Saggese v. Kelley11/30/2005
Suffolk.
October 5, 2005.
Present: Marshall, C.J., Greaney, Spina, Cowin, Sosman, & Cordy, JJ.
Contract, Compensation of attorney, Consideration, Ratification. Frauds, Statute of. Attorney at Law, Fee-sharing agreement, Canons of ethics.
Civil action commenced in the Superior Court Department on April 3, 2000.
The case was heard by Janet L. Sanders, J., and a motion to alter or amend the judgment was also heard by her.
The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.
Following a jury-waived trial, a judge in the Superior Court found the defendants James Michael Kelley, Kathleen M. Kelley, and Kelley Law Associates, P.C., liable to the plaintiff, Alfred E. Saggese, Jr., pursuant to an oral fee-sharing agreement, for one-third of the legal fees they received for professional legal services rendered to a client referred to them by Saggese. The judge also denied their motion to alter or amend the judgment, which sought relief for the Kelleys individually from a liability which they contend is an obligation of their professional corporation alone.
On appeal the Kelleys argue that the judge erred by finding that there was an enforceable oral agreement, where (1) there was no present consideration for the agreement; (2) the agreement falls under the Statute of Frauds, G. L. c. 259, ยง 7, and thereby is unenforceable; and (3) the agreement is void and unenforceable because Saggese did not obtain the client's prior consent to the fee sharing in violation of both the Canons of Ethics and Disciplinary Rules Regulating the Practice of Law, S.J.C. Rule 3:07, Canon 2, DR 2-107 (A) (1), 382 Mass. 773 (1981), and Mass. R. Prof. C. 1.5 (e), 426 Mass. 1315 (1998)., The Kelleys also argue that (4) Saggese was not entitled to relief because of an incident that they claim invokes the clean hands doctrine; and (5) the individual attorneys cannot be liable for debts of the corporate defendant through which they were openly engaged in the practice of law. We conclude that the parties entered into an enforceable fee-sharing agreement and affirm the judgment in all respects. We also decide that hereafter, in order to satisfy professional ethical requirements, lawyers who participate in a fee-sharing agreement must obtain the client's consent in writing before the referral is made.
1. Background
We summarize the facts found by the trial judge, and note that her findings of fact are not challenged as clearly erroneous. See Mass. R. Civ. P. 52 (a), as amended, 423 Mass. 1402 (1996). See also New England Canteen Serv., Inc. v. Ashley, 372 Mass. 671, 674 (1977).
Saggese is a seasoned trial lawyer specializing in criminal and personal injury work. He was admitted to practice in 1972. Kathleen Kelley was admitted to practice in 1988. James Kelley, her brother, was admitted to practice in 1992. The Kelleys were members of the same small firm in 1992. By March 1, 1996, they were members of the firm Kelley & Donovan, P.C., and on May 1, 1997, the name of the firm was changed to Kelley Law Associates, P.C.
In 1996, Saggese was looking for attorneys to lease space with him in a suite of offices at 11 Beacon Street in Boston. The Kelleys were looking for space for their firm. The parties met for the first time in late fall of 1996 and eventually executed a three-year lease in December, 1996. The tenants of the premises were Saggese and Kelley & Donovan, P.C. To facilitate the transaction, Saggese and Kelley & Donovan, P.C., entered into a real estate partnership whereby they would lease the space together but maintain separate l
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