     08-4966-cv
     Rodriguez v. Custodio

1                           UNITED STATES COURT OF APPEALS

2                               FOR THE SECOND CIRCUIT

3                                 August Term, 2009

4    (Argued:     August 25, 2009               Decided: February 18, 2010)

5                               Docket No. 08-4966-cv

6    - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

 7   WAGNER & WAGNER, LLP, DANIEL J. BAURKOT, ESQ.,
 8
 9                Non-Party-Appellants,
10
11   DAYANARA RODRIGUEZ, an infant by her Parents and Natural
12   Guardians, EVELYN CUSTODIO and LEE RODRIGUEZ, EVELYN CUSTODIO,
13   individually, and LEE RODRIGUEZ, individually,
14
15                Plaintiffs,
16
17                     v.
18
19   ATKINSON, HASKINS, NELLIS, BRITTINGHAM, GLADD & CARWILE, P.C.,
20
21                Non-Party-Appellee,
22
23   INTERNATIONAL SALES, INC., INTERNATIONAL GROUP OF COMPANIES,
24
25                Defendant-Cross-Claimant-Cross-Defendants,
26
27   TARGET CORPORATION,
28
29                Defendant-Third-Party-Plaintiffs,
30
31   ROYAL CONSUMER INFORMATION PRODUCTS, INC.,
32
33                Defendant-Cross-Defendant-Cross-Claimant-Third-
34                Party-Plaintiffs.
35
36   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
37
38   B e f o r e:      WINTER, POOLER, and KATZMANN, Circuit Judges.
39
40         Appeal from an order of the United States District Court for

41   the Eastern District of New York (John Gleeson, Judge)


                                            1
1    determining attorneys’ fees after an infant compromise hearing.

2    Appellants argue that the district court inappropriately inquired

3    into the fee splitting agreements among the attorneys and then,

4    after concluding a violation of New York Disciplinary Rule 2-107

5    had occurred, erroneously took the amount of fees that would go

6    to plaintiffs’ original attorney and instead awarded them to the

7    plaintiffs.   On September 1, 2009, we issued an order affirming

8    the district court and issuing the mandate forthwith.   Given

9    evidence that the annuity called for by the settlement had not
10   been established, we appointed pro bono counsel to represent the

11   plaintiffs in all matters in these proceedings.   Our order stated

12   that an opinion would follow.   We now issue this opinion.

13                                   EDWARD WAGNER (Michael P.
14                                   Atkinson, on the brief), Wagner &
15                                   Wagner, LLP, Staten Island, New
16                                   York (Daniel J. Baurkot, Basking
17                                   Ridge, New Jersey), for Non-Party-
18                                   Appellants.
19
20                                   STACIE L. HIXON, Atkinson, Haskins,
21                                   Nellis, Brittingham, Gladd, &
22                                   Carwile, Tulsa, Oklahoma, for Non-
23                                   Party-Appellees.
24
25   WINTER, Circuit Judge:

26        Wagner & Wagner, LLP, and Daniel J. Baurkot, Esq., appeal

27   from Judge Gleeson’s adoption of Magistrate Judge Mann’s Report

28   and Recommendation.

29        After an infant compromise hearing, Judge Mann awarded

30   $107,654.56 in attorneys’ fees and $49,866.84 in expenses

31   to Atkinson, Haskins, Nellis, Brittingham, Gladd, & Carwile, P.C.

32   (the “Atkinson firm” or “appellees”), and $133,286.60 in


                                        2
1    attorneys’ fees and $2,378.86 in expenses to Wagner & Wagner,

2    LLP.       She denied an award of fees to Baurkot because Wagner &

3    Wagner’s sharing of the fees with Baurkot was not properly

4    disclosed to plaintiffs and Baurkot had performed no services of

5    value in the litigation.       Therefore, she concluded, the fee

6    sharing agreement was in violation of New York Disciplinary Rule

7    2-107 (“DR 2-107”).1      The magistrate judge awarded Baurkot’s

8    portion of the fee to the plaintiffs.         Appellants then took this

9    appeal.       The Atkinson firm has filed a brief responding to Wagner

10   & Wagner’s argument that if we affirm the award to the

11   plaintiffs, the fee splitting agreement between Wagner & Wagner

12   and the Atkinson firm requires a redistribution of fees between

13   the two firms.

