## Facts

- A law firm operated a “Collection Division” as part of its practice.
- The plaintiff, a nonlawyer, worked as office manager of that division.
- The plaintiff alleged a 1967 agreement providing a weekly salary plus one-third of the division’s net profits, with employment to continue for a specified term tied to the firm’s existence.
- After a partner died, the plaintiff alleged the agreement was modified so the net profits were split 50/50 between the plaintiff and the remaining partner.
- The remaining partner later continued the firm’s operations through a professional corporation, and the plaintiff continued working under the alleged modified arrangement.
- The plaintiff claimed he performed but was terminated and not paid his alleged profit share, and he sought contract damages and an accounting.
- Defendants asserted the arrangement was unlawful fee-splitting between an attorney and a nonlawyer and therefore void as against public policy.

## Issues

1. Whether an agreement paying a nonlawyer a percentage of a law firm division’s net profits constitutes prohibited attorney fee-splitting and is unenforceable on public policy grounds.
2. If the agreement is unenforceable, whether the plaintiff may amend the pleading to assert fraud and unjust enrichment theories.

## Decision

- Defendants’ cross-motion for summary judgment was granted to the extent of dismissing the breach-of-contract claim as unenforceable.
- Plaintiff’s motion for summary judgment on the contract claim was denied.
- Plaintiff was granted leave to amend the complaint to add causes of action sounding in fraud and unjust enrichment.

## Legal Principles

- Lawyers may not share legal fees with nonlawyers except in limited, specified circumstances; percentage-based sharing of law-practice profits with a nonlawyer constitutes prohibited fee-splitting.
- An agreement that violates professional conduct rules and public policy is void and cannot be enforced through contract remedies such as damages or an accounting.
- Even when a contract is void for illegality, amendment to plead noncontract theories (including fraud and unjust enrichment) may be permitted where the claims seek relief without requiring enforcement of the illegal bargain.

## Conclusion

The court treated the collection division’s “net profits” as derived from legal services and held that paying a nonlawyer a percentage share was unlawful fee-splitting, barring contract enforcement, while allowing the plaintiff to proceed on amended allegations of fraud and unjust enrichment.


Gorman v. Grodensky, 498 N.Y.S.2d 249 (N.Y. Sup. Ct. 1985)