Vogelhut v. Kandel

• Decision Date: 01 December 1986
• Docket Number: No. 29,29
• Citation: 308 Md. 183,517 A.2d 1092
• Parties: , 55 USLW 2369 Steven M. VOGELHUT v. Nelson R. KANDEL. Sept. Term 1986.
• Court: Maryland Court of Appeals

Page 183

308 Md. 183

517 A.2d 1092, 55 USLW 2369

Steven M. VOGELHUT v. Nelson R. KANDEL.

No. 29 Sept. Term 1986.

Court of Appeals of Maryland.

Dec. 1, 1986.

John H. Zink III, Towson, for appellant.

Saul E. Kerpelman, Baltimore, for appellee.

Argued before MURPHY, C.J., ELDRIDGE, COLE, RODOWSKY, COUCH and McAULIFFE, JJ., and MARVIN H. SMITH, Associate Judge of the Court of Appeals of Maryland (retired) Specially Assigned.

COUCH, Judge.

We shall here hold that where a discharged attorney gives the files relating to his former client to a successor attorney in exchange for a promise by the successor attorney to give the discharged attorney twenty-five percent of any fee received by the successor attorney, there is an enforceable contract between the attorneys not involving the client. We further hold that such an agreement does not violate either Disciplinary Rule 2-106 or 2-107 of the Code of Professional Responsibility.

The facts of this case are as follows. Shirley Ellis retained the services of attorney Nelson R. Kandel after she and her children sustained personal injuries in an automobile accident. Ellis, apparently dissatisfied with Kandel's representation, subsequently retained attorney Steven M. Vogelhut under a forty percent contingent fee agreement. Vogelhut wrote a letter to Kandel advising Kandel of his retention by Ellis and requesting "all the information you have concerning this matter;" at the bottom of the letter was a note, signed by Ellis, repeating both the fact of Vogelhut's retention and the request for files.

Some two months later, an associate in Kandel's practice, Robert Wolf, took the Ellis files to Vogelhut's office with instructions to negotiate a fee for services rendered prior to Kandel's discharge. Wolf surrendered the files and Vogelhut signed a written receipt for the files and for three insurance checks, payable to various members of the Ellis family, contained therein. There was conflicting testimony at trial as to the result of the negotiations. Wolf testified that Vogelhut agreed to give Kandel twenty-five percent of any fee received by Vogelhut from the Ellis case; Vogelhut denied that a binding agreement was reached. After the meeting, Wolf sent a confirmatory letter to Vogelhut reciting his version of the terms of the alleged agreement. Vogelhut admitted receiving the letter and stated that he did not respond thereto because he had never agreed to the terms set forth in the letter and because Mrs. Ellis had indicated that she did not want Kandel to receive any remuneration.

Upon settlement of the Ellis case, Vogelhut wrote to Kandel asking for an accounting of the time Kandel claimed, the nature of the services performed, and his hourly rate, so that Vogelhut could determine if Kandel was entitled to compensation for services rendered the Ellis family on a quantum meruit basis. Kandel responded by demanding twenty-five percent of Vogelhut's fee pursuant to their agreement. Vogelhut refused this demand and Kandel sued Vogelhut for breach of contract.

The matter was heard in a bench trial in the Circuit Court for Baltimore City. The trial judge resolved the disputed facts in favor of Kandel and rendered judgment in his favor for $18,700.00. The Court of Special Appeals affirmed in Vogelhut v. Kandel, 66 Md.App. 170, 502 A.2d 1120 (1986). We granted Vogelhut's petition for certiorari, 306 Md. 71, 507 A.2d 185, and affirm the judgment of the intermediate appellate court.

Appellant Vogelhut presents three questions for our consideration which we shall address seriatim.

I

Do the rules of agency attend negotiations between a

discharged lawyer and his successor for settling a

division of legal fees?

The appellant claims that he was acting as an agent of a disclosed principal (Mrs. Ellis) in his negotiations with the discharged attorney and therefore the law of agency is apposite to a resolution of the case sub judice. ¹ The trial judge found, however, as a matter of fact, that the fee agreement was a contract between the discharged attorney and the successor attorney and not a contract between the client and the discharged attorney. The trial judge stated, in pertinent part, that "the whole dispute is not over something that Mrs. Ellis is obliged to pay, but what Vogelhut is obliged to pay." Implicit in this statement is the trial judge's conclusion that the successor attorney was not negotiating the fee arrangement as an agent for Mrs. Ellis.