14          On September 1, 2009, we issued an order affirming the

15   district court’s order.       Given the nature of this appeal -- taken

16   by attorneys who continue to represent the plaintiffs from a

17   judgment in plaintiffs’ favor and evidence that the annuity

18   called for in the settlement had not been established -- we
19   appointed pro bono counsel to represent the plaintiffs and

20   forbade appellants from contacting plaintiffs except through pro

21   bono counsel.       Our order stated that an opinion would follow.

22   This is that opinion.

23                                    BACKGROUND



            1
            New York modified its disciplinary code effective April 1, 2009, but
     the revisions would not affect the outcome in this matter. The principles
     embodied in former DR 2-107 are now contained in Rule 1.5(g)-(h), N.Y. Comp.
     Codes R. & Regs. tit. 22, § 1200.

                                             3
1    a) The Underlying Action

2         After his two-year-old daughter was injured by a paper

3    shredder, Lee Rodriguez contacted Baurkot to discuss legal

4    assistance.   On April 4, 2005, Baurkot contacted Wagner & Wagner,

5    after which representatives of Wagner & Wagner met with Rodriguez

6    and his wife, Evelyn Custodio, the mother of the injured girl.

7    During that meeting, plaintiffs retained Wagner & Wagner on a

8    one-third contingency-fee basis to reach a settlement or bring an

9    action on behalf of their daughter and themselves as plaintiffs.

10   Appellants then executed a fee agreement between themselves,

11   providing that Wagner & Wagner would receive two-thirds of any

12   recovered fee and Baurkot would receive the remaining one-third.

13        In 2006, the Atkinson firm, which had experience with

14   similar cases, contacted Wagner & Wagner.   After consultation

15   with Baurkot and the plaintiffs, Wagner & Wagner retained the

16   Atkinson firm.   The retention agreement provided that the

17   Atkinson firm would receive 35% of any contingency fee received,

18   while Wagner & Wagner would receive 65% of the fee, to be shared
19   with Baurkot pursuant to the existing agreement.

20        Ultimately, the action was brought in the Eastern District,

21   with Wagner & Wagner as the attorneys of record and the Atkinson

22   firm as lead counsel.   This led to an agreement to settle the

23   matter for $975,000.00, that, after the payment of fees, was to

24   fund an annuity in the infant plaintiff’s name.

25   b) Attorneys’ Fee Proceedings



                                       4
1            Pursuant to Local Civil Rule 83.2(a),2 the magistrate judge

2    held an infant compromise hearing to review the proposed

3    settlement and award of fees.             Although the attorneys were in

4    agreement regarding the sharing of the fee award and the

5    plaintiffs consented to the fee, the judge sua sponte questioned

6    whether DR 2-107 permitted Wagner & Wagner to share its fee with

7    Baurkot.         She expressed concern that Baurkot had not performed

8    any work in the matter and that his fee was simply a referral

9    fee.3        This concern arose at least in part, because (i) Wagner &
10   Wagner failed to initially disclose Baurkot’s share of the fee to

11   the court and (ii) prior to the disclosure of Baurkot’s share in

12   a supplemental petition filed the day before the infant

13   compromise hearing, the magistrate judge had never heard of

14   Baurkot.

15           When the plaintiffs were questioned about their contact with

16   Baurkot, Custodio stated that she could not recall his name.

17   Rodriguez testified that he had spoken to Baurkot once over the

18   phone and had a sense that Baurkot would receive a portion of the
19   fee because he was the first attorney contacted, but that he “was


             2
                 Local Civil Rule 83.2(a)(1) provides:

                      An action by or on behalf of an infant or incompetent
                      shall not be settled or compromised, or voluntarily
                      discontinued, dismissed or terminated, without leave
                      of the court embodied in an order, judgment or decree.
                      The proceeding upon an application to settle or
                      compromise such an action shall conform, as nearly as
                      may be, to the New York State statutes and rules, but
                      the court, for cause shown, may dispense with any New
                      York State requirement.
             3
            The magistrate judge expressed no concern over the division of fees
     between Wagner & Wagner and the Atkinson firm.

