Post v. Bregman , 349 Md. 142 ( 1998 )

WILNER, Judge.

This is a dispute between two lawyers over the division of one-third of a fee. A letter agreement called for petitioner, Alan F. Post, Chartered (Post), to receive 60% of the third and for Douglas Bregman and his firm (Bregman) to receive the other 40%. The remaining two-thirds of the fee was paid to another firm that is not involved in the instant dispute. When the underlying case that generated the fee was settled, Post received the entire one-third share, $260,000, and he then balked at paying Bregman the 40% called for in the letter agreement ($104,000), contending that Bregman had done insufficient work to warrant a fee in that amount. Instead, Post filed an action for declaratory judgment in the Circuit Court for Montgomery County, asserting that his honoring of the 60/40 fee arrangement would violate Rule 1.5(e) of the Maryland Lawyers’ Rules of Professional Conduct (MLRPC). Bregman filed a two-count counterclaim for declaratory judgment and for breach of contract.

The circuit court concluded, on summary judgment, that the fee agreement was clear and unambiguous, that Post breached the agreement and was hable for damages, and that the alleged violation of MLRPC Rule 1.5(e) did not suffice to constitute a defense to the breach of contract action. It granted Bregman’s motion for summary judgment, entered judgment on the breach of contract counterclaim in favor of Bregman for $112,881, and dismissed the opposing actions for declaratory judgment as moot. The Court of Special Appeals affirmed, Post v. Bregman, 112 Md.App. 738, 686 A.2d 665 (1996), and we granted certiorari to consider (1) whether a fee-sharing agreement between lawyers is subject to MLRPC Rule 1.5(e) and may be rendered unenforceable if in violation of that rule, and (2) whether there was a sufficient dispute of material fact regarding Bregman’s performance to preclude summary judgment. Our affirmative answer to the first question will obviate the need to answer the second. We shall reverse the judgment of the Court of Special Appeals and direct that the case be remanded to the circuit court for further proceedings.

FACTUAL BACKGROUND

MLRPC Rule 1.5 deals generally with lawyers’ fees. Section (a) requires that the fees be reasonable and sets forth some factors to be considered in determining reasonableness. Section (b) requires that the basis or rate of the fee be communicated to the client, if the lawyer has not regularly represented the client. Section (c) allows contingent fees, subject to certain conditions set forth in that section and certain prohibitions specified in § (d); and § (e)—the section at issue here—deals with the splitting of fees among lawyers who are not part of the same firm. It states:

“A division of fee between lawyers who are not in the same firm may be made only if:

(1) the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation;

(2) the client is advised of and does not object to the participation of all the lawyers involved; and

(3) the total fee is reasonable.”

In 1988, Stanley Taylor was diagnosed as suffering from chronic myleogenous leukemia. Believing that his condition may have been caused by exposure to a toxic substance during his employment, he sought legal assistance for the purpose of obtaining workers’ compensation benefits. He found a lawyer, who filed a claim, but when benefits were initially denied the lawyer withdrew. Taylor then, in August, 1989, interviewed Mr. Bregman as a prospective replacement. Bregman informed Taylor that his firm did not handle workers’ compensation claims but introduced him to Post who, Bregman explained, had considerable experience in that field. Bregman, it appears, had referred other cases or clients to Post in accordance with a mutually acceptable fee-sharing arrangement. Taylor later retained Post to pursue the compensation claim, which Post did successfully.

While the compensation case was pending, Taylor retained Post to file a separate action against the suppliers of the toxic substance. The retainer agreement with respect to the third-party action called for Post to receive a fee of one-third of any recovery if the case was settled and 40% if suit was filed and discovery undertaken. The agreement also provided that “[a]ssociate counsel may be employed at the discretion and expense of Alan F. Post, Chartered without any increase in the attorneys’ fees to be paid by client.”

Post did not believe himself capable of handling the litigation alone, so, in June, 1990, he brought in the firm of Connerton, Ray & Simon, and entered into a three-way arrangement with that firm and Bregman’s firm.¹ On June 14, 1990, he confirmed the arrangement in letters to Bregman and to Ron Simon, of the Connerton firm. In his letter to Bregman, Post acknowledged that Bregman had referred Mr. Taylor with respect to both the worker’s compensation claim and the third-party action and that “we have brought in as co-counsel” the Connerton firm. He noted that he and Bregman had discussed the active participation of Bregman’s firm in the case and that he (Post) and Simon believed that “there will certainly be opportunities for the use of manpower from your office to handle various pleadings, depositions, etc.” He continued:

“Therefore, we have agreed that the firm of Bregman, Berbert & Schwartz will share in the recoveries to the extent of 25% of all fees recovered from the third party litigation.

You will be called upon to contribute 25% of all out-of-pocket expenses and an appropriate allocation of the labors of litigation.”

That arrangement was recited in Post’s letter to Simon as well. There, he confirmed that they had agreed, with respect to Taylor’s case, that “the referring law firm of Bregman, Berbert & Schwartz will be entitled to 25% of the net fee recovery, provided that they meet their commitment of contributing 25% of costs as well as such litigation related tasks as shall be assigned to them.” The letter continued that Post and Connerton would share the other 75% equally. It was anticipated that Taylor’s case would be consolidated with at least two others, in which Bregman had no interest, and that the fees generated in those cases would be shared equally between Post and the Connerton firm. Bregman claimed that he responded to Post’s letter on June 21, noting in his response that the letter correctly stated the understanding, subject to two clarifications. The one of interest here is Bregman’s statement that “our firm’s involvement in the third party actions is dependent upon direction from you or Ron Simon. We are excited about working the case with you, but we cannot do work until you delegate. If you do not ask us to do 25% of the work, nevertheless, our fee will still be 25%.” A copy of Bregman’s letter, properly addressed to Post, is in the record; Post claimed that he did not recall having seen that letter, although he never denied having received it.

