## Facts

- Glenn Judge, an insurance adjuster and lawyer not actively admitted to any bar at the relevant time, had worked with Parker McCay, P.A., a New Jersey law firm, on insurance-defense matters.
- Judge’s neighbor, Timothy Carroll, was seriously injured in a construction accident; Judge contacted Parker McCay about representing Carroll.
- Parker McCay sent Judge a contingent-fee retainer agreement; Judge obtained signatures from Carroll and Carroll’s wife.
- Judge claimed an oral agreement with Parker McCay for a referral fee: one-third of Parker’s fee in the tort case and one-fifth of Parker’s fee in a related workers’ compensation matter.
- The Carrolls were not told Judge expected a referral fee, did not consent to fee sharing, and the written retainer did not disclose any fee division.
- Parker McCay litigated the New Jersey personal injury action, obtained a jury verdict of about $1.9 million, and collected contingent fees in both matters.
- After the verdict, Judge first asked the Carrolls whether they objected to his receiving a fee; Parker McCay refused to pay, and Judge sued for breach of the alleged oral contract.

## Issues

1. Whether Pennsylvania or New Jersey law governed the alleged referral-fee contract.
2. Whether a referral/fee-splitting agreement is enforceable when the claimant was not actively licensed and the clients were not informed of, and did not consent to, the arrangement.

## Decision

- The court applied Pennsylvania choice-of-law rules and held New Jersey had the most significant relationship to the alleged contract.
- Under New Jersey law and public policy reflected in New Jersey’s professional-conduct rules, the alleged undisclosed fee-sharing agreement was unenforceable as a matter of law.
- The court granted Parker McCay’s motion for summary judgment, denied Judge’s cross-motion, and entered judgment for Parker McCay.

## Legal Principles

- In diversity cases, the forum state’s choice-of-law rules apply; for contracts, courts consider factors such as where contracting, negotiation, and performance occurred and which state has the most significant relationship to the transaction and parties.
- New Jersey professional-conduct rules governing fee division require client disclosure and informed consent, and contemplate that fee sharing occur only among properly authorized attorneys.
- A contract that violates strong, clearly defined public policy expressed through professional-conduct rules is void or unenforceable, and courts will not enforce it even if ordinary contract elements are otherwise shown.
- Equitable arguments for compensation do not overcome public-policy limits where enforcement would reward undisclosed fee sharing and undermine the attorney-client relationship.

## Conclusion

The court held that New Jersey law governed and barred enforcement of an alleged oral referral-fee agreement because the clients were not informed or asked to consent and the claimant was not actively licensed, making the agreement unenforceable on public-policy grounds.


Judge v. Parker McCay, 500 F. Supp. 2d 521 (E.D. Pa. 2007)