                                                  5
1    not sure whether he was going to be working on the case or not.”

2    The attorneys from Wagner & Wagner stated only that Baurkot “has

3    been involved and been in constant contact with [Wagner & Wagner]

4    throughout the litigation.”    They also added conclusory

5    statements relating to Baurkot’s routine involvement in other

6    cases that he had referred to Wagner & Wagner.    Dissatisfied with

7    this record, the magistrate judge requested submissions from

8    Baurkot and Wagner & Wagner regarding the specific services

9    Baurkot provided in the present litigation.

10        Both Wagner & Wagner and Baurkot submitted supplemental

11   affidavits and memoranda of law.    Wagner & Wagner also submitted

12   its entire file in the case.    Baurkot claimed that after he was

13   first contacted by Rodriguez, they had several other telephone

14   conversations that enabled Baurkot to conduct a preliminary

15   investigation.   Baurkot also claimed that once he concluded that

16   Wagner & Wagner should become involved in the matter, he

17   introduced Rodriguez to members of Wagner & Wagner over the

18   telephone on August 3, 2005.    According to Baurkot, he advised
19   plaintiffs of the arrangement between himself and Wagner & Wagner

20   during that phone call, and they agreed to it.    Baurkot also

21   asserted that he was involved in strategic decisions about the

22   case, including the decision to file the claim in federal court

23   instead of state court and the decision to bring in the Atkinson

24   firm.

25        Edward Wagner, a member of Wagner & Wagner, submitted an

26   affidavit stating that Wagner & Wagner informed plaintiffs of the

                                        6
1    arrangement between Wagner & Wagner and Baurkot during a meeting

2    with the plaintiffs on August 4, 2005, and that the parents

3    agreed to the arrangement.   He also asserted that Baurkot was

4    involved in the decision to file suit in federal court and that

5    Baurkot was involved throughout the case, even reminding him of

6    specific facts on one occasion.   However, Wagner acknowledged

7    that he could not describe with greater particularity the amount

8    or type of work performed by Baurkot.

9         Wagner & Wagner’s file contained several hundred pages of

10   documents, but only four that referred to Baurkot.    These four

11   dealt exclusively with the retaining of Wagner & Wagner and the

12   Atkinson firm and with resultant fee agreements.   None of the

13   documents involved constituted legal services on behalf of the

14   plaintiffs.   Nor did any of the documents submitted show the

15   parents consented to the fee-splitting arrangement.

16        On August 7, 2008, the magistrate judge issued her Report

17   and Recommendation.   After acknowledging that both Wagner &

18   Wagner and plaintiffs agreed that their retainer agreement
19   provided for a one-third contingency fee, she examined each

20   individual fee request and determined that both Wagner & Wagner’s

21   request for fees of $133,286.60, representing two-thirds of 65%

22   of the total one-third contingency fee, and the Atkinson firm’s

23   request for $107,654.56 in fees, representing 35% of the total

24   one-third contingency fee, were reasonable.

25        The magistrate judge then denied any portion of the

26   attorneys’ fees to Baurkot because DR 2-107 prohibited it.

                                       7
1    First, she found that DR 2-107 was violated because plaintiffs

2    never received the required disclosure of the fee-sharing

3    agreement.   The judge rejected Wagner & Wagner’s and Baurkot’s

4    contentions that they had orally sought and received the required

5    consent.   Instead, the magistrate judge relied on the plaintiffs’

6    testimony indicating they were unaware that Baurkot would be

7    working on the case.

8         Second, the magistrate judge concluded that DR 2-107 was

9    violated because the requirement that either the work done be in
10   proportion to the fee received or that the attorneys agree in a

11   writing to undertake joint responsibility was not met.   In so

12   finding, she relied on several pieces of evidence, including:

13   (i) Wagner & Wagner’s initial failure to disclose Baurkot’s share

14   of the fee to plaintiffs; (ii) Wagner & Wagner’s and Baurkot’s

15   failure to show specific work he performed on the case; and (iii)

16   the lack of any documents in Wagner & Wagner’s file to

17   corroborate the claim that Baurkot performed services on the

18   case.
19        The magistrate judge determined that the portion of the fee

20   claimed by Baurkot should be awarded to the plaintiffs, rather

21   than going to Wagner & Wagner.   She expressed a concern that the

22   fee would still find its way to Baurkot if Wagner & Wagner

23   received it, and, moreover, noted that Wagner & Wagner had

24   acknowledged that it considered $133,286.60 fair and adequate

25   compensation for its efforts.