In September, 1990, suit was filed in Taylor’s case in the Superior Court of the District of Columbia, with the Conner-ton firm acting as lead counsel. Connerton continued in that role until October, 1991, when it withdrew from the case. Faced with that -withdrawal, Post then contacted the firm of Paulson, Nace, Norwind & Sellinger, which, as a condition of assuming the role of lead counsel, insisted on receiving two-thirds, rather than one-half, of the total contingency fee. In a letter to Barry Nace of that firm, dated December 20, 1991, Post agreed to that arrangement—one in which the Paulson firm would act as lead counsel “and bear responsibility for the costs entailed in the litigation.”² That required a new arrangement with Bregman. The next day, December 21, 1991, Post wrote to Bregman, informing him that he (Post) had decided to engage the Paulson firm, which had agreed to fund the litigation, including expected discovery costs in excess of $100,000. The letter concluded:

“Unfortunately, the one draw back is that there has been an upset in the fee arrangements, and we are no longer in a position to extend a referral fee of 1/3 of the gross amount of fees. Barry [Mr. Nace, of the Paulson firm] is insisting on a 2/3 share for [h]is firm, which in a sense is reasonable considering the fact that he is taking on the expenses as well. That leaves 1/3 as a remaining fees [sic] to be divided up and I would propose that I will split that remaining portion with you on a 60/40 basis in an effort to be reasonably fair.”

With one modification, Bregman accepted the new arrangement. At the bottom of the letter, the words “Plus Costs” and “Plus unpaid fees owed” were added in handwriting and initialed by Post.

On November 1, 1994, the Taylor case was settled, as a result of which Post received $260,000, representing one-third of the fee. The Paulson firm received the other two-thirds. It is not clear from the record before us what initial communications occurred between Post and Bregman regarding Bregman’s share of the fee. Bregman asserted that, upon his inquiry, Post informed him that his (Bregman’s) share of the fee was between $80,000 and $90,000. It appears that, on November 10, 1994, Post wrote to Bregman offering to settle the matter for $50,000, an offer that Bregman rejected the next day.³ With an impasse looming, Post, on November 28, filed a Complaint for Declaratory Relief in the Circuit Court for Montgomery County. Though acknowledging the December 21, 1991 letter, Post contended that, whereas, between December, 1991 and October, 1994, he (1) was directly involved in the preparation or review of over 100,000 pages of documentation, (2) participated directly in 35 depositions, reviewed 62 others, and attended 30 court hearings and over 100 litigation conferences, and (3) expended “thousands of hours” and “thousands of dollars” in the representation of Mr. Taylor, Bregman drafted no documentation, participated in no depositions, attended no court hearings or conferences, and expended no material amount of time or money on the case. He therefore asked the court “to declare the letter agreement dated December 20, 1991, unenforceable as against public policy, and to declare [Bregman’s] demand to recover a fee in an amount in excess of $100,000, without performing any material services and/or assuming any significant responsibility for the benefit of either [Taylor or Post] to be a ‘per se’ violation of Rule 1.5(e) of the Maryland Rules of Professional Conduct.”⁴

In response to a motion to dismiss, Post filed an Amended Complaint and then, in response to another motion to dismiss, a Second Amended Complaint seeking essentially the same relief. Specifically, he asked the court to declare that (1) MLRPC and, in particular, Rule 1.5(e) governs the conduct of the parties, (2) there was no written agreement with Taylor for joint representation, (3) Taylor was advised and consented to joint representation of all co-counsel except for Bregman, (4) in order to obtain the division of fees claimed by Bregman, he would have been required to perform services in proportion thereto, (5) Bregman either did or did not do so, and (6) the existence of “an alleged fee sharing agreement” does not create an exception to the requirements of Rule 1.5(e).

Bregman promptly responded with a counterclaim for declaratory judgment and for breach of. contract. Reciting the two letter agreements of June 21, 1990, and December 21, 1991, Bregman asserted, among other things, that his firm had engaged in a “wide array of legal services” in connection with the tort litigation, that it was co-counsel of record throughout the litigation, that it was “jointly responsible” for Taylor’s representation, and that Post “never requested any participation or provision of services by the Bregman firm that the Bregman firm did not fully satisfy.” Bregman denied any violation of Rule 1.5(e) on his part; he asserted that, if there was a violation of the.Rule, it was Post who was responsible and that Post’s wrongful conduct should not affect Bregman’s entitlement to agreed-upon fees. He asked that the court declare that he was entitled to $104,000 in legal fees and that MLRPC is “not an impediment to the enforceability of [the contract between the parties].” In the breach of contract count, Bregman sought judgment for $106,000 plus costs advanced in the Taylor litigation, interest, and court costs.

On this state of the pleadings, Bregman renewed a motion for summary judgment that he had filed earlier. In connection with that motion, through documents and stipulations, the following “facts” were presented:

(1) From the beginning and throughout the Taylor litigation, Bregman was listed on the pleadings as co-counsel;

(2) The Bregman firm participated in the drafting of the initial complaint, a copy of which was sent to him as co-counsel;

(3) The Bregman firm participated in drafting an amended complaint in March, 1991;

(4) Bregman and his firm were included on the Official Service List provided to the clerk of the court in February, 1992;

(5) No separate retainer agreements were entered into between Taylor and the Connerton firm, between Taylor and the Paulson firm, or between Taylor and Bregman;

(6) Post kept no accounting of the time he or his firm spent on the Taylor litigation and, obviously, gave no such accounting to the Paulson firm;

(7) The Paulson firm gave no accounting to Post of the time it spent on the Taylor litigation; and

(8) “At no time during the course of the Taylor litigation was the Bregman firm assigned any task that it did not properly perform.”

