Co‑Counsel Duties, Charging Liens, and Joint Contingency Fees: Commentary on Gelwan v. De Ratafia

Co‑Counsel Duties, Charging Liens, and Joint Contingency Fees:
A Comprehensive Commentary on Gelwan v. De Ratafia, 2025 NY Slip Op 07093

I. Introduction

Gelwan v. De Ratafia (App Div 1st Dept, Dec. 18, 2025) is a dense, multi-issue decision arising from a fee dispute after a federal civil rights action settled. It addresses:

  • Whether a joint contingency-fee retainer agreement between two lawyers and their clients was valid and enforceable under the New York Rules of Professional Conduct;
  • Whether the withdrawal (and later death) of one of the lawyers terminated the other lawyer’s right to share in the contingent fee;
  • The scope of claims a lawyer can assert against his own clients and against successor or co‑counsel, including claims for:
    • tortious interference with contract,
    • breach of the implied covenant of good faith and fair dealing,
    • breach of fiduciary duty,
    • professional negligence/legal malpractice, and
    • violation of Judiciary Law § 487;
  • Whether a lawyer can assert a fiduciary-duty or malpractice-type claim against co‑counsel;
  • The applicable statute of limitations for a claim that a third party interfered with the lawyer’s Judiciary Law § 475 charging lien; and
  • Various procedural issues, including motions to renew, motions to extend time to answer, default-judgment practice, and the effect of a coordinate court’s decision.

The principal parties are:

  • Plaintiff-Appellant: attorney Lloyd A. Gelwan, who acted “of counsel” in the underlying civil rights case;
  • Clients/Defendants-Respondents: Georges‑Lucien De Ratafia and Diane Ackroyd, plaintiffs in the underlying federal civil rights action against Columbia County;
  • Co-counsel/Defendants-Respondents: The Warshawsky Law Firm and Steven M. Warshawsky (collectively “Warshawsky”), who came in as substitute counsel in the federal action while plaintiff remained as co‑counsel; and
  • Defendant-Respondent: Columbia County, the defendant in the federal action and alleged interferer with plaintiff’s charging lien.

Although the decision ultimately affirms dismissal of many of plaintiff’s claims, it leaves intact his core breach-of-contract and charging-lien claims against his former clients, while clarifying several important points of New York law in the attorney–fee, co‑counsel, and charging‑lien context.

II. Summary of the Opinion

A. Factual Background in Brief

  • In 2012, De Ratafia and Ackroyd retained the law firm of Glenn Backer, Esq., with Lloyd Gelwan as “of counsel,” to prosecute a federal civil rights action against Columbia County.
  • The written retainer provided for a 40% contingency fee, to be split equally between Backer and Gelwan.
  • In 2015, the firm of O’Connell and Aronowitz (“O&A”), not a party here, was substituted for Backer after Backer withdrew; Backer later died in 2016. Gelwan continued to work with O&A.
  • In 2016, Warshawsky was substituted for O&A, and Gelwan remained as co‑counsel.
  • The federal action settled in June 2016. No attorneys’ fees were paid to Gelwan from the settlement.
  • In August 2016, Gelwan commenced this state-court action, ultimately seeking, among other things, 45% of the settlement recovery (the original 40% contingency plus a later-agreed 5% “bonus” fee).

B. Procedural Posture

The Supreme Court, New York County (Cohen, J.), issued several orders:

  • Partially granting motions by De Ratafia and Ackroyd, Columbia County, and Warshawsky to dismiss various causes of action;
  • Denying plaintiff’s motion to renew Columbia County’s motion to dismiss; and
  • Granting De Ratafia and Ackroyd’s motion to compel acceptance of their late-served answer and consequently denying plaintiff’s motion for default judgment as moot.

On appeal, the First Department:

  • Affirmed the partial dismissal order in all respects;
  • Dismissed the cross-appeal by De Ratafia and Ackroyd as untimely;
  • Affirmed the denial of plaintiff’s motion to renew against Columbia County; and
  • Affirmed the order compelling plaintiff to accept the late-served answer and denying default judgment.