26        Wagner & Wagner and Baurkot filed timely objections to the


                                       8
1    Report and Recommendation.   They objected to those parts of the

2    order that determined that Baurkot’s portion of the fee should go

3    to plaintiffs.   These objections included an objection to the

4    awarded fees because they resulted in a 55.3%/44.7% split between

5    Wagner & Wagner and the Atkinson firm, rather than the agreed

6    upon 65%/35% split.   However, Wagner & Wagner and Baurkot

7    specifically stated that “[t]he Wagner Firm, [sic] is not

8    suggesting that the fee to the Atkinson Firm be reduced. . . .

9    What we are stating is that since the fee to the Atkinson Firm is

10   35% of the full one-third contingency fee, the fee to the Wagner

11   Firm should be 65% of the full one-third contingency fee.”    Judge

12   Gleeson adopted the magistrate judge’s Report and Recommendation

13   in full.   This appeal followed.

14                                DISCUSSION

15        In the context of an infant compromise hearing, we review a

16   district court’s award or denial of attorneys’ fees for an abuse

17   of discretion.   See Chen v. Chen Qualified Settlement Fund, 552

18   F.3d 218, 225 (2d Cir. 2009) (per curiam); see also Reiter v. MTA
19   N.Y. City Transit Auth., 457 F.3d 224, 229 (2d Cir. 2006).

20        Appellants argue that the district court erred:   (i) when it

21   looked beyond the contingency agreement between Wagner & Wagner

22   and the plaintiffs to the fee splitting agreements among the

23   attorneys; (ii) when it found that DR 2-107 was violated; and

24   (iii) when it granted Baurkot’s portion of the fee to the

25   plaintiffs instead of to Wagner & Wagner, thus altering the


                                        9
1    65%/35% proportional division agreed upon by Wagner & Wagner and

2    the Atkinson firm.   We disagree.

3         With regard to (i), in an infant compromise hearing, the

4    district court is not confined to the overall award of attorneys’

5    fees, and it is not excluded from considering the division of

6    those fees among the various attorneys.   District courts have

7    broad discretion when conducting an infant compromise hearing.

8    See Local Civil Rule 83.2(a)(1); supra Note 2.   In particular,

9    both the Local Civil Rules and New York State law grant broad
10   authority to determine the reasonableness of attorney’s fees.

11   See Local Civil Rule 83.2(a)(2) (“The court shall authorize

12   payment to counsel for the infant or incompetent of a reasonable

13   attorney’s fee and proper disbursements from the amount recovered

14   in such an action, whether realized by settlement, execution or

15   otherwise and shall determine the said fee and disbursements,

16   after due inquiry as to all charges against the fund.”);

17   Goldstein v. St. Luke’s-Roosevelt Hosp. Ctr. (In re Goldstein),

18   430 F.3d 106, 111 (2d Cir. 2005) (per curiam) (“[W]hen [the
19   attorney] moved under Local Rule 83.2(b) for approval of the

20   request for fees and costs, he thereby opened up the issue of the

21   quality, or lack thereof, of his representation and the

22   reasonableness of his fees.”); N.Y. Judiciary Law § 474 (“An

23   attorney may contract with the guardian of an infant to

24   prosecute, by suit or otherwise, any claim for the benefit of an

25   infant for a compensation to said attorney dependent upon the


                                         10
1    success in the prosecution of such claim, subject to the power of

2    the court . . . to fix the amount of such compensation.”); White

3    v. DaimlerChrysler Corp., 871 N.Y.S.2d 170, 173-74 (App. Div. 2d

4    Dep’t 2008) (noting that under N.Y. Judiciary Law § 474, a

5    contract between the attorney and the infant guardians providing

6    for a contingency fee is to be considered by the judge, but it is

7    not binding).