Other documents, in the form of statements under oath but made on information and belief rather than on personal knowledge, purported to generate some dispute over Bregman’s role in the litigation. Taylor, for example, claimed that he had never requested Bregman or his firm to represent him “in any legal matter,” that he never consented to their representation, and that, until December, 1994, he was unaware that Bregman or his firm provided any service on his behalf. Notwithstanding other evidence that Taylor received a copy of every paper filed in his case, all of which showed Bregman as co-counsel, Taylor also stated that he was unaware that Bregman was listed as co-counsel. Post asserted that, “[a]t no time during the period April, 1991 through November 1, 1994, did Mr. Bregman perform, any further services in the Taylor matter” and that “[i]n order to meet the demands of the case, I was forced by Mr. Bregman’s failure to perform to reduce my other caseload, causing a substantial financial sacrifice.” That, of course, stands in sharp contrast to Post’s stipulation, quoted above, that at no time during the litigation was the Bregman firm assigned any task that it did not properly perform. It also stands in contrast to Bregman’s statement that his firm performed “a wide array” of legal services to Taylor, including meeting with and interviewing the client, developing legal theories, investigating potential defendants, drafting pleadings, appearing in court, attending a deposition, meeting with co-counsel to discuss strategy, conducting legal research, and reviewing pleadings. He added that on several occasions he called Post to inquire what else he could do to be of assistance and was often told that nothing was then required.⁵

The issues presented to the court through Bregman’s motion were clear. Post asserted that the fee arrangement provided for in the December, 1991 letters was subject to the requirements of MLKPC Rule 1.5(e), requiring either that the division be in proportion to the services performed or that, by written agreement with the client, the lawyers assume joint responsibility for the representation, and that neither condition was met. Accordingly, the arrangement was unenforceable and all that Bregman was entitled to was what would be due on a quantum meruit basis. Bregman, on the other hand, contended (1) that Rule 1.5(e) was an ethical rule, enforceable through the attorney grievance mechanism, but that it did not serve to affect or modify the December, 1991 agreement, and (2) even if the arrangement was subject to the rule, the rule was not violated, as there was, in fact, a joint responsibility for the representation. The latter contention was based largely on the facts that Bregman was listed as co-counsel on all pleadings and other papers, he actually performed work on the case, and Post was authorized in his retainer agreement with Taylor to engage other counsel.

The court viewed the case, essentially, as a breach of contract action, to which the ethical argument made in Post’s complaint for declaratory judgment was offered as a defense. It found that there was a contract between the parties— emanating from the December, 1991 letter—and that the contract was clear and unambiguous. It also determined that the “ethical question is not a defense to a breach of contract between the parties,” especially when one of the parties, Post, “not only entered into, but in his case made the proposal himself.” Upon those findings, the court granted Bregman’s motion for summary judgment with respect to the breach of contract claim and declared, as a result, that there no longer was a dispute requiring a declaratory judgment. It manifested those decisions in an order entered on June 19, 1995, granting summary judgment on Count II of Bregman’s counterclaim, entering judgment in favor of Bregman in the amount of $112,881 (representing the $104,000 share of the fee, reimbursement for $2,283 in funds contributed by Bregman, and pre-judgment interest on the $106,233 from November 1, 1994), and dismissing Post’s complaint and Count I of Bregman’s counterclaim as moot.

In his appeal to the Court of Special Appeals, Post claimed that the circuit court erred (1) in finding, on summary judgment, that the fee agreement consisted only of the December letter, rather than the combination of the June and December letters, and in further finding that the agreement was clear and unambiguous, and (2) in concluding that the agreement was not governed by MLRPC Rule 1.5. On the first issue, the appellate court concluded that there was, in fact, a dispute over whether the June letter was part of the agreement between the parties, but it determined that the dispute was not a material one and that, even if the two letters are read together, the resulting agreement was clear and unambiguous. The alleged “duty” on the part of Bregman to contribute 25% to the litigation, mentioned in the June letter, was, in the court’s view, a passive one: “The plain language of the contract, then, specifies that appellees’ role in the litigation was a passive one; no duty to contribute would arise until appellees were ‘called upon.’ ” Post v. Bregman, supra, 112 Md.App. at 754, 686 A.2d at 672.

The second issue, it said, emanated from the principle established in Von Hoffman v. Quincy, 71 U.S. (4 Wall.) 535, 550,18 L.Ed. 403 (1866), that parties to a contract are deemed to have contracted with knowledge of existing law and that “the laws which subsist at the time and place of the making of a contract ... enter into and form a part of it, as if they were expressly referred to or incorporated in its terms.” Post v. Bregman, supra, 112 Md.App. at 758, 686 A.2d at 674, quoting from Wilmington Trust Co. v. Clark, 289 Md. 313, 320, 424 A.2d 744, 749 (1981), quoting in turn from Von Hoffman v. Quincy, supra. Although recognizing that statutes constitute “law for purposes of interpreting contracts,” the court drew from Attorney Gen. of Maryland v. Waldron, 289 Md. 683, 426 A.2d 929 (1981), “a clear distinction between legislative enactments and the legislature in general and rules passed by the judiciary for the purpose of regulating the conduct of lawyers” and concluded from that that MLRPC did not constitute “laws” to be read into contracts. Nor, the court continued, did MLRPC qualify as “judicial precedent,” even assuming that judicial precedent was automatically incorporated into contracts. Finally, the court turned to the concern expressed in the Scope part of MLRPC that the purpose of the rules “can be subverted when they are invoked by opposing parties as procedural weapons” and the admonition that the fact that the rules may be a basis for disciplining lawyers “does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the Rule.” To a large extent, this view followed earlier pronouncements by the Court of Special Appeals that MLRPC does not represent a reflection of public policy. See Kersten v. Van Grack, 92 Md.App. 466, 608 A.2d 1270 (1992); compare, however, Fraidin v. Weitzman, 93 Md.App. 168, 191, 611 A.2d 1046,1057 (1992).

