealth’s policy to protect the clients’ subsequent choices, I would disapprove its holding.

. Presumably, attorneys will be constrained from improper conduct in soliciting clients or obfuscating client choice by the applicable Rules of Professional Conduct and exposure to civil action. See Adler, supra.

. For example, a complex personal injury claim, based upon the theory of product liability or medical negligence, may require the expenditure of costs in the tens of thousands of dollars. The client may have signed a fee agreement by which the lawyer would be entitled to one third of the recovery in return in part for his risk in the outlay of expenses. However, in cases of dissolution, because of his or her obligation to former partners, the return to the lawyer trying the case may be ten percent or less. A client may legitimately *790be concerned whether the attorney is still going to be motivated to advance the costs of trial.