C. Key Substantive Holdings

Several holdings stand out:

  1. Validity of the 2012 fee-sharing retainer: The court rejected arguments that the retainer was invalid under Rule 1.5(g) of the Rules of Professional Conduct or void for public-policy/ethical reasons. The agreement’s language—specifically that the 40% fee would be “equally shared” and the use of “we” regarding work to be done—sufficiently indicated that Backer and Gelwan were assuming joint responsibility.
  2. Continuing enforceability after Backer’s withdrawal: Backer’s withdrawal (and later death) did not terminate plaintiff’s entitlement to a contingency fee under the retainer, nor did it render the agreement invalid.
  3. Conflicts of interest and bonus fee did not forfeit fees: Defendants failed to show that intra-client disputes created disqualifying conflicts under Rule 1.7 that would bar plaintiff’s fee recovery, or that the clients’ agreement to pay plaintiff an additional 5% contingency bonus was an ethical violation requiring fee forfeiture.
  4. Tortious interference and implied-covenant claims against clients dismissed: Plaintiff’s tortious interference claims against De Ratafia and Ackroyd, and his claim for breach of the implied covenant of good faith and fair dealing, were dismissed as conclusory and insufficiently particular.
  5. Section 487, fiduciary-duty, tortious-interference, and malpractice claims against co‑counsel dismissed: The court:
    • found plaintiff’s Judiciary Law § 487 deceit allegations against Warshawsky conclusory;
    • held as a matter of public policy that there is no fiduciary duty running between co‑counsel that could support a claim like the one plaintiff asserted;
    • found no adequately pled “wrongful means” or malice for tortious interference by Warshawsky; and
    • held plaintiff had no standing to sue co‑counsel for professional negligence (legal malpractice) absent an attorney–client relationship.
  6. Three-year statute of limitations for interference with charging lien: Plaintiff’s claim that Columbia County interfered with his Judiciary Law § 475 charging lien was held time-barred under CPLR 214(3)’s three-year limitations period, applicable to claims akin to conversion of property (the settlement funds subject to the lien), not the six-year period for equitable claims under CPLR 213(1).
  7. Relation-back doctrine inapplicable; motion to renew properly denied: Relation back could not salvage the time-barred claim against Columbia County, and a later coordinate-court decision (Gelwan v. Hyson) suggesting a six-year period was dicta, not “law of the case” or collateral estoppel, and did not justify renewal.
  8. Late answer and default: The trial court did not abuse its discretion in directing plaintiff to accept a late-served answer by the clients and in denying plaintiff’s motion for default judgment as moot.

Importantly, the First Department did not dismiss plaintiff’s core claims for breach of contract and for imposition of a charging lien against De Ratafia and Ackroyd. Those claims survive for further proceedings, meaning the decision governs the “outer ring” of ancillary and tort-based theories, not the basic contractual fee dispute.

III. Analysis

A. The Retainer Agreement and Rule 1.5(g): Joint Contingency Fee Sharing

1. The Challenge: Alleged Violations of Rule 1.5(g)

De Ratafia and Ackroyd argued that the 2012 retainer with Backer (with Gelwan as “of counsel”) violated Rule 1.5(g) of the New York Rules of Professional Conduct (22 NYCRR 1200.0) governing fee sharing between lawyers not in the same firm, and was therefore invalid. Substantively, Rule 1.5(g) requires, among other things, that:

  • The fee division must be either:
    • in proportion to the services performed by each lawyer, or
    • based on each lawyer’s assumption of joint responsibility for the representation;
  • There must be client consent after full disclosure, usually including disclosures about the share or basis of the division; and
  • The overall fee must not be excessive or unconscionable.

Defendants contended that because the retainer did not spell out a proportionate division of work and fees, and (in their view) lacked adequate conflict-of-interest disclosures or “waivers,” it should be held invalid and unenforceable, thereby stripping plaintiff of any contractual entitlement to a contingency fee.

2. The Court’s Resolution: Joint Responsibility Sufficiently Disclosed

The First Department rejected this attack. It made two key findings:

  1. Equal fee split plus “we” language signaled joint responsibility.
    The retainer’s statement that the 40% contingency fee would be “equally shared” between Backer and plaintiff, combined with the use of the pronoun “we” in describing the work to be performed, was sufficient to put the clients on notice that both Backer and plaintiff were assuming “joint responsibility” for the representation. This satisfies the alternative prong of Rule 1.5(g): when lawyers agree to share responsibility, they are not required to justify a division based strictly on hours or proportionate services.
  2. Absence of a “conflict waiver” does not void the retainer.
    The court specifically held that the absence of an express “conflict of interest waiver” clause does not render the retainer void. While conflict rules (Rule 1.7, for example) may impose duties of disclosure and informed consent in particular factual settings, not every possible conflict scenario must be preemptively described and “waived” in a standard contingency retainer for it to be valid.