Factual findings will not be disturbed on appeal unless clearly erroneous. Md.Rule 886. We have reviewed the record and find sufficient evidence to support the finding of the lower court.

II

Is a discharged lawyer ethically precluded from sharing the

fee of his successor, either not in proportion to

the value of services, or in the absence

of the client's consent?

The substance of the appellant's second contention is that the agreement between the attorneys violated DR 2-106 and DR 2-107 of the Code of Professional Responsibility and therefore, inasmuch as the Code is an expression of the public policy of this State, the contract is unenforceable as against public policy. We disagree.

DR 2-106 and DR 2-107 of the Code of Professional Responsibility have no application to an agreement between a discharged attorney and a successor attorney whereby the former gives the files of the erstwhile client to the latter in exchange for a promise to share a percentage of any fee received. DR 2-106 regulates fees for legal services. ² The appellant claims that the fee sought by the appellee is clearly excessive in light of the appellee's modest efforts on behalf of the Ellis family.

DR 2-106, read in pari materia with its respective ethical considerations, is, however, plainly limited to fee agreements between a client and his attorney. Where, as here, the agreement is between two attorneys and the agreement has no effect on the fee the client contracted to pay, DR 2-106 is inapposite.

DR 2-107 ³ proscribes the division of fees between attorneys not properly associated unless, inter alia, "[t]he client consents to the employment of the other attorney after a full disclosure that a division of fees will be made." DR 2-107(A)(1). The appellant maintains that the agreement contravenes DR 2-107 because Mrs. Ellis never consented to the agreement.

DR 2-107, however, contemplates concurrent representation of a client by more than one attorney insofar as the rule requires an attorney to obtain the consent of the client upon the employment of a second attorney. Here, there was no such concurrent representation; to the contrary, Mrs. Ellis discharged her attorney and she procured the employment of the successor attorney. DR 2-107 was formulated to prohibit brokering, to protect a client from clandestine payment and employment, and to prevent aggrandizement of fees. Krajewski v. Klawon, 84 Mich.App. 532, 538, 270 N.W.2d 9, 11 (1978). Patently, we are not faced with such a situation in the present case.

With respect to the remainder of appellant's argument, that a contract in violation of the Code of Professional Responsibility is unenforceable as against public policy, the foregoing analysis is logically dispositive thereof.

III

Is the surrender of files by a discharged attorney adequate

consideration to support a promise by the

successor attorney to share a percentage

of any fee received?

Finally, the appellant alleges that the contract fails for lack of consideration because by the time the appellee gave the files to the appellant, some two months after the appellant requested the files, the materials contained therein had been duplicated by the appellant. We perceive no merit to this contention.

It is basic contract law that courts generally will not inquire as to the adequacy of consideration. Blumenthal v. Heron, 261 Md. 234, 243, 274 A.2d 636, 640 (1971). The policy behind this rule was best expressed by our predecessors in Taylor v. Turley, 33 Md. 500, 505 (1871):

"It is not the province of the Courts to interfere with the natural right of parties to contract, and to exercise their own will and judgment upon the subject; and they will have the power to estimate the value of the consideration and the benefits to be derived from their contracts, where there is no incompetency to contract, no fraud or surprise, and no rule of law is violated."

It follows, therefore, that anything which fulfills the requirement of consideration, that is, one recognized as legal, will support a promise, whatever may be the comparative value of the consideration and of the thing promised. Blumenthal v. Heron, supra, 261 Md. at 243, 274 A.2d 636 (quoting Hercules Powder Co. v. Harry T. Campbell Sons Co., 156 Md. 346, 144 A. 510 (1929)). Accord 1 A. Corbin, Corbin on Contracts § 127 (1963); 1 S. Williston, W. Jaeger, A Treatise on the Law of Contracts § 115 (3d ed. 1957). A benefit to the promisor or a detriment to the promisee is sufficient valuable consideration to support a contract. Shimp v. Shimp, 287 Md. 372, 385, 412 A.2d 1228, 1234 (1980). Legal detriment means "giving up something which immediately prior thereto the promisee was privileged to retain, or doing or refraining from doing something which he was then privileged not to do, or not to refrain from doing." 1 S. Williston, A Treatise on the Law of Contracts, supra, § 102A at 382.

We agree with the trial court, upon reviewing the record, that there was adequate consideration to...