8          When multiple attorneys are involved in such an inquiry, fee

9    splitting agreements offer no more than non-mandatory guidance
10   because the court is under a duty to evaluate the quantity and

11   quality of the representation by each attorney in order to ensure

12   that the fees are appropriate.        See, e.g., Ford v. Albany Med.

13   Ctr., 724 N.Y.S.2d 795, 796-98 (App. Div. 3d Dep’t 2001) (looking

14   beyond the retainer agreement to the fee sharing agreement

15   between the attorneys as well as the amount of work performed by

16   each attorney).4



           4
             Appellants argue that the district court erred when it relied on Ford,
     724 N.Y.S.2d 795, because of statements made by this court in Ballow Brasted.
     See Ballow Brasted, 435 F.3d at 242 n.7 (“To the extent Ford and Benjamin can
     be read to conflict, we follow the decision of the Court of Appeals in
     Benjamin.”). However, those statements were clearly dicta, at least when
     sought to be applied in the circumstances before us. Ballow Brasted arose as
     the result of a dispute amongst attorneys outside the context of an infant
     compromise hearing, see id. at 236-37, in circumstances in which Ford and
     Benjamin might be read to be in conflict with one another. Compare Ford, 724
     N.Y.S.2d at 797-98 (looking into the amount of work performed by the attorneys
     where a violation of DR 2-107 was alleged) with Benjamin, 650 N.E.2d at 832-33
     (refusing to look into the amount of work performed by the attorneys where a
     violation of DR 2-107 was alleged). In the context of a court determination
     of attorneys’ fees during an infant compromise hearing, the cases do not
     conflict because only Ford is applicable. Compare Ford, 724 N.Y.S.2d at 796-
     97 (arising in the context of a dispute amongst the attorneys during an infant
     compromise hearing), with Benjamin, 650 N.E.2d at 830 (arising in the context
     of a dispute amongst the attorneys not during an infant compromise hearing).


                                            11
1         We, therefore, see no reason why a court may not inquire as

2    to the roles played and services provided by each firm.   If a

3    firm that plays an active role and provides substantial services

4    seeks a fee that will be shared with a firm that has played no

5    role and provided no services, the fee request may well be

6    unreasonable.

7         Appellants rely on a number of cases to support their

8    argument that consideration of the appropriateness of attorneys’

9    fees does not extend to fee-splitting agreements among the
10   attorneys.   However, these cases are easily distinguished.

11   Although each determined that it would be inappropriate to alter

12   a fee splitting agreement between attorneys based on a violation

13   of DR 2-107, they all arose in the context of a dispute between

14   the attorneys rather than a dispute arising in the context of an

15   infant compromise hearing.   The different contexts involve

16   differing interests and impose different obligations on the

17   reviewing courts.   See Ballow Brasted O’Brien & Rusin, P.C. v.

18   Logan, 435 F.3d 235, 236-37 (2d Cir. 2006); Samuel v. Druckman &
19   Sinel, LLP, 906 N.E.2d 1042, 1044-45 (N.Y. 2009); Benjamin v.

20   Koeppel, 650 N.E.2d 829, 830-33 (N.Y. 1995).   Indeed, only one of

21   those cases, Samuel, involved an underlying matter with an infant

22   plaintiff, and even there, the decision was in the context of a

23   declaratory action involving a dispute between the attorneys

24   after the infant compromise hearing.   See Samuel, 906 N.E.2d at

25   1043-44; cf. Ford, 724 N.Y.S.2d at 796-98 (examining the amount


                                       12
1    of work performed by the attorneys in a fee dispute involving an

2    infant compromise hearing).

3         Therefore, the policies applied in those cases -- i.e., the

4    desire to prohibit “efforts by clients or customers to use public

5    policy as a sword for personal gain rather than a shield for

6    public good,” Benjamin, 650 N.E.2d at 831 (internal quotation

7    marks omitted); the fact that “it ill becomes [attorneys seeking

8    to avoid sharing fees], who are also bound by the Code of

9    Professional Responsibility, to seek to avoid on ‘ethical’
10   grounds the obligations of an agreement to which they freely

11   assented and from which they reaped the benefits,” id. at 832-33;

12   and the desire to avoid “inquir[ing] into the precise worth of

13   the services performed by the parties” where the dispute is

14   “among attorneys over the enforcement of fee-sharing agreements,”

15   id. at 832, -- simply do not apply here.   In the present context,

16   the guiding policy is protection of the infant interests.    See

17   White, 871 N.Y.S.2d at 173-74.

18         Therefore, the district court did not err in looking beyond
19   the retainer agreement between Wagner & Wagner and the plaintiffs

20   to the actual work performed by the various attorneys.