3. Use of Oberman v. Reilly

The decision cites Oberman v. Reilly, 66 AD2d 686 (1st Dept 1978), appeal dismissed 48 NY2d 602 (1979), to reject the argument that the retainer was void simply because plaintiff allegedly “solicited other attorneys to work and did not perform the legal work himself.” In Oberman, the court refused to void a retainer just because one attorney, essentially acting as a referring or coordinating counsel, caused other attorneys to do much of the work. The current decision follows that approach: lawyers can properly share fees and work with other counsel, provided they comply with ethical fee-sharing and responsibility rules.

4. Settlement-Consent Clause and Costa v. Arandia & Arandia

The retainer also contained a clause that an “agreement between you [the clients] and us [Backer and plaintiff], as your counsel, is necessary for settlement.” Such clauses can raise concerns if used to block a client’s absolute right to settle. The court held that:

  • The mere inclusion of the clause did not render the retainer void;
  • There was no attempt here by any attorney to invoke that clause to impede settlement; and
  • This result aligns with Costa v. Arandia & Arandia, 191 AD3d 499 (1st Dept 2021), which indicates that settlement-approval provisions are problematic primarily when they are invoked to frustrate a client’s rights, not when they merely exist in the retainer but play no operative role.

Thus, under Gelwan, the presence of such a provision alone does not void an otherwise valid fee agreement if it is not actually used to hinder settlement.

5. Ethical Violations vs. Contract Enforceability

A broader principle is implicit: alleged violations of the Rules of Professional Conduct do not automatically render a fee agreement void and unenforceable, absent particularly serious ethical breaches directly relevant to the fee arrangement itself. New York courts have been consistent that the ethical rules are primarily disciplinary in nature; they inform but do not automatically determine contract validity.

B. Continuing Rights Under the Retainer After Withdrawal of Original Counsel

Defendants also argued that plaintiff’s right to a contingency-based fee ended when Backer withdrew from the federal action and O’Connell & Aronowitz was substituted. The First Department explicitly rejected that assertion: “For the same reasons, we reject de Ratafia and Ackroyd’s assertion that plaintiff’s right to a contingency fee terminated upon Backer’s withdrawal.”

The implicit reasoning is:

  • The 2012 retainer created a joint arrangement in which both Backer and plaintiff undertook responsibility and were entitled to share in the fee;
  • Backer’s withdrawal (and subsequent death) did not extinguish plaintiff’s contractual relationship with the clients;
  • Nor did the substitution of O&A and then Warshawsky as counsel terminate plaintiff’s extant rights, particularly because plaintiff remained involved in the case as co‑counsel throughout.

This is an important reaffirmation that the enforceability of a contingency-fee contract for one lawyer is not necessarily contingent on another lawyer’s continued participation, absent an express contractual provision to that effect.

C. Alleged Conflicts of Interest and the 5% “Bonus” Contingency Fee

1. Conflicts Under Rule 1.7 and Saint Annes Dev. Co. v. Batista

Defendants argued that disputes between them during the federal lawsuit created conflicts of interest that made plaintiff’s joint representation unethical under Rule 1.7 (current-client conflicts). They sought to use these alleged conflicts to bar plaintiff’s entitlement to any fee.

The court held that De Ratafia and Ackroyd “failed to show as a matter of law” that these disputes created such conflicts as to make the representation unethical in a manner that would preclude remuneration. The citation to Saint Annes Dev. Co. v. Batista, 165 AD3d 997 (2d Dept 2018), is telling: that case concerns conflict situations and fee consequences, but Gelwan clarifies that mere “disputes” or tension between multiple clients do not automatically equate to an unwaivable Rule 1.7 conflict that voids an attorney’s fee claim.

2. The 5% Bonus Contingency Fee

Plaintiff alleged that, mid-litigation, the clients agreed to pay him an additional 5% contingency “bonus.” Defendants characterized this as ethically suspect. The court squarely rejected the notion that plaintiff’s acceptance of this agreement “constituted an ethical violation that would oblige plaintiff to forfeit his legal fees.”

