IMPORTANT: Lexamica is not a law firm. We do not offer legal advice, nor are we a party to any fee-sharing arrangements. Lexamica is a tool designed to facilitate referrals with more transparency, clarity, and speed. The resources below are a starting point; all actions should be taken only with ethics counsel.
Frequently Asked Questions About Lawyer Referral Fees
1. Are referral fees unethical?
No, referral fees are not inherently unethical. Although they were once prohibited, the legal profession now recognizes their value in connecting clients with specialized legal expertise. However, strict rules govern referral fees to ensure ethical practices and protect client interests.
2. What is the ABA Rule on referral fees?
ABA Rule 1.5(e) governs the division of fees between lawyers not in the same firm. It requires:
Proportionality or Joint Responsibility: Fees must be divided in proportion to the services performed, or each lawyer must assume joint responsibility for the representation.
Client Consent: The client must agree in writing to the fee-sharing arrangement, including the share each lawyer will receive.
Reasonable Total Fee: The total fee charged to the client must be reasonable.
3. What does "joint responsibility" mean in a referral context?
"Joint responsibility" means both the referring and receiving lawyers share financial and ethical accountability as though they were partners. This can include vicarious liability for any malpractice by the handling attorney.
4. What disclosures are required when sharing referral fees?
Clients must be informed in writing about:
Fee Division: The fact that fees will be shared.
Lawyer Identities: The names of the lawyers or law firms involved.
Division Terms: The specific details of how fees will be split.
Most states require these disclosures before representation begins or within a reasonable time afterward.
5. Are there any restrictions on referral fee amounts?
While the primary requirement is that the total fee charged to the client is reasonable, some states impose additional limits. For example:
California prohibits increasing the total fee solely due to a referral agreement.
Florida caps referral fees in certain case types, such as personal injury.
6. What ongoing responsibilities does a referring lawyer have?
This varies by jurisdiction:
ABA Guidelines: Referring lawyers should remain informed about the case to fulfill joint responsibility.
Florida: Referring lawyers must be available for consultation.
Wisconsin: Referring lawyers must monitor the case, remain available, and intervene if necessary to address misconduct or incompetence by the receiving lawyer.
7. Can lawyers in different states share referral fees?
Yes, but the arrangement must comply with the ethical rules of both states involved. Some states, like Connecticut and Michigan, explicitly address this, but confirming the rules of each jurisdiction is always recommended.
8. How do referral fees work in firms with non-lawyer owners?
This area is evolving. For example:
New York permits fee sharing with firms in jurisdictions that allow non-lawyer ownership, provided non-lawyers do not compromise the professional judgment of the lawyers involved.
Other Resources
Atticus Law Firm: Ethical Fee-Sharing
Atticus is a California law firm that refers claims across the country. Their resources include:
50-State Survey and Practical Guide (Highly recommended as the most comprehensive resource.)
Overture Law: CLE
Overture is a law firm that facilitates referrals. Their resources include:
Disclaimer
This article is intended for informational purposes only. Always consult ethics counsel for guidance specific to your jurisdiction and situation.