A Pennsylvania appeals court has vacated a nearly $70,000 award to a Philadelphia law firm in a dispute over how a successor firm should have disbursed the proceeds of a more than $200,000 settlement.

The opinion clarifies that without agreements between initiating and successor firms, law firms disgruntled over fee disputes can only sue the client and not the subsequent law firm on the case.

The state Superior Court on Tuesday ruled in Spector Gadon & Rosen v. Rudinski, Orso & Lynch that the Philadelphia Court of Common Pleas erred when it awarded 37-member Spector Gadon Rosen Vinci $68,660.

The firm had alleged Williamsport-based Rudinski, Orso & Lynch failed to pay Spector Gadon its portion of the settlement proceeds. It had also argued that Rudinski Orso had committed conversion by paying all the proceeds directly to the client, Mark Hazelton, rather than sending them the portion to which they were entitled.

But Superior Court Judge Victor Stabile, who wrote the court's 10-page precedential decision, said Spector Gadon could only recover from the client, not the successor attorney.

"To hold appellants liable for conversion here would be to impose upon them a duty to presume that Hazelton would breach his obligation to Spector Gadon," Stabile said. "We find no authority in the law for imposing such a duty."

The ruling comes after Spector Gadon obtained an initial $68,660 judgment against Hazelton, which, according to Stabile, remains unsatisfied.

According to Stabile, who was joined by Superior Court Judges John Bender and Mary Murray, Hazelton had retained Spector Gadon to represent him in a suit against Shell Energy Holding for damages to his crops that resulted from a natural gas pipeline being installed across his farm. The retainer, which was entered into in 2013, said any payment would initially be made to Spector Gadon, and then, after subtracting all fees and expenses, the firm would pay Hazelton.

In 2014, Joseph Orso of Rudinski Orso took over the case and entered his appearance for Hazelton. The following year, Hazelton settled his suit for $210,000.

Stabile said that, after he received the settlement check, Orso wrote a check to his law firm for $4,200 and another check to Hazelton's landlord, before paying the remaining $191,766 to Hazelton.

Before the settlement took place, however, Spector Gadon had sent Rudinski Orso copies of its outstanding invoices for the services it performed on Hazelton's behalf. Spector Gadon and Rudinski Orso, however, did not enter into a written agreement regarding the handling of any settlement or judgment, Stabile noted.

Spector Gadon first sued Hazelton and obtained a judgment, and then sued Rudinski Orso in 2016, alleging conversion. The case went to trial on stipulated facts, and ended with a $68,660 award in Spector Gadon's favor.

Rudinski Orso appealed, saying the trial court erred, since it had followed its clients instructions and the firm had not written agreement with Spector Gadon.

Stabile noted that the trial court had relied on Superior Court case law involving similar attorney fee disputes, however, the Superior Court judge found the cases the trial court relied on were distinguishable from Spector Gadon's suit.

According to Stabile, the Superior Court's 1997 decision in Fowkes v. Shoemaker was more on point. In that case, Stabile said, the court determined that initiating attorneys should bring claims against clients, rather than successor attorneys.

"While Spector Gadon was clearly entitled to a portion of Hazelton's recovery from [the settlement], [Orso's} conduct did not fully and finally deprive [Spector Gadon] of the funds," Stabile said. "On the contrary, [Orso] provided Hazelton the funds he could use to compensate Spector Gadon for services rendered. [Spector Gadon] are not liable in conversion for Hazelton's subsequent breach."

Orso did not return a call seeking comment. Spector Gadon attorney Johan Kian, who represented the firm, declined to comment.