In practical terms:

  • Midstream modifications of fee arrangements must still conform to ethical standards—e.g., not be unconscionable, involve adequate disclosure, and avoid conflicts;
  • But the court found no basis on this record to treat the agreed 5% bonus as an unethical exaction warranting fee forfeiture.

Thus, the court leaves open that such mid-litigation fee adjustments can be valid if properly disclosed and consented to, and if they do not otherwise violate substantive ethical rules.

D. Claims Against the Clients: Tortious Interference & Implied Covenant

1. Tortious Interference with Contract (Against the Clients)

Plaintiff asserted tortious interference claims against:

  • De Ratafia (sixth cause of action); and
  • Ackroyd (seventh cause of action).

Though the opinion does not reprint the complaint’s details, tortious interference with contract generally requires:

  • Existence of a valid contract;
  • Defendant’s knowledge of that contract;
  • Intentional procurement of the contract’s breach;
  • Actual breach; and
  • Damages.

Additionally, when the alleged tortfeasor is not an absolute “outsider” but someone closely related to one of the contracting parties, courts often require pleading “wrongful means” (fraud, threats, crime, extreme economic pressure, or another independent tort) or sole malicious purpose.

The First Department held:

  • The allegations against De Ratafia were “lacking in specifics.”
  • The allegations against Ackroyd were “conclusory and insufficient to assert the type of tortious conduct that could be the basis for such a claim.”

The court cited:

  • 245 E. 19 Realty LLC v. 245 E. 19th St. Parking LLC, 223 AD3d 604 (1st Dept 2024); and
  • L.Y.E. Diamonds, Ltd. v. Gemological Inst. of Am., Inc., 169 AD3d 589 (1st Dept 2019).

These precedents emphasize that tortious interference must be pleaded with substantial factual specificity, especially regarding the “wrongful means” element when the alleged interferer’s conduct could also be explained as within the scope of its own business or contractual interests.

2. Implied Covenant of Good Faith and Fair Dealing

Plaintiff also alleged a breach of the implied covenant of good faith and fair dealing (second cause of action) against the clients, premised on an alleged “scheme” against him.

New York law implies in every contract a covenant of good faith and fair dealing that neither party shall:

  • do anything to destroy or injure the right of the other party to receive the contract’s benefits, or
  • act in a manner that frustrates the contract’s reasonable expectations.

However, this covenant cannot be used to create new duties inconsistent with the express terms of the contract, nor will purely conclusory conspiracy-like allegations suffice.

The court concluded that:

  • The allegations of a “purported scheme” were conclusory; and
  • They did not describe the sort of specific, bad-faith conduct that can support an implied-covenant claim distinct from the basic breach-of-contract claim.

Thus, those claims were dismissed, but the underlying breach-of-contract claim against the clients remains extant.

E. Claims Against Co‑Counsel (Warshawsky)

1. Judiciary Law § 487: Deceit by Attorneys

Judiciary Law § 487 is a penal and civil statute targeting attorney deceit. It provides remedies where an attorney:

  • is guilty of any deceit or collusion, or
  • engages in an intent to deceive the court or any party.

New York case law, including:

  • Nehmadi v. Claude Castro & Assoc. PLLC, 204 AD3d 544 (1st Dept 2022); and
  • Facebook, Inc. v. DLA Piper LLP (US), 134 AD3d 610 (1st Dept 2015), lv denied 28 NY3d 903 (2016),

requires that:

  • the deceit be pleaded with particularity;
  • there be a clear, knowing intent to deceive; and
  • often, that the conduct be part of a chronic pattern of extreme legal delinquency or egregious deception causing damages.

The First Department held that plaintiff’s § 487 allegations against Warshawsky were “conclusory” and lacked the necessary particularity. Accordingly, the § 487 claim (twelfth cause of action) was correctly dismissed.

2. No Fiduciary Duty Between Co‑Counsel

Perhaps the most significant doctrinal pronouncement in Gelwan is the express rejection of a fiduciary duty running between co‑counsel.

Plaintiff alleged a breach of fiduciary duty by Warshawsky (tenth cause of action), essentially claiming that co‑counsel owed him fiduciary obligations in the handling of the case and fees. The First Department held:

“The strong public policy interest of protecting the attorney’s paramount ethical duty of undivided loyalty to the client would be compromised by creating a fiduciary duty between co-counsel.”

