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Rich v. Simoni

Rich v. Simoni

Case No. 
14-0998
Type of Proceeding: 
Certified Question from the United States District Court for the Northern District of West Virginia
Issues: 

Are the West Virginia Rules of Professional Conduct (“WVRPC”) statements of public policy with the force of law equal to that given to statutes enacted by the West Virginia Legislature?

Background: 

This case focuses on a fee-splitting agreement between Gary W. Rich (“Rich”), a lawyer, and Joseph Simoni (“Simoni”), a non-lawyer.  Pursuant to the agreement, Rich had promised to compensate Simoni for work he had performed relative to two civil actions, the Fairmont Litigation and the Spelter Litigation.  Instead of compensating Simoni in the form of hourly wages, Rich, who was local counsel for the plaintiffs in both cases, allegedly agreed to pay Simoni a portion of any contingency fees he earned through the successful outcome in the two cases.

By January 2011, the plaintiffs in both cases had obtained successful results and the attorneys’ fees were split between Rich and out-of-state counsel.  Despite the agreement between Rich and Simoni, Rich did not pay Simoni any of the fees.  In January of 2012, Rich sought a declaratory judgment, arguing (1) that Simoni was not entitled to compensation for his work in either case and (2) sharing legal fees with Simoni would violate Rule 5.4 of the WVRPC, which states that “[a] lawyer or law firm shall not share legal fees with a nonlawyer.”  Simoni responded with a counterclaim and amended counterclaim, in which he sought compensation under the theories of quantum meruit, unjust enrichment and breach of an implied contract.

Positions of the Parties: 

Petitioners

The Petitioners have argued that the majority of jurisdictions have concluded that the Rules of Professional Conduct are declarations of public policy with the force of law and are applicable outside the context of attorney disciplinary proceedings.  Moreover, the Petitioners note that “many courts” have invalidated and refused to enforce fee-sharing agreements that violate the Rules of Professional Conduct.  Furthermore, courts have extended this rule to equitable and/or other non-contract claims that would produce the same effective result.

Respondent

The Respondent argues that West Virginia law should permit him to collect a reasonable and equitable sum from Rich as compensation for the services he rendered and the role he played in the litigation.  Furthermore, Rule 5.4 of the WVRPC should not be interpreted as a statement of public policy that would deny Simoni the right to receive compensation from Rich under the guise of protecting some intangible public interest.  While the WVRPC define unethical conduct for members of the West Virginia State Bar that may result in discipline and/or sanctions, the rules are not statements of public policy that should be used as a procedural weapon to prevent Simoni from receiving the reasonable value of his well-documented services, particularly through the previously mentioned non-contractual theories.

Third-Party Respondent

The WVRPC are expressions of public policy and entitled to the same weight as statutes for several reasons.  First, the Constitution authorizes the Judiciary to make these rules regulating the courts and the bar, and only the Judiciary can make these rules.  In making the WVRPC, the Supreme Court of Appeals exercised its Constitutional authority under a provision that expressly states that any rules will “have the force and effect of law.”  Therefore, the WVRPC are expressions of public policy made by the only body entitled to make these expressions.  Second, in holding that the Rules embody the public policy of West Virginia, the Supreme Court would confirm that the Rules were written for good policy reasons.

Probable Impact: 

Even though attorneys are not ethically allowed to split a portion of a contingent fee with a non-lawyer, it is unlikely that the Court will hold that the Petitioner does not have to pay anything to the Respondent.  The Court will likely hold that a non-lawyer is entitled to reasonable compensation for the benefits provided to an attorney, as it would be unequitable to allow an attorney to refuse to pay a non-lawyer for the services received.

While this decision may appear to go against the policy and spirit of the WVRPC, by allowing a non-lawyer to recover payment for an agreement that is illegal under the WVRPC, an attorney who enters into such an agreement could still be fined, suspended and/or reprimanded in an appropriate manner.  Therefore, this decision would still dissuade attorneys from attempting to enter into such agreements, due to the fact that the non-lawyer will still receive payment based on the benefit conferred upon the attorney, and the attorney would still be subject to disciplinary actions.

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