Referral Fees

 

Opinion rules that a lawyer may receive a fee for referring a case to another lawyer provided that, by written agreement with the client, both lawyers assume responsibility for the representation and the total fee is reasonable.

 

Inquiry #1:

 

Attorney A would like to refer cases to Attorney B in exchange for a referral fee in the amount of ten percent of the fee earned by Attorney B on each case referred. May Attorney A charge and receive a fee from Attorney B for referring cases?

 

Opinion #1:

 

Yes, provided that Attorney A complies with the requirements of Rule 2.6(d) of the Rules of Professional Conduct. As the comment to that rule notes, "[a] division of a fee facilitates association of more than one lawyer in a matter in which neither alone could serve the client as well." Rule 2.6(d)(1) allows lawyers who are not in the same firm to divide a fee in one of two ways: (a) in proportion to the services performed by each lawyer, or (b) if the fee division is not in proportion to the services performed by each lawyer, by a written agreement with the client whereby each lawyer assumes joint responsibility for the representation. A referral fee would typically fall within the latter category. Thus, whenever a lawyer accepts a fee for referring a case to another lawyer, the lawyer remains responsible for the competent and ethical handling of the matter. Regardless of whether the fee is in proportion to the services rendered, the client must be advised of and not object to the participation of all lawyers involved and the total fee paid by the client must be reasonable. Rule 2.6(d)(2) and (3).

 

Inquiry #2:

 

May a referral fee be based upon a percentage of the fee charged to the client by the lawyer to whom the case is referred?

 

Opinion #2:

 

Yes, provided the requirements of Rule 2.6(d) are satisfied.

 

Inquiry #3:

 

If a referral fee may be based upon a percentage of the fee charged to the client by the lawyer accepting a referral, is there a maximum percentage for such a referral fee?

 

Opinion #3:

 

No. See opinion #2 above.

 

Inquiry #4:

 

May a flat fee be charged for the referral of a case to another lawyer?

 

Opinion #4:

 

Yes, provided the total fee is reasonable, the client does not object, and, by written agreement with the client, each lawyer assumes joint responsibility for the representation. Rule 2.6(d).

 

Inquiry #5:

 

If a flat fee for a referral is permissible, is there a limit on the amount of the flat fee that may be charged for the referral?

 

Opinion #5:

 

No. See opinion #4 above.

 

Inquiry #6:

 

Does the client have to be informed that a referral fee is being paid to the referring lawyer?

 

Opinion #6:

 

Yes. Rule 2.6(d)(1) and (2).

 

Inquiry #7:

 

Must the client be told and consent to the amount of the referral fee paid to the referring lawyer?

 

Opinion #7:

 

No. As noted in the comment to Rule 2.6, "[p]aragraph (d) does not require disclosure to the client of the share that each lawyer is to receive."