The court cited:

  • Charles Gruenspan Co. v. Thompson, 2003 WL 21545134, 2003 Ohio App LEXIS 3287 (Ohio Ct App 2003); and
  • Beck v. Wecht, 28 Cal 4th 289, 48 P3d 417 (Cal 2002).

Both out-of-state decisions reasoned that recognizing a lawyer–lawyer fiduciary duty in co‑counsel relationships can conflict with the lawyer’s paramount fiduciary duty to the client, especially in situations such as allocation of settlement proceeds or strategic decisions where client and co‑counsel interests might diverge.

By endorsing this reasoning, the First Department effectively establishes that:

  • Co‑counsel relationships in New York are governed primarily by contract and general duties of fair dealing, not by a fiduciary standard running between the lawyers;
  • An attorney’s highest and overriding duty remains to the client, not to other lawyers in the case; and
  • Co‑counsel fee or conduct disputes are not to be shoehorned into fiduciary-duty frameworks that might chill zealous client advocacy.

As a result, plaintiff’s fiduciary-duty claim against Warshawsky was dismissed as a matter of law.

3. Tortious Interference with Retainer Agreement

Plaintiff also alleged that Warshawsky tortiously interfered with his retainer agreement (ninth cause of action), essentially accusing Warshawsky of collaborating with the clients to “freeze him out” of the federal action and his fee.

The court restated a critical element: beyond mere interference, plaintiff needed to allege with particularity that:

  • Warshawsky’s interference was accomplished by “wrongful means” (e.g., fraud, duress, crime, independent tort, or extreme and unfair economic pressure), or
  • was undertaken solely to harm plaintiff, not pursuant to Warshawsky’s or the clients’ legitimate self-interest.

Although plaintiff labeled Warshawsky’s conduct “coercive,” the court emphasized that:

  • The complaint alleged no facts indicating “actual coercion, crime, threat or other tort” in connection with the clients’ decision to exercise their right to counsel of choice; and
  • It is inherently legitimate for clients to change counsel, and for successor counsel to accept that representation, especially if the goal is to advance the clients’ own interests.

The court cited:

  • Jacobs v. Continuum Health Partners, 7 AD3d 312 (1st Dept 2004); and
  • LoPresti v. Florio, 71 AD3d 574 (1st Dept 2010),

which underscore that “wrongful means” is a demanding standard, and courts are reluctant to find tortious interference where the alleged interferer is pursuing its own economic or professional interests in a legitimate way, absent egregious misconduct.

4. Professional Negligence / Legal Malpractice

Plaintiff asserted a professional negligence cause of action (eleventh cause of action) against co‑counsel Warshawsky. The court treated this as a legal malpractice claim and held that plaintiff lacked standing because:

  • There was no attorney–client relationship between plaintiff (a lawyer) and Warshawsky (co‑counsel); and
  • Absent an attorney–client relationship or a specific “privity-like” relationship, New York does not permit non-clients to sue for legal malpractice.

The court cited:

  • Federal Ins. Co. v. North Am. Specialty Ins. Co., 47 AD3d 52 (1st Dept 2007); and
  • Burton v. Rogovin, 262 AD2d 72 (1st Dept 1999).

Those decisions confirm that malpractice liability is fundamentally client-centered. Other participants in a matter—co‑counsel, adversaries, third-party beneficiaries—generally may not sue a lawyer for malpractice absent a strong showing of privity or its functional equivalent. Thus, professional-negligence claims among co‑counsel are not viable; disputes must be resolved on other legal theories (typically contract, quantum meruit, or certain torts not dependent on a special fiduciary standard).

F. Claim Against Columbia County: Interference with Charging Lien

1. Charging Lien Basics (Judiciary Law § 475)

Judiciary Law § 475 grants an attorney a statutory charging lien on the cause of action and its proceeds (from settlement or judgment) once the attorney appears in an action. In essence:

  • The lien attaches automatically when the attorney appears;
  • It protects the attorney’s right to secure compensation directly from the recovery;
  • A party (or sometimes a third party) who pays settlement proceeds in violation of a known lien may be liable to the attorney.

Plaintiff claimed Columbia County interfered with such a lien, by participating in or allowing settlement funds (held in escrow) to be distributed in a way that ignored his lien rights.

