Prudential Equity Group, LLC v. Ajamie, _ F.Supp.2d _ , 2008 WL 510047 (S.D.N.Y. 2008)

Brief Summary
A lawyer not licensed in New York may ethically participate in arbitration in New York.

Complete Summary
The key dispute in this interpleader action was between interpleader defendants/lawyers Ajamie and Weiss. They had successfully represented the Sahnis in an arbitration against Prudential and had won attorney fees in the arbitration. When they could not agree on how to split the fees, Prudential brought this action to resolve the dispute.

The Sahnis originally retained New York attorney Weiss. He in turn recruited Texas attorney Ajamie. The attorneys first agreed to split fees and expenses evenly, but later amended the agreement to give Ajamie 66 percent in exchange for his handling the remainder of the case. Ajamie then recruited two more lawyers to help him.

The court rejected the argument that the fee-sharing agreement was unenforceable because Ajamie had engaged in the unauthorized practice of law in New York. The court based its decision in part on Williamson v. John D. Quinn Construction Corp., 537 F.Supp. 613 (S.D.N.Y. 1982), which held that out-of-state lawyers could participate in arbitration in New York.

The court also rejected the argument that the fee-sharing agreement was unenforceable because the fee division was not in proportion to each lawyer’s services. The court noted that proportionality is not needed if “each lawyer assumes joint responsibility for the representation.” Prudential, 2008 WL 510047 at *4 (quoting New York Disciplinary Rule 2-107(A)(2)).

The court held that these lawyers had joint responsibility because, even though Ajamie eventually assumed full responsibility for the case, Weiss had been directly retained by the Sahnis and had never sought to withdraw.

Significance of Opinion
The district court judge was convinced that the New York Court of Appeals would agree on the unauthorized practice of law issue. This decision does not bind New York state courts, but they are likely to find it persuasive.

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