Many of our clients have been “referred” by other attorneys. Many clients ask “why should the ‘referring attorney’ share part of the legal fee”?
Here is an example:
Client James Jones is referred to our office by our esteemed colleagues, Apex & Brown, criminal lawyers. We handle Mr. Jones’s case from the beginning to end.
At the end of the case the legal fee is 1/3 of the net recovery after disbursements. We divide the legal legal fee as follows: 2/3 to Seitelman Law Offices and 1/3 to Apex & Brown.
The client asks “why does Apex & Brown get part of the fee”? The client reasons that Apex & Brown should receive nothing because they did none of the work except send the client to Seitelman.
The ethics rules allow fee spliting. It is known as paying a referral fee.
The attorney of record (Seitelman) can share part of his legal fee with the referring attorney (Apex & Brown) even if the referring attorney did no work on the case. However, the client must agree to this arrangement, and the