2. Statute of Limitations: Three-Year Period Under CPLR 214(3)

The key issue was the appropriate statute of limitations:

  • Plaintiff argued for a six-year limitations period under CPLR 213(1), generally applicable to equitable claims or claims without a specific limitations period;
  • The court, however, held that the appropriate period was the three-year period under CPLR 214(3), applicable to claims involving “conversion of property.”

The court reasoned that plaintiff’s cause of action, though framed in terms of “interference with a charging lien,” substantively alleged the conversion of his property interest in the escrowed settlement funds on which the lien attached. It therefore:

  • treated the claim as analogous to conversion of money or property; and
  • applied the three-year statute of limitations, running from the time those escrowed settlement funds were allegedly diverted or disbursed in derogation of the lien.

Because the alleged interference occurred more than three years before plaintiff sued Columbia County on this theory, the claim was time-barred. The decision is significant in making clear that a lawyer’s third-party claim for damages based on interference with a charging lien sounds in tort/conversion for limitations purposes, not as a general equitable action with a six-year period.

3. Relation-Back Doctrine Rejected

Plaintiff attempted to invoke the relation-back doctrine to salvage the time-barred claim, arguing that his later-asserted claim against Columbia County should relate back to timely claims in the original pleadings.

Under the relation-back doctrine (see CPLR 203 and related case law), a claim against a new or later-named defendant can sometimes relate back when:

  • the claim arises out of the same conduct, transaction, or occurrence;
  • the new defendant is “united in interest” with the original defendant; and
  • the new defendant had reason to know, within the original limitations period, that but for a mistake in identity, it would have been named originally.

The First Department, citing Kingstone Ins. Co. v. Marion Pharm. Inc., 224 AD3d 501 (1st Dept 2024), held that plaintiff failed to meet the stringent requirements for relation back. Without unity of interest and the requisite notice components, Columbia County could not be added after the limitations period via relation back. The charging-lien interference claim was therefore dismissed as untimely.

G. Motion to Renew and Coordinate-Court Decision (Gelwan v. Hyson)

1. Motion to Renew Under CPLR 2221(e)

Plaintiff moved to “renew” Columbia County’s motion to dismiss after obtaining a decision from Columbia County Supreme Court in a separate proceeding, Gelwan v. Hyson, 81 Misc 3d 1230(A), 2023 NY Slip Op 51451(U) (Sup Ct, Columbia County 2023). In that case, the Columbia County court, in dicta, stated that a six-year statute of limitations applied to plaintiff’s cause of action against Columbia County. Plaintiff argued that this later decision (from a court of coordinate jurisdiction) constituted new law or a new fact justifying renewal.

CPLR 2221(e)(2) permits renewal based on:

  • new facts not offered on the prior motion that would change the prior determination, or
  • a change in the law that would change the prior determination.

2. No Law of the Case; No Collateral Estoppel

The First Department held that the Columbia County decision:

  • was a decision of a court of coordinate jurisdiction (i.e., another Supreme Court) and therefore was not “law of the case” in this First Department action;
  • did not have collateral estoppel (issue-preclusion) effect; and
  • could not dictate the law governing the case in New York County Supreme Court.

The court cited Arnold v. 4–6 Bleecker St. LLC, 165 AD3d 493 (1st Dept 2018), which confirms that one Supreme Court’s ruling does not bind another Supreme Court in a different county; both are courts of coordinate jurisdiction.

3. Dicta and No Change in the Controlling Law

Moreover, the Columbia County court in Hyson dismissed that parallel action entirely on the ground that it was duplicative of the present action; its discussion suggesting a six-year statute of limitations was expressly dicta and not necessary to the result. Therefore:

  • It did not represent a binding or controlling interpretation of the law;
  • It did not constitute a “change in law” for CPLR 2221(e) purposes; and
  • Even if considered, it would not “change the prior determination” because this First Department action independently affords plaintiff complete relief if his claims are otherwise timely and meritorious.

Accordingly, the motion to renew was properly denied.

H. Procedural Rulings: Late Answer and Default Judgment

Lastly, the First Department addressed the Supreme Court’s order:

  • granting De Ratafia and Ackroyd’s cross-motion to compel plaintiff’s acceptance of their late-served answer; and
  • denying as moot plaintiff’s motion for default judgment based on their failure to timely answer the second amended complaint.

