Ethics Hotline & Opinions

ETHICS DOCKET NO. 1989-34

"

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 1989-34

Attorney referral fee; effect of confidentiality


You state that you represent Attorney X in a dispute with Attorney Y. Several years ago, Attorney X employed Attorney Y to work for him. According to Attorney X, if a case were settled for one of Attorney X's clients, Attorney X would receive 100 percent of the attorney's fee but if Attorney Y settled a case for one of his own clients, then 50 percent of the fee would be paid to Attorney X. It was Attorney X's understanding that any clients referred subsequently to Attorney Y who were previously clients of Attorney X, would be considered Attorney X's clients. A dispute arose between the parties concerning fees owed. Attorney Y admitted that he had not paid Attorney X fees for clients that belonged both to Attorney X and Attorney Y. The parties have entered into settlement negotiations, but Attorney X is concerned that if he enters into a settlement which contains a confidentiality clause he will be violating Rule 8.3 of the Rules of Professional Conduct.

Rule 8.3 provides in relevant part that:

(a) A lawyer having knowledge that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority.

You have not referred to any particular Rule which Attorney Y may have violated. However, you may be concerned about Rule 8.4 which in pertinent part provides:

It is professional misconduct for a lawyer to: . . .

(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; 

(d) engage in conduct that is prejudicial to the administration of justice . . . .

However, the facts yu have provided are not sufficient to determine whether Rule 8.4(c) or 8.4(d) were violated. While you relate Attorney X's understanding of his agreement with Attorney Y, you have not advised us of Attorney Y's understanding of that agreement. Nor have you indicated whether facts exist which show dishonesty, fraud, deceit or misrepresentation on the part of Attorney Y.

Whether Rule 8.4(c) or 8.4(d) [formerly D.R. 1-102(A) (4) and (5)] are violated by a breach of contract will depend primarily upon whether Attorney Y acted with intent to cheat the other party to the contract or intended not to perform a known legal duty. Cf. Attorney Griev. Comm'n v.Gilland, 293 Md. 316 (1982); Arizona State Bar Assoc. Ethics Opinion 87-26. In our opinion, there would be no violation of Rule 8.4(c) or (d) if Attorney Y's failure to pay Attorney X was due to a good faith disagreement as to the nature of his obligation.


"
DISCLAIMER: Opinions of the Maryland State Bar Association (MSBA) Ethics Committee are an uncompensated service of the MSBA. This Committee’s opinions are not binding on the Maryland Court of Appeals, Maryland Attorney Grievance Commission, MSBA or this Committee. The reader is advised that subsequent judicial opinions, revisions to the rules of professional conduct, and future opinions of this Committee may render the Opinions stated herein outdated. As such, the Committee’s opinions are advisory only and neither the Committee nor the MSBA assumes any liability whatsoever with respect thereto. Accordingly, reliance upon the opinions of this Committee is solely at the risk of the user.