From all of this, the Court of Special Appeals concluded that “the judiciary must be extremely careful not to abuse its autonomy by extending the application of the rules it promulgates into areas not within its primary authority” and that “the enforceability in contract of fee-sharing agreements between attorneys is one such area.” Post, supra, at 762, 686 A.2d at 676.

DISCUSSION

A. An Unresolved Issue

Although the major issue presented to the circuit court was whether the fee agreement between Post and Bregman was subject to MLRPC Rule 1.5(e) (and what the effect of that subjection might be), Bregman made clear his position that, even if the rule were applicable, it was not violated, at least not by him. The principal basis for that position was that there was, in fact, a joint responsibility on the part of Post and Bregman for the representation of Taylor, and that, in turn, was based on (1) the retainer agreement between Post and Taylor allowing Post to engage additional counsel, (2) the fact that Bregman was listed on pleadings, papers, and the official service list as co-counsel, and (3) the fact that he and his firm actually performed considerable work on the case. Apart from that, Bregman contended that his further participation was dependent on being asked to perform work by Post, that he offered to perform additional work but was not called upon to do any, and that he did properly perform whatever tasks were assigned to him.

Because of its finding that any alleged violation of Rule 1.5(e) would not suffice as a defense to enforcement of the fee agreement, the court never reached the question of whether there was, in fact, a violation of the Rule. Indeed, given the nature of the record, it is not at all clear that the violation issue could properly have been resolved on summary judgment. Other than the stipulations and the documents themselves, the only “evidence” before the court bearing on that issue was either in dispute, or in the form of legally insufficient “affidavits,” or both. At the very least, the court would certainly have had discretion to deny summary judgment on that ground and allow further development of the relevant facts. See Metropolitan Mtg. Fd. v. Basiliko, 288 Md. 25, 28, 415 A.2d 582, 583 (1980): “whereas a ‘court cannot draw upon any discretionary power to grant summary judgment’ (6 Pt. 2 Moore’s Federal Practice ¶ 56.15[6], at 56-601 (2d. ed.1980)), it, ordinarily, does possess discretion to refuse to pass upon, as well as discretion affirmatively to deny, a summary judgment request in favor of a full hearing on the merits; and this discretion exists even though the technical requirements for the entry of such a judgment have been met.”

Bregman continued to press his argument, in both the Court of Special Appeals and before us, that there was no violation of the Rule, but that is an issue we cannot address. As we pointed out in Geisz v. Greater Baltimore Medical, 313 Md. 301, 314 n. 5, 545 A.2d 658, 664 n. 5 (1988), “[o]n an appeal from the grant of a summary judgment which is reversible because of error in the grounds relied upon by the trial court the appellate court will not ordinarily undertake to sustain the judgment by ruling on another ground, not ruled upon by the trial court, if the alternative ground is one as to which the trial court had a discretion to deny summary judgment.” See also Three Garden Village Ltd. Partnership v. U.S. Fidelity & Guar. Co., 318 Md. 98, 567 A.2d 85 (1989); Gross v. Sussex, 332 Md. 247, 630 A.2d 1156 (1993). We therefore must look only to the ground relied upon by the circuit court—whether MLRPC Rule 1.5(e) is relevant in determining the enforceability of the fee agreement.

B. The Actions For Declaratory Judgment

As noted, the circuit court dismissed Post’s and Bregman’s respective actions for declaratory judgment on the ground that, by entering judgment on Bregman’s breach of contract claim, the actions for declaratory judgment were moot. If the issue raised in an action for declaratory judgment is truly moot, the action may properly be dismissed, for, as we held in Reyes v. Prince George’s County, 281 Md. 279, 289 n. 5, 380 A.2d 12, 18 n. 5 (1977), the declaratory judgment process “is not available for the decision of purely theoretical questions which may never arise, questions which have become moot and abstract questions” and should not be used “where a declaration would neither serve a useful purpose nor terminate a controversy.” Nonetheless, when an action for declaratory judgment does clearly lie, as it did in this case, it is ordinarily not permissible for a court to avoid declaring the rights of the parties by entering judgment on another pending count. Compare Popham v. State Farm, 333 Md. 136, 140 n. 2, 634 A.2d 28, 29 n. 2 (1993), where, though noting that the resolution of another claim in the same action rendered moot the need for a declaratory judgment, we also observed that the order purporting to dismiss the declaratory judgment action “also declared the rights of the parties.”

We understand the constraints under which trial judges must operate and can well appreciate the court’s desire to avoid the extra effort necessary to draft a declaratory judgment when, in its view, the entry of judgment on the breach of contract action essentially decides the issue. Nonetheless, we have historically enforced the provisions of the Declaratory Judgment Act and insisted that courts declare the rights of the parties when presented with an action properly susceptible to a declaratory judgment. Rarely, we have held, is it permissible to dismiss an action for declaratory judgment in lieu of declaring the rights of the party seeking the judgment. See Broadwater v. State, 303 Md. 461, 494 A.2d 934 (1985). We have made clear that, as a general rule, courts will not entertain a declaratory judgment action “if there is pending, at the time of the commencement of the action for declaratory relief, another action or proceeding involving the same parties and in which the identical issues that are involved in the declaratory action may be adjudicated.” Waicker v. Colbert, 347 Md. 108, 113, 699 A.2d 426, 428 (1997). We have not, however, except in the peculiar circumstance of Popham v. State Farm, supra, 333 Md. 136, 634 A.2d 28, generally blessed the dismissal of a proper action for declaratory judgment because of a ruling on an alternative claim in the same action. The existence of another remedy, at law or in equity, does not ordinarily defeat a party’s right to seek and obtain a declaratory judgment. Turner v. Mfrs. Casualty Ins. Co., 206 Md. 601, 112 A.2d 670 (1955); Glorius v. Watkins, 203 Md. 546, 102 A.2d 274 (1954).