The appellate court held there was no abuse of discretion. While the opinion does not recount the exact excuse and showing made for the late answer, New York courts generally allow late pleadings where:

  • the delay is not willful or highly prejudicial; and
  • the defaulting party presents a potentially meritorious defense and a reasonable excuse.

The effect is to permit the litigation to proceed on the merits as to the surviving claims (notably, breach of contract and charging lien against the clients). Plaintiff’s attempt to obtain a default-based victory was, in practical terms, cut off by this discretionary ruling, which the First Department fully endorsed.

The court also disposed of two appellate motions:

  • It denied plaintiff’s motion to compel De Ratafia and Ackroyd to reimburse his costs for the joint appendix (M‑6112), and
  • It granted the motion to dismiss defendants’ cross-appeal as untimely (M‑6114). This explains why the opinion notes that the cross-appeal is dismissed.

IV. Complex Legal Concepts Simplified

1. Joint Responsibility and Fee Sharing (Rule 1.5(g))

When two separate lawyers or firms share a fee in New York:

  • They must either divide the fee proportional to their work, or
  • They must both assume “joint responsibility” for the case, which means each is responsible to the client for the entire representation, not just their own slice.

Gelwan clarifies that:

  • Language like “we will pursue your claim” and an express equal split of a contingency fee can be enough to show joint responsibility;
  • The retainer does not need to micromanage internal divisions of labor to be valid.

2. Charging Lien (Judiciary Law § 475)

A charging lien:

  • Automatically attaches when a lawyer appears for a client in a case;
  • Gives the lawyer a security interest in any recovery (settlement or judgment);
  • Can be enforced even against third parties (e.g., defendants or insurers) who pay out settlement funds in disregard of the lien.

In Gelwan, the claim that Columbia County interfered with the lien was treated as tantamount to a claim that the County helped “convert” the lawyer’s share of the settlement proceeds, so a three-year statute of limitations applied.

3. Tortious Interference with Contract

To sue someone for interfering with your contract, you must usually show:

  1. You had a valid, enforceable contract;
  2. The defendant knew about it;
  3. The defendant intentionally caused the other contracting party to breach;
  4. There was an actual breach; and
  5. You suffered damages.

If the defendant has its own legitimate interest in the situation (e.g., being hired as successor counsel), you also generally must show “wrongful means,” such as fraud or threats, or that the defendant acted solely out of ill will toward you. Calling their conduct “coercive” is not enough; you need concrete facts.

4. Judiciary Law § 487 (Attorney Deceit)

Section 487 creates a special cause of action against lawyers for intentional deceit in a judicial proceeding. To succeed, a plaintiff must show:

  • Specific acts of deception;
  • Intent to deceive a party or the court; and
  • A causal link between that deceit and the plaintiff’s damages.

Courts strictly enforce the requirement that such claims be pleaded with particularity, not mere broad accusations of “lying” or “scheming.”

5. Fiduciary Duty Between Co‑Counsel

A fiduciary duty is a special, high-level duty of loyalty and care, such as:

  • a lawyer’s duty to a client, or
  • a trustee’s duty to a beneficiary.

Gelwan explicitly holds that co‑counsel do not owe each other a fiduciary duty in New York. Their primary duty is to the client. Disputes between co‑counsel over fees or tactics thus are matters of contract, general tort, or equity—not fiduciary law.

6. Legal Malpractice and Standing

Legal malpractice requires an attorney–client relationship. Except in very narrow circumstances where a non-client is essentially in “privity” with the client, only clients can sue lawyers for malpractice. A lawyer cannot ordinarily sue another lawyer as “co‑counsel” for malpractice regarding the shared client’s representation.

7. Relation-Back Doctrine

The relation-back doctrine allows a claim against a new defendant to “relate back” to the filing date of the original pleading if:

  • the claims arise from the same events;
  • the old and new defendants are so closely related (“united in interest”) that they effectively have the same defense; and
  • the new defendant knew or should have known that, but for a mistake, they would have been named initially.

Gelwan confirms that this is a narrow exception, inapplicable where a governmental defendant like Columbia County stands in a distinct position and did not have notice of likely inclusion as a defendant within the limitations period.