21        We turn now to whether the court erred in denying fees to

22   Baurkot.   DR 2-107 imposes three requirements before a fee may be

23   shared among attorneys:   (i) “[t]he client consents to employment

24   of the other lawyer after a full disclosure that a division of

25   fees will be made”; (ii) “[t]he division is in proportion to the


                                       13
1    services performed by each lawyer, or, by a writing given the

2    client, each lawyer assumes joint responsibility for the

3    representation”; and (iii) “[t]he total fee of the lawyers does

4    not exceed reasonable compensation for all legal services they

5    rendered to the client.”    N.Y. Disciplinary R. 2-107(A).   The

6    district court found that a fee award to Baurkot violated both

7    (i) and (ii).   We agree.

8         With regard to (i), the district court was well within its

9    role as fact finder when it rejected appellants’ self-serving
10   affidavits and statements, which were notably unsupported by any

11   documentary evidence, in favor of the plaintiffs’ testimony.

12   Rodriguez’s testimony, while indicating a speculative awareness

13   that Baurkot would receive a fee in the case -- “Yeah, I have

14   some idea that he was [getting part of the fee] because he was -

15   we first contacted him” -- stated that he was unaware that

16   Baurkot would actually be working on the case, in contrast to

17   appellants’ claims.   Therefore, the district court did not err in

18   determining that appellants did not obtain informed consent from
19   the client for the fee-sharing agreement.

20        Nor did the district court err in finding that the second

21   requirement of DR 2-107(A) was not met.    The evidence

22   demonstrated that Baurkot performed no services of value on the

23   case, and thus the agreed fee division was not “in proportion to

24   the services performed by each lawyer.”    N.Y. Disciplinary R. 2-

25   107(A)(2); see also Ford, 724 N.Y.S.2d at 797-98.    Nor did


                                        14
1    appellants produce “a writing given to the client” in which “each

2    lawyer assumes joint responsibility for the representation.”

3    N.Y. Disciplinary R. 2-107(A)(2).    Therefore, the district court

4    properly found that the second requirement of DR 2-107 was also

5    not met.

6         Appellants also contend that, even if there was a violation

7    of DR 2-107, it was a prospective violation of technical

8    requirements and curable -- presumably by providing the client

9    with a “joint responsibility” letter -- before fees have been
10   paid.   We disagree.   While DR 2-107 does not impose an explicit

11   time requirement, it clearly anticipates compliance with its

12   requirements early on in the representation, as it requires that

13   “[t]he client consents to the employment of the other lawyer

14   . . . .”   N.Y. Disciplinary R. 2-107(A)(1).    Moreover, the

15   undertaking of joint responsibility is difficult (to say the

16   least) to accomplish, other than as a charade, after a settlement

17   with the defendant has been reached.     Therefore, the district

18   court did not abuse its discretion by not allowing appellants to
19   “cure” the violation after a settlement and scheduling of an

20   infant compromise hearing.

21        Finally, appellants contend that, after determining that

22   Baurkot was not entitled to attorneys’ fees because of the

23   violation of DR 2-107, the district court still erred when it

24   distributed those fees to the plaintiffs rather than to Wagner &

25   Wagner.    They argue that this altered Wagner & Wagner’s agreement


                                         15
1    with the Atkinson firm because the proportion of the fees that

2    went to Wagner & Wagner and to the Atkinson firm respectively did

3    not conform to the agreed-upon 65%/35% split.

4         However, as noted, the district court had broad discretion

5    to determine the value of the services rendered by each attorney,

6    looking to fee-splitting agreements only for non-mandatory

7    guidance.   The district court did not abuse its broad discretion

8    when it determined that Baurkot’s fees should not go to Wagner &

9    Wagner because that firm engaged in an ethical violation by
10   failing to get the proper consent from the plaintiffs.    See N.Y.