This case, in particular, was appropriate for declaratory judgment. Post, indeed, objected to the court’s refusal to declare his rights. After the court announced its intended decision, he argued his right to a declaration and asked that the court, in writing, define the contract (which was in dispute), state whether MLRPC Rule 1.5(e) applied to the contract, and declare whether he was or was not entitled to the relief he sought. This was not an ordinary breach of contract action. As is the case with many lawyers, both parties used fee-sharing agreements in their practices, and they sought a specific determination of whether MLRPC Rule 1.5(e) applied to their fee-sharing agreement, and, if so (1) whether the Rule was violated in this case, and (2) if the Rule was violated, what the effect of that violation was on the contract. They were entitled to a specific written declaration, not just oral rulings or implicit determinations, on those matters. It is the judgment that must declare the rights of the parties. Robert T. Foley Co. v. W.S.S.C., 283 Md. 140, 389 A.2d 350 (1978). As we shall be directing a remand of the case because of our disagreement with the substantive ruling of the court on the application of Rule 1.5(e) in any event, the court will have an opportunity to correct this deficiency and declare the rights of the parties.

C. The Effect of MLRPC Rule 1.5(e)

The dispute over the status and effect of Rule 1.5(e) has been viewed in two somewhat different ways so far in this proceeding. The circuit court regarded Post’s argument as being in the nature of a defense to an action for breach of contract—as an assertion, in other words, that the Rule constituted a statement of supervening public policy and that the fee agreement was unenforceable because it was in violation of that public policy. That certainly was the position set forth in Post’s initial complaint for declaratory judgment. It is established in Maryland that a contractual provision that is in violation of public policy, to the extent of the conflict, is invalid and unenforceable. State Farm Mut. v. Nationwide Mut., 307 Md. 631, 516 A.2d 586 (1986); Walsh v. Hibberd, 122 Md. 168, 89 A. 396 (1913). The Court of Special Appeals, citing Wright v. Commercial & Sav. Bank, 297 Md. 148, 464 A.2d 1080 (1983), viewed Post’s argument more as one of incorporating the Rule into the agreement, as defining or shaping the terms of the agreement rather than as acting as a defense to it. In that context, a violation of the Rule would not serve to invalidate the contract or render it unenforceable but rather would constitute a violation of the contract itself.

Post’s argument has, indeed, fluctuated between the two but is currently cast closer to the Court of Special Appeals view of it. He does not now contend that the fee-sharing agreement, calling for a 60/40 split of one-third of the fee, itself is in violation of the Rule; what is unethical and therefore impermissible, in his view, is Bregman’s demand for a 40% share when he did not make a proportionate contribution to the effort. Presumably, he would find no problem with the agreement, or its enforcement, if Bregman, in fact, had contributed 40% of one-third (or 13%) of the effort or if there was, in fact, a joint responsibility for the representation. Because he believes that neither circumstance existed, he urges that the agreement, read in light of Rule 1.5(e), cannot be enforced precisely as written.

The disagreement over whether Rule 1.5(e) is either subsumed into the contract between the parties or constitutes an external check on its enforcement stems from a larger disagreement over whether the Rule, or MLRPC in general, constitutes a cognizable and enforceable statement of public policy, equivalent in effect to a statute. On that more general question, one finds seemingly contradictory pronouncements from courts around the country, each party citing to us the pronouncements that purport to favor his position. One must be careful, however, to consider the underlying basis of those pronouncements. A number of courts, for example, have viewed the Code of Professional Conduct and the various disciplinary rules and ethical considerations that pertain to it as merely “self-imposed internal regulations prescribing the standards of conduct for members of the bar,” State v. Ford, 793 P.2d 397, 400 (Utah.Ct.App.1990), quoting in part from People v. Green, 405 Mich. 273, 274 N.W.2d 448, 454 (1979), and, for that reason, not as “a vehicle for defining public policy.” Tanasse v. Snow, 929 P.2d 351, 355 (Utah.Ct.App. 1996); see also In re Dineen, 380 A.2d 603, 604 (Me.1977); and Niesig v. Team I, 76 N.Y.2d 363, 559 N.Y.S.2d 493, 495, 558 N.E.2d 1030,1032 (1990). In the Maine case, Dineen, the court made clear that the Code did not “have the force of positive law” because it was promulgated only by the State Bar Association and not by the court. It is not clear from the opinions who promulgated the Code in Michigan and Utah; in New York, it was apparently promulgated by the State Bar Association and “enacted” by the intermediate appellate division of the New York courts. Niesig, supra, 559 N.Y.S.2d at 495, 558 N.E.2d at 1032.

In Maryland, the rules contained in MLRPC do not constitute “self-imposed internal regulations.” They are not precatory guidelines adopted by lawyers or by lower levels of the court system, but are rules adopted by this Court (Md. Rule 16-812) in the exercise of its inherent Constitutional authority to regulate the practice of law. Attorney General v. Waldron, supra, 289 Md. 683, 426 A.2d 929. Together with the rules governing admission to the Bar, rules pertaining to attorney trust and bank accounts, rules governing the disciplining of lawyers, and other rules governing specific conduct by lawyers (see, for example, Rule' 16-401), they serve to regulate virtually every aspect of the practice of law, establishing both general and particular standards for how lawyers must handle funds belonging to them or to others and how they may and may not deal with each other, with the courts, with their clients, with adverse parties, with witnesses, and with the community at large.

