Michigan Attorney Fee Referral Rule Clarified by State Top Court

June 10, 2021, 10:05 PM

A Michigan lawyer seeking referral fees from a $10 million auto accident case properly obtained fees for one client at trial and can try to show he had an attorney-client relationship with a second crash victim, after the Michigan Supreme Court clarified such a relationship is required.

At the new trial, the burden will be on the firm opposing the fee sharing to present evidence that an attorney-client relationship for purposes of referral wasn’t established, even indirectly, while the second victim was in a coma, the high court said Tuesday.

There was no evidence that two other accident victims in the case consulted with the referring attorney, Jeffrey Sherbow, before they signed on with Fieger & Fieger PC, Justice David F. Viviano said for the court. So the jury’s verdict denying Sherbow a 20% portion of their fees was proper, he said.

Sherbow, who practices in Sylvan Lake, Mich., provided legal services to Charles Rice on nonprofit issues, according to the court. Rice and three others were in a car accident that killed Rice and injured the others. The survivors and Rice’s estate pursued the accident case with the Fieger firm, which resulted in a $10.2 million verdict. Fieger and Fieger received a $3.4 million contingency fee.

But how the accident plaintiffs got to the Feiger firm was at issue here. After the underlying suit concluded, Sherbow sued the Fieger firm over a fee-sharing referral agreement between them.

A jury determined that only Rice’s son, on behalf of the estate, was a client of Sherbow, and awarded Sherbow about $93,000 of the fees.

The Michigan Supreme Court said that Michigan professional conduct rules require an attorney-client relationship, “which does not need to extend any further than the referral,” with the person being referred.

And that relationship involves “some direct or indirect consultation,” the court said. “This is not a radical concept or requirement but a pure fact of life for consumers of goods and services.”

The Fieger firm’s opposition to the referral contract was an affirmative defense that the contract violated public policy, putting it in the position of having to produce evidence of no attorney-client relationship between the accident parties and Sherbow, the court said.

The verdict could be different only for one person, Rice’s partner, who was in a coma, the court said. She was also the mother of Rice’s son, and the son may have acted as her agent in engaging Sherbow for referral advice—a matter to be determined at a new trial.

Fieger & Fieger, now called Fieger Law, was represented by itself and Bendure & Thomas. Gregory M. Janks, who practices in Bloomfield Township, Mich., and James G. Gross, who practices in Detroit, represented Sherbow.

The case is Law Offices of Jeffrey Sherbow, PC v. Fieger & Fieger, PC, 2021 BL 215626, Mich., No. 159450, 6/9/21.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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