company was insured by the defendant, American County Insurance Company. Patterson retained plaintiff Cross, an attorney, to represent him in a personal injury action against the insurance company. d. Cross prepared a written retainer agreement providing that he would receive 1/3 of any settlement reached in the lawsuit. Patterson, the client, signed the agreement, but Cross did not. Id. Subsequently, the insurance company settled the suit directly with Patterson and without contacting Cross. Id. at 627. Cross did not receive payment from either the insurance company or from Patterson. Id. Accordingly, Cross brought suit against the insurance company, claiming tortious interference with the contingency fee contract between Cross and his client, Patterson. In defense, the insurance company maintained that the contract between Cross and Patterson was nonenforceable and, hence, one of the elements of tortious interference with business relations had not been met. Specifically, the insurance company's assertion relied on the violation of Rule 2-106(c)(2), which required the contingency fee agreement to be in writing and signed by both the client and the attorney. Id. at 627-28.
Interpreting Illinois law, the Seventh Circuit held that the violation of Rule 2-106(c)(2) was only a "minor technical deficiency" not warranting invalidation of the contingency fee agreement between Cross and Patterson. Id. at 628. As a necessary finding in support of this conclusion, the court in Cross was required to determine that "the Code of Professional Responsibility is not binding on the courts." Id. Although acknowledging that at least one Illinois appellate court has held that the Code "has the function of law," see Marvin N. Benn & Assocs., Ltd. v. Nelsen Steel & Wire, Inc., 107 Ill. App. 3d 442, 446-47, 437 N.E.2d 900, 904, 63 Ill. Dec. 251 (1st Dist. 1982), the Cross court noted that "subsequent Illinois Supreme Court decisions have held that the Code is not binding on the courts." Cross, 875 F.2d at 628 (citing In re Yamaguchi, 118 Ill. 2d 417, 515 N.E.2d 1235, 113 Ill. Dec. 928 (1987); In re Teichner, 104 Ill. 2d 150, 470 N.E.2d 972, 83 Ill. Dec. 552 (1984), cert. denied, 470 U.S. 1053, 105 S. Ct. 1757, 84 L. Ed. 2d 820 (1985)). Yamaguchi, the most recent Supreme Court pronouncement on the issue at the time of Cross, certainly supported the proposition that the Code serves as guidelines, not mandatory requirements of law:
The canons of ethics contained in the Code constitute a safe guide for professional conduct, and an attorney may be disciplined for not observing them. ( In re Taylor (1977), 66 Ill. 2d 567, 6 Ill. Dec. 898, 363 N.E.2d 845.) In determining the appropriate discipline, we bear in mind that, although fairness requires a reasonable degree of consistency and predictability, each disciplinary matter is unique and must be decided on its own facts. In re Hopper (1981), 85 Ill. 2d 318, 53 Ill. Dec. 231, 423 N.E.2d 900.
Yamaguchi, 118 Ill. 2d at 427-28, 515 N.E.2d at 1239. However, Yamaguchi was not without ambiguity. Indeed, in both Taylor and Hopper, decisions relied on in Yamaguchi, the Illinois Supreme Court confronted conduct governed by standards predating 1980, i.e., prior to the Illinois Supreme Court's formal adoption of the Code. As such, Yamaguchi appeared to treat the 1980 Code in the same regard as previous canons of ethics and model codes which were not adopted as official court rules.
In any event, to the extent that the Illinois Supreme Court in Yamaguchi and previous decisions suggested that the 1980 Code was not binding on courts, such conclusion no longer represents the current state of Illinois law. Indeed, the Illinois Supreme Court recently held that: "As an exercise of this court's inherent power over the bar and as rules of the court, the Code operates with the force of law. Accordingly, the Code, as a binding body of disciplinary rules, has, sub silentio, overruled prior judicial decisions which conflict with its mandates and proscriptions. Vrdolyak, 137 Ill. 2d at 422, 560 N.E.2d at 845. In so holding, the Illinois Supreme Court took great pains to distinguish the Code of 1980 from the previous canons of ethics and model codes on the basis of its standing as a formally adopted court rule. Id. The conclusion to be drawn is apparent: Cross, which relied on Yamaguchi and earlier Illinois case law, no longer represents a proper interpretation of Illinois law. Accordingly, we find that the Code of Professional Responsibility, as formally adopted by the Illinois Supreme Court in 1980, is binding on this court and operates with the force of law. See also In re Del Grosso, 111 Bankr. 178, 184 (Bankr. N.D. Ill. 1990) ("The Supreme Court Rules, including the Code of Professional Responsibility, have the function of law and are a strong indicator of public policy in the area of attorney conduct.").
Rule 2-107 dictates the conditions under which a fee-sharing agreement between lawyers will be tolerated by law. As the alleged agreement between Kaplan and Pavalon & Gifford (as successor in interest to Asher & Pavalon) runs afoul of the requirements set forth in Rule 2-107(a), that agreement is rendered unenforceable in this court of law. Accordingly, we grant Pavalon & Gifford's motion for summary judgment.
For the reasons set forth above, we grant Pavalon & Gifford's motion for summary judgment. It is so ordered.
MARVIN E. ASPEN
United States District Judge