11   Disciplinary R. 2-107(A) (“A lawyer shall not divide a fee for

12   legal services . . .” unless the rule’s requirements are met.).

13   Moreover, there was evidence to support the district court’s

14   concern that Baurkot would obtain the money if it was awarded to

15   Wagner & Wagner, given that appellants stressed throughout the

16   proceeding the nature of their collaborative efforts in other

17   cases Baurkot referred to Wagner & Wagner.    Therefore, the

18   district court did not abuse its discretion in awarding that
19   portion of the fees to plaintiffs.

20        Appellants further suggest that, having determined that they

21   were not entitled to Baurkot’s portion of the fee, the district

22   court nonetheless should not have altered its fee splitting

23   agreement with the Atkinson firm.    As a result, they seek to

24   redistribute the awarded fees to match the agreed upon split,

25   thus reducing the Atkinson firm’s fees.


                                         16
1         However, a party waives appellate review of a decision in a

2    magistrate judge’s Report and Recommendation if the party fails

3    to file timely objections designating the particular issue.    See

4    Cephas v. Nash, 328 F.3d 98, 107 (2d Cir. 2003); Mario v. P & C

5    Food Markets, Inc., 313 F.3d 758, 766 (2d Cir. 2002).   In their

6    objections to the Report and Recommendation, appellants stated

7    that “[t]he Wagner Firm, [sic] is not suggesting that the fee to

8    the Atkinson Firm be reduced.”    Such a statement not only failed

9    to raise the claim now made but in effect told the district court

10   not to consider the relief now sought.   That statement was,

11   therefore, a waiver.   Moreover, even if the argument had not been

12   waived, appellants would still not be entitled to a reduction in

13   the fees awarded to the Atkinson firm because the fee-splitting

14   agreement was not binding on the district court.   See Local Civil

15   Rule 83.2(a)(2); Ford, 724 N.Y.S.2d at 796-98.

16        We turn to a final matter.   Given that Wagner & Wagner and

17   Baurkot appeal from a judgment benefitting their clients while

18   still claiming to represent those clients and given that said
19   judgment found Wagner & Wagner and Baurkot committed ethical

20   violations, the court made various inquiries at oral argument

21   regarding the legal representation given the plaintiffs.   The

22   answers made it apparent that appellants had not obtained written

23   consent from the plaintiffs for this appeal.   Moreover, none of

24   the plaintiffs’ lawyers knew whether the annuity called for in

25   the settlement agreement, the funding of which did not involve


                                        17
1    monies at stake in the present dispute, had been established.       As

2    a result, both Wagner & Wagner and the Atkinson firm were ordered

3    to submit letters indicating the status of the annuity.     These

4    letters indicated that, as of August 27, 2009, the defendants had

5    made the required annuity premium payments, but the annuity had

6    not yet been finalized and issued.   Wagner & Wagner blamed the

7    Atkinson firm for the delay.   The Atkinson firm blamed Wagner &

8    Wagner for the delay.

9         Concerned by the overall context of the proceeding and the

10   failure to establish the annuity, we entered an order on August

11   28, 2009, indicating an intent to appoint pro bono counsel to

12   represent the plaintiffs and ordering the law firms not to

13   contact them.   On September 1, 2009, we entered an order

14   affirming the judgment of the district court, directing that the

15   mandate should issue forthwith, and indicating that an opinion

16   would follow.   In that order, we appointed Robert J. Guiffra,

17   Jr., Esq., to represent the plaintiffs on a pro bono basis and

18   instructed Baurkot, Wagner & Wagner, and the Atkinson firm to
19   communicate with plaintiffs only through the pro bono counsel.

20   Finally, the order remanded to the district court to:   (i)

21   inquire into whether the district court’s order of September 26,

22   2008, was complied with; (ii) ensure that plaintiffs receive the

23   benefits to which they are entitled; and (iii) take any

24   appropriate remedial and disciplinary actions.

25


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1                               CONCLUSION

2         We affirm the district court’s order and order the

3    continuation of representation by pro bono counsel.   Any further

4    appeal in this matter should be referred to this panel.   The

5    party taking the appeal shall notify the Clerk of this provision

6    for reference.

7

8

9
10

11

12

13

14

15

16




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