8. Law of the Case vs. Collateral Estoppel vs. Coordinate Courts

  • Law of the case generally refers to a rule that decisions made at one stage of a case are binding in later stages of the the same case, in the same court system.
  • Collateral estoppel (issue preclusion) prevents relitigation of an issue already decided in a prior action, if the issue was actually litigated and necessary to the judgment.
  • Coordinate courts (e.g., Supreme Court, New York County and Supreme Court, Columbia County) do not bind each other. One trial court’s ruling is persuasive at most—not controlling—in another county or case.

Gelwan applies these concepts to reject any binding effect from the Columbia County decision in Hyson regarding the statute of limitations.

V. Impact and Significance

1. Co‑Counsel Relationships and Fee Disputes

The decision is especially significant for:

  • Lawyers entering co‑counsel arrangements, referral relationships, or “of counsel” affiliations;
  • Successor counsel taking over cases with existing fee arrangements; and
  • Fee disputes among lawyers in multi-firm representations.

Gelwan underscores:

  • The importance of clear contracts allocating fees and responsibilities;
  • That courts will enforce properly structured contingency agreements even after counsel substitutions and internal disputes;
  • The limits of tort-based or fiduciary-based claims between co‑counsel—lawyers must rely on contract, quantum meruit, or other appropriate remedies, not on malpractice or fiduciary-duty theories against each other.

2. Priority of Client Loyalty Over Inter-Lawyer Duties

By expressly rejecting fiduciary duties between co‑counsel and emphasizing the paramount duty of undivided loyalty to the client, Gelwan consolidates a client-centric view of professional responsibility. Lawyers must:

  • Make decisions and give advice driven by the client’s best interests; and
  • Not compromise those duties based on concerns about another lawyer’s fees or expectations.

This has practical implications for:

  • Situations where successor counsel questions prior counsel’s performance;
  • Disputes over how to allocate settlement funds or fees among lawyers; and
  • Conflicts between “referring” and “working” counsel.

3. Charging Liens and Third-Party Liability

The application of a three-year statute of limitations for claims alleging interference with a Judiciary Law § 475 charging lien is a precedential clarification likely to affect:

  • How quickly lawyers must act when they discover that settlement or judgment funds have been disbursed in ways that ignore their lien;
  • The framing of such claims as essentially torts involving conversion of a property interest (the liened proceeds) rather than purely equitable actions; and
  • Strategic decisions about adding potentially responsible third parties (such as defendants or insurers) to lien-enforcement litigation.

4. Strict Pleading Standards for Attorney-Deceit and Tortious Interference Claims

The decision continues the First Department’s insistence that:

  • Judiciary Law § 487 claims be pleaded with detailed, specific allegations of deceit; and
  • Tortious interference claims, especially those targeting participants in underlying litigation, allege concrete “wrongful means” or malice beyond ordinary, self-interested professional behavior.

This will likely deter loosely framed “deceit” and “interference” claims in attorney-versus-attorney litigation, steering parties toward more traditional contract and lien-based theories.

VI. Conclusion

Gelwan v. De Ratafia is a far-reaching decision at the intersection of attorney ethics, contingency fee contracts, co‑counsel relationships, and charging-lien enforcement. Its main contributions include:

  • Confirming that a joint contingency retainer, properly drafted to show joint responsibility, remains enforceable despite subsequent substitutions of counsel and intra-party disputes;
  • Holding that ordinary conflicts and mid-litigation fee modifications do not, without more, compel forfeiture of fees;
  • Clarifying that co‑counsel do not owe each other fiduciary duties and cannot sue each other for malpractice absent an attorney–client relationship;
  • Reiterating demanding pleading standards for Judiciary Law § 487 and tortious interference claims in the attorney‑conduct context;
  • Establishing that claims against third parties for interference with a charging lien are governed by the three-year statute of limitations for conversion-like claims; and
  • Emphasizing that trial-level decisions from courts of coordinate jurisdiction, especially dicta, do not control later decisions in other actions and cannot, by themselves, compel renewal under CPLR 2221(e).

Although many of plaintiff’s tort and statutory theories were extinguished, his core contractual and charging-lien claims against his former clients survive. Gelwan thus both narrows the spectrum of available inter‑lawyer claims and reinforces the primacy of clear fee agreements, statutory liens, and client-centered professional duties in New York practice.

Case Details

Year: 2025
Court: Appellate Division of the Supreme Court, New York

Comments