Unquestionably, so thorough a regulation of an occupation and professional calling, the integrity of which is vital to nearly every other institution and endeavor of our society, constitutes an expression of public policy having the force of law. We made the point with unmistakable clarity in Waldron—that “the power generally to regulate matters regarding the profession and its practitioners, are reposed inherently in the judiciary” (id. at 694, 426 A.2d 929), that “the obligation of the judicial branch of government to monitor and manage its own house are not hollow proclamations of power, for the placement of this responsibility with the judiciary represents a recognition of the special, and to a degree, unique relationship that has evolved over the years between the legal profession and the tribunals of justice it serves” (id. at 695, 426 A.2d 929), and that, although the Legislature may act “to aid the courts in the performance of their judicial functions,” the judicial branch nonetheless retains the “fundamental authority and responsibility” to “carry out its constitutionally required function, an aspect of which ... is the supervision of practicing lawyers.” Id. at 699, 426 A.2d 929. See also In re Application of Allan S., 282 Md. 683, 689 387 A.2d 271, 275 (1978): “Upon this Court falls the primary and ultimate responsibility for regulating the practice of law and the conduct and admission of attorneys in this State.”

MLRPC represents the exercise of that authority, the discharge of that responsibility. To the extent, therefore, that the pronouncements of other courts are based on a different view of the function and authority of the Code in their respective States, they are simply not relevant to the Maryland situation. MLRPC constitutes a statement of public policy by the only entity in this State having the Constitutional authority to make such a statement, and it has the force of law. The mere fact that lawyers may be disciplined—even disbarred—for violating those rules attests to the legal significance of the rules. We thus share the view of the Illinois Supreme Court, expressed in In re Vrdolyak, 137 Ill.2d 407, 148 Ill.Dec. 243, 248, 560 N.E.2d 840, 845 (1990), that “[a]s an exercise of this court’s inherent power over the bar and as rules of court, the Code operates with the force of law.” See also Succession of Cloud, 530 So.2d 1146,1150 (La.1988) (“The standards in the Code of Professional Responsibility which govern the conduct of attorneys have the force and effect of substantive law”); Citizens Coalition for Tort Reform, Inc. v. McAlpine, 810 P.2d 162 (Alaska 1991).

The real issue here, however, is not the general quality or legal significance of MLRPC, but rather the extent to which it is enforceable outside the disciplinary context—the extent to which it, and Rule 1.5(e) in particular, governs private agreements entered into by lawyers. This Court, and indeed most courts, have given effect to at least some of the rules embodied in the Code outside the disciplinary context. In Advance Finance Co. v. Trustees, 337 Md. 195, 652 A.2d 660 (1995), for example, we applied MLRPC Rule 1.15 in determining that a lawyer was a fiduciary for purposes of sustaining a claim against the Client Security Trust Fund. In Harris v. Baltimore Sun, 330 Md. 595, 625 A.2d 941 (1993), an action under the Public Information Act, we applied Rule 1.6 (Confidentiality of Information) to determiné whether the Public Defender, as an attorney, had an obligation to release information relating to one of his clients under that Act. In Prahinski v. Prahinski, 321 Md. 227, 241, 582 A.2d 784, 791 (1990), we applied Rule 5.4(b) and (d), precluding a lawyer from forming partnerships for the practice of law with persons who are not lawyers, in holding that a non-lawyer spouse “has no interest in the lawyer-spouse’s practice and therefore the goodwill of the practice may not be included as marital property.” In Harris v. Harris, 310 Md. 310, 529 A.2d 356 (1987), the trial court in a worker’s compensation case disqualified the claimant’s lawyer on the ground that his continued representation would be in violation of MLRPC Rule 3.7, which precludes a lawyer from acting as advocate in a case in which the lawyer is likely to be a necessary witness. Though dismissing the appeal as non-allowable from the interlocutory pretrial order, we stated that “in further proceedings in this case counsel’s conduct will be governed by Rule 3.7.... ” Id. at 320, 529 A.2d at 361. See also Medical Mutual v. Evans, 330 Md. 1, 32, 622 A.2d 103, 118 (1993). In Cardin v. State, 73 Md.App. 200, 533 A.2d 928 (1987), the Court of Special Appeals held that the violation by a lawyer charged with theft of former Disciplinary Rule 2-107—the predecessor of MLRPC Rule 1.5(e)—could be considered by the jury in determining whether the lawyer had criminal intent in receiving the funds alleged to be stolen. The Court of Special Appeals and the U.S. District Court for the District of Maryland have applied MLRPC Rules 1.7 and 1.9 (Conflict of Interest) in determining whether to strike the appearance of counsel in collateral litigation. Tydings v. Berk Enterprises, 80 Md.App. 634, 565 A.2d 390 (1989), Gaumer v. McDaniel, 811 F.Supp. 1113 (D.Md.1991); Blumenthal Power Co., Inc. v. Browning-Ferris, Inc., 903 F.Supp. 901 (D.Md.1995); Buckley v. Airshield Corp., 908 F.Supp. 299 (D.Md.1995).

In Succession of Cloud, supra, 530 So.2d 1146, the Louisiana Supreme Court invalidated the transfer of property by a client to her lawyer on the ground that the transfer ran afoul of the ethical rule precluding a lawyer from acquiring a proprietary interest in the client’s cause of action. At 1150, the court held:

“The disciplinary rules are mandatory rules that provide the minimum level of conduct to which an attorney must conform without being subject to disciplinary action. When an attorney enters into a contract with his client in direct and flagrant violation of a disciplinary rule and a subsequent civil action raises the issue of enforcement (or annulment) of the contract, this court, in order to preserve the integrity of its inherent judicial power, should prohibit the enforcement of the contract which directly contravenes the Code adopted by this court to regulate the practice of law.”

