Court of Appeals Voids Fee-Sharing Agreement

An empty courtroom

Division I of the Washington Court of Appeals recently refused to enforce a fee-sharing agreement between two plaintiffs’ lawyers because the arrangement had not been confirmed in writing with the client as required by RPC 1.5(e)(1)(ii). Kayshel v. Chae, __ Wn. App.2d __, 483 P.3d 1285 (2021), involved an individual employment discrimination claim and a separate wage class action. The attorney who was retained initially by the client—the claimant in the individual case and the then-potential class representative in the class action—later associated another lawyer in the class action.

(Note: The original Court of Appeals opinion dated April 12 was withdrawn and a substitute opinion was filed on May 17 to correct a footnote regarding attorney fees on appeal. The substitute opinion did not change the fee-sharing analysis reflected in this post. An updated Pacific Reporter citation to the substitute opinion should follow.)

The two lawyers eventually agreed on a fee split in percentage terms. They wrote the agreement by hand over breakfast and later confirmed the terms between themselves by email. Although the second lawyer related that he had received the client’s oral consent in a telephone call, the client was never presented with the written agreement.

The first lawyer then had a dispute with the client and withdrew from both cases. The class action was later certified and the second lawyer was appointed class counsel. The class action settled and resulted in an $800,000 attorney fee award. At that point, the first lawyer sought part of the award under the fee-sharing agreement. The trial court agreed, but the Court of Appeals reversed.

The Court of Appeals found that the agreement between the lawyers was unenforceable because they had not confirmed the client’s consent in writing:

RPC 1.5(e)(1)(ii) provides that a fee division between attorneys who are not at the same firm is permitted only if the client agrees to “the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing.”

We agree with [the first lawyer]… that the “agreement confirmed in writing” does not require the client to physically sign the… Agreement, though that would be preferred for obvious reasons. However, there must be something in writing that conveys the client actually is aware of and agrees to the terms of the fee division agreement. 483 P.3d at 1290 (emphasis in decision).

Because the first lawyer had withdrawn, his fee claim was framed procedurally as an attorney lien. The Court of Appeals, therefore, remanded the case to the trial court to determine whether the first lawyer was instead entitled to quantum meruit recovery based on evidence of his contribution to the fund created. In the meantime, Kayshel serves as a very pointed reminder of the importance of carefully following the requirements of the fee-sharing rule.