Champion v. Superior Court
| Decision Date | 27 May 1988 |
| Docket Number | No. A039803,A039803 |
| Citation | 247 Cal.Rptr. 624,201 Cal.App.3d 777 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Jan CHAMPION et al., Petitioners, v. The SUPERIOR COURT of the City and County of San Francisco, Respondent; James F. BOCCARDO et al., Real Parties in Interest. |
Townsend and Townsend, Paul Vapnek, San Francisco, for petitioners.
Richard M. Bryan, Kathleen A. Foley, Nelson H. Wild, Morrison & Foerster, James J. Brosnahan, San Francisco, for real parties.
Ropers, Majeski, Kohn, Bentley, Wagner & Kane, Robert F. Kane, Ted F. Hannig, James F. Sweeney, Redwood City, Pillsbury, Madison & Sutro, Walter R. Allan, David S. Winton, Steinhart & Falconer, David E. Lombardi, San Francisco, Iwasaki, Thomas & Sheffield, Hardy L. Thomas, Los Angeles, amici curiae for petitioners.
This petition invites us to examine the intricate web woven by a legal partnership specializing in personal injury litigation. A former partner asks us to (1) find that the partnership's agreement for sharing fees for unfinished cases taken by a departing partner violates several rules of professional conduct, and (2) declare that he is entitled to share in the profits of the partnership from all cases pending at the time of his departure. Other former partners and a former client appear as amici curiae in support of the petition. We examine the web because it reaches far into the community, entangling other former partners and former clients. We conclude that because of rule 2-107 of the Rules of Professional Conduct of the State Bar of California and because of public policy, the partnership agreement may not be enforced. We conclude, however, that petitioner is not entitled to share the fees from all cases pending at the time of his departure. In the second part of our opinion, we consider requests to seal the record of this proceeding. We explain the procedures to be used in appellate courts when seeking to file or lodge confidential documents.
In March of 1985, The Boccardo Law Firm amended its partnership agreement to change the way pending cases were treated upon termination or withdrawal of a partner. Whereas former section 9.9 presented different formulae for sharing client fees between the partnership and the departing partner, depending upon the progress of the cases, new section 9.9 established a uniform rule. It provided that
At the time of the amendment some fifteen attorneys were members of The Boccardo Law Firm. James F. Boccardo held a 51 percent interest in the firm and the other partners held interests ranging from 2.8 percent to 5.4 percent. Petitioner, a five-year associate of the firm, joined the firm, taking a 1.0 percent interest and signing an agreement to be bound by the terms of the partnership agreement and all amendments thereto. (In this opinion, we use the term "petitioner" to refer to Jan Champion and Jan Champion, a Professional Corporation.) For reasons not pertinent here, petitioner resigned on June 30, 1986, holding a 1.79 percent interest in the firm. At least eight former clients of The Boccardo Law Firm elected to be represented by petitioner after his departure.
Shortly after petitioner's departure, The Boccardo Law Firm and its remaining partners, real parties in interest here, filed an action against petitioner and others seeking, inter alia, a declaration of rights and duties of the partners under the agreement. Petitioner answered and cross-complained, asserting a different interpretation of the partnership agreement. Both petitioner and real parties moved for summary adjudication, seeking to establish and enforce their differing interpretations of section 9.9 of the partnership agreement. After briefing and argument, the court ruled in real parties' favor. This petition followed.
After the petition was filed we were deluged with requests to seal parts of the record. We also received two applications to appear as amici curiae. We granted the requests of amici curiae, and at first we granted some requests to seal documents. But more requests to seal were filed and briefs arrived addressing public and sealed information without distinction, often assuming confidential treatment without specifically requesting it. It became increasingly apparent that the situation called for a more deliberate approach to the question of sealing documents. We deferred ruling on other requests for sealing, but held the documents in confidence while we considered the requests. We are now prepared to rule on both the petition and the requests to seal documents. We address the merits of the petition first.
Petitioner takes the position that new section 9.9 of the partnership agreement is ambiguous and may be interpreted to call for sharing between former partners and the partnership of fees from all pending cases of the firm, not just cases taken by the departing partner. Petitioner contends that if the section is not so interpreted it violates several rules of professional conduct. Petitioner asserts that the court erred in interpreting the section to cover only fees from cases taken by petitioner and in ruling that the section so interpreted was enforceable.
In order to demonstrate conflict with rules of professional conduct, petitioner presents the example of a partnership client who chose to retain him after his departure from the partnership. Petitioner points out that since his departure he has taken several depositions in her case and plans to conduct further discovery, and that he expects to conduct a two-week trial in the case. But if the jury returns a verdict of $160,000, petitioner will receive a fee of only $912, while the partnership will receive $50,088. Petitioner contends that this arrangement: (1) provides an unconscionable fee to The Boccardo Law Firm in violation of rule 2-107 of the Rules of Professional Conduct, (2) constitutes unlawful fee splitting without the consent of the client, in violation of rule 2-108 of the Rules of Professional Conduct, and (3) unlawfully restricts him in the practice of law, in violation of rule 2-109 of the Rules of Professional Conduct. He also argues that enforcement of the provision as interpreted by the court violates public policy by infringing upon his client's right to representation by the attorney of her choice. Because of the economics of law practice, he will be unable to represent this client (and others) if the court's application of section 9.9 is upheld.
Our reading of section 9.9 fails to uncover the ambiguity to which petitioner refers. The section states that "all clients and client files" remain the property of the partnership and that if a client desires to hire the withdrawing party, "any fees realized in any such case shall remain the property and asset of the Partnership," subject to the withdrawing partner's right to receive his partnership percentage of the fees. Under section 9.9, fees to be shared are the fees of "any such case," which refers to the case of a client who desires to hire the withdrawing partner, not to the cases of all clients of the firm, as urged by petitioner.
Petitioner argues violation of several rules of professional conduct. We examine only one, because we find it, and considerations of public policy, dispositive. We conclude, as a matter of law, that the agreement here provides an unconscionable fee to The Boccardo Law Firm, in violation of rule 2-107 of the Rules of Professional Conduct.
Rule 2-107 provides in part: Petitioner contends that if his clients are required to turn over to The Boccardo Law Firm most of the legal fees for pending cases formerly with the partnership, the partnership will be exacting an unconscionable fee within the meaning of rule 2-107. We agree.
We do not doubt The Boccardo Law Firm's assertion that it provides each client a significant service when it signs an agreement with him or her and dedicates its reputation to his or her service and its considerable resources to preparation of the client's case. But paragraph 9.9 provides, in essence, that for the very act of signing the agreement, the Boccardo Law Firm is entitled to receive almost all the legal fees recovered, regardless of how much of the case preparation is performed by The Boccardo Law Firm.
The agreement is quite specific "all clients and client files remain the property of the Partnership." Even if a client retains a departing partner, "any fees realized in any such case shall remain the property and asset of the Partnership." (Emphasis added.) These fees have no relationship whatsoever to the amount of service provided or to be provided by the partnership to the client. No consideration is given to the stage of litigation at the time of departure. An agreement to share the fees in unfinished cases is not per se unconscionable. But the way in which this agreement shares the fees is unconscionable. A fee of this size, without any relationship to services rendered, must "shock...
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