More to the point, courts have applied Code provisions dealing with fee sharing between lawyers in deciding upon the validity and enforceability of fee-sharing agreements. In Baer v. First Options of Chicago, Inc., 72 F.3d 1294 (7th Cir.1995), the Seventh Circuit Court of Appeals, applying Illinois law, held an oral modification of a fee-sharing agreement between two lawyers unenforceable because Rule 1.5 of the Illinois counterpart to MLRPC required such agreements to be in writing and approved by the client. See also Holstein v. Grossman, 246 Ill.App.3d 719, 186 Ill.Dec. 592, 616 N.E.2d 1224 (1993); Kaplan v. Pavalon & Gifford, 12 F.3d 87 (7th Cir.1993). In O’Hara v. Ahlgren, Blumenfeld & Kempster, 158 Ill.App.3d 562, 110 Ill.Dec. 702, 511 N.E.2d 879 (1987), the court declared an agreement by a deceased lawyer’s widow to sell her husband’s good will to a law firm in exchange for a share of the fees earned by the firm from the husband’s clients “in stark violation of the Illinois Code of Professional Responsibility which precludes the splitting or sharing of fees between a lawyer or law firm and a nonlawyer with certain exceptions not applicable to this case,” and therefore unenforceable. Id. at 704, 511 N.E.2d at 881.

Illinois is not alone in applying fee-sharing provisions of the Code to private agreements between lawyers and declining to enforce fee-sharing contracts in violation of those provisions. In Scolinos v. Kolts, 37 Cal.App.4th 635, 44 Cal.Rptr.2d 31 (Cal.Ct.App.1995), the California court held a fee-sharing agreement between lawyers invalid because it contravened an ethical rule requiring that such agreements be approved in writing by the client. At 640, 44 Cal.Rptr.2d 31, the court observed that “[i]t would be absurd if an attorney were allowed to enforce an unethical fee agreement through court action, even though the attorney potentially is subject to professional discipline for entering into the agreement.” See also Altsckul v. Sayble, 83 Cal.App.3d 153, 147 Cal.Rptr. 716 (Cal.Ct.App.1978) and Kallen v. Delug, 157 Cal.App.3d 940, 203 Cal-Rptr. 879 (Cal.Ct.App.1984) (refusing to enforce feesharing agreements in violation of Code of Professional Conduct).

In Matter of P & E Boat Rentals, Inc., 928 F.2d 662 (5th Cir.1991), the Fifth Circuit Court of Appeals, applying Louisiana law, refused to enforce an alleged agreement between a referring attorney and an attorney who did most of the work on the case to share fees equally, affirming instead a division on a quantum meruit basis, on the ground that, to do otherwise would violate the Louisiana Code of Professional Conduct. The Alaska Supreme Court refused to enforce a fee-sharing agreement between lawyers because it violated an ethical requirement that the client be advised of the participation of the attorneys involved. Matter of Estate of Katchatag, 907 P.2d 458 (Alaska 1995). In Belli v. Shaw, 98 Wash.2d 569, 657 P.2d 315 (1983), the Washington Supreme Court refused to enforce a fee-sharing agreement that violated that State’s counterpart of MLRPC Rule 1.5(e), both because the client had not approved the agreement and because the referring attorney had done little or no work on the case. Applying Ohio law, a U.S. District Court declined to enforce an agreement to share a fee on an 80/20 basis when the evidence showed that the lawyer seeking the 20% share played “only an incidental role” in the underlying litigation and that the other firm “expended tremendous resources in taking the case to trial and beyond.” Dragelevich v. Kohn, Milstein, Cohen & Hausfeld, 755 F.Supp. 189, 194 (N.D.Ohio 1990). The issue, it said, was “whether a fee-splitting agreement between attorneys is enforceable when the actual contribution of an attorney in the case differs substantially from the proportion of fees to which he would be entitled under the agreement.” That issue, the court held, was “governed” by the applicable provision of the Ohio Code of Professional Responsibility. Id. at 191.

Although, for reasons shortly to be described, we do not necessarily agree with the ultimate results reached in each of the cases just cited, we do adopt the premise emanating from those cases that MLRPC Rule 1.5(e) does constitute a supervening statement of public policy to which fee-sharing agreements by lawyers are subject, and that the enforcement of Rule 1.5(e) is not limited to disciplinary proceedings. It may extend to holding fee-sharing agreements in clear and flagrant violation of Rule 1.5(e) unenforceable, for, following the observation of the California court in Scolinos v. Kolts, supra, 37 Cal.App.4th at 640, 44 Cal.Rptr.2d 31, it would indeed be at least anomalous to allow a lawyer to invoke the court’s aid in enforcing an unethical agreement when that very enforcement, or perhaps even the existence of the agreement sought to be enforced, would render the lawyer subject to discipline.

We highlight the word “may” for a reason. Although a fee-sharing agreement in violation of Rule 1.5(e) may be held unenforceable, the Rule is not a per se defense, rendering invalid or unenforceable otherwise valid fee-sharing agreements because of rule violations that are merely technical, incidental, or insubstantial or when it would be manifestly unfair and inequitable not to enforce the agreement. The Scope note that introduces MLRPC makes clear that the Rules are “rules of reason” that are partly obligatory, partly disciplinary, and partly constitutive and descriptive. It goes on to point out:

“Violation of a Rule should not give rise to a cause of action nor should, it create any presumption that a legal duty has been breached. The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability. Furthermore, the purpose of the Rules can be subverted when they are invoked by opposing parties as procedural weapons.”

As the Minnesota court observed in Christensen v. Eggen, 562 N.W.2d 806 (Minn.App.1997), although the Code constitutes a statement of important public policy, a court ought not to strike down an otherwise valid fee-sharing agreement “merely because of a minor technical deficiency with respect to the professional rules.” Id. at 811. This Court has expressed the same view, albeit in a different context. See Maryland Fertilizing and Manufacturing Co. v. Newman, 60 Md. 584, 588 (1883): “Parties have the right to make their contracts in what form they please, provided they consist with the law of the land; and it is the duty of the Courts so to construe them, if possible, as to maintain them in their integrity and entirety.” See also Webster v. People’s Loan, Etc. Bank, 160 Md. 57, 61, 152 A. 815, 817 (1931); Mortgage Inv. v. Citizens Bank, 278 Md. 505, 509, 366 A.2d 47, 49 (1976). In more direct accord with Christensen, see Watson v. Pietranton, 178 W.Va. 799, 364 S.E.2d 812 (1987); Breckler v. Thaler, 87 Cal.App.3d 189, 196, 151 Cal.Rptr. 50 (Cal.Ct.App.1978) (“Attorneys should be permitted to agree in advance what division of fees there will be, so long as they make a good faith attempt at the time of agreement to anticipate the proportions of services to be performed and responsibilities to be assumed, and otherwise comply with [the applicable rule]” ).

When presented with a defense resting on Rule 1.5(e), the court must look to all of the circumstances— whether the rule was, in fact, violated, and, if violated (1) the nature of the alleged violation, (2) how the violation came about, (3) the extent to which the parties acted in good faith, (4) whether the lawyer raising the defense is at least equally culpable as the lawyer against whom the defense is raised and whether the defense is being raised simply to escape an otherwise valid contractual obligation,⁶ (5) whether the violation has some particular public importance, such that there is a public interest in not enforcing the agreement, (6) whether the client, in particular, would be harmed by enforcing the agreement, and, in that regard, if the agreement is found to be so violative of the Rule as to be unenforceable, whether all or any part of the disputed amount should be returned to the client on the ground that, to that extent, the fee is unreasonable, and (7) any other relevant considerations. We view a violation of Rule 1.5(e), whether regarded as an external defense or as incorporated into the contract itself, as being in the nature of an equitable defense, and principles of equity ought to be applied.

As we indicated, having declared Rule 1.5(e) inapplicable, the circuit court never considered these matters. It must now do so.

JUDGMENT OF COURT OF SPECIAL APPEALS REVERSED; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO REMAND TO CIRCUIT COURT FOR MONTGOMERY COUNTY FOR FURTHER PROCEEDINGS IN ACCORDANCE WITH THIS OPINION; COSTS IN THIS COURT AND IN COURT OF SPECIAL APPEALS TO ABIDE THE RESULT.

RODOWSKY, J., concurs.

ELDRIDGE and CHASNOW, JJ., dissent.

1 . Post later claimed that he was forced to bring the Connerton firm into the case because of Bregman's failure to honor a commitment he made to contribute $2,000/month toward the cost of an associate, who was to devote 50% of her time to the case. Bregman made only one payment, of $2,000, in February, 1990. Bregman disputed that claim.

2 . By letter of January 3, 1992, Mr. Nace accepted those terms, with two clarifications: (1) Paulson’s minimum fee would be 26.67% if the case was settled or resolved by jury verdict and 33.33% if an appeal was necessary, and (2) Paulson would not be responsible for any costs incurred up to that point, but only costs incurred by Paulson thereafter.

3 . The November 10 letter from Post is not in the record. Bregman’s response, dated November 11, is in the record. In that response, Bregman takes issue with a number of allegations and claims made in Post’s letter, most particularly the claim that Bregman contributed very little to the litigation and that the fee agreement might violate Rule 1.5(e) of the MLRPC.

4 . Throughout the record, the parties sometime refer to the letter of December 20 and sometime to the letter of December 21. As noted, the first letter was sent by Post to Nace; the second letter was sent by Post to Bregman. Bregman accepted the arrangement communicated to him in the letter of December 21, so that letter constituted the effective agreement between Post and Bregman.

5 . Maryland Rule 2-501 (c) requires an affidavit in support of or in opposition to a motion for summary judgment to be on personal knowledge: A statement based only on information and belief does not suffice as an affidavit, even if under oath. Fletcher v. Flournoy, 198 Md. 53, 81 A.2d 232 (1951), cert. denied, 343 U.S. 917, 72 S.Ct. 649, 96 L. Ed. 1331 (1952); White v. Friel, 210 Md. 274, 123 A.2d 303 (1956). Rule 2-501 (a) requires a motion for summary judgment to be supported by an affidavit or other statement under oath only if the motion is filed before the day on which the adverse party's initial pleading or motion is filed, and Rule 2-501(b) requires that a response be supported by affidavit or other statement under oath only when the motion is supported by affidavit or other statement under oath and the respondent, desires to controvert a fact contained in the affidavit or statement under oath filed in support of the motion.

As Judge Niemeyer and Ms. Schuett point out, this follows the broader mandate of Rule 2-311(d), requiring any motion or response that is based on facts not contained in the record or in papers filed in the proceeding to be supported by affidavit. Paul V. Niemeyer and Linda M. Schuett, Maryland Rules Commentary 331 (2d ed.1992). The particular language in Rule 2-501 simply recognizes the fact that, if a motion for summary judgment is filed before the adverse party’s initial pleading is filed, there is no record, and thus nothing to supplant the need for. an affidavit or other statement under oath.

The effective motion for summary judgment in this case was filed (or renewed) after both sides had filed various pleadings and motions, so a record of sorts did exist. Nonetheless, at least to the extent that the assertions contained in the purported affidavits were not otherwise in the record or in other papers previously filed and sought to establish facts that were not accepted by the opposing party, an affidavit in proper form was required by Rule 2-311(d). Except for one supplementary affidavit, each of the "affidavits” filed by or on behalf of either party, were stated to be on information and belief; none of them, therefore, were legally sufficient as affidavits.

6 . In this regard, we note the view of the Delaware Supreme Court, expressed in Potter v. Peirce, 688 A.2d 894, 897 (Del. 1997): "As a matter of public policy, this Court will not allow a Delaware lawyer to be rewarded for violating Delaware Lawyers' Rule of Conduct 1.5(e) by using it to avoid a contractual obligation.” See also Freeman v. Mayer, 95 F.3d 569 (7th Cir.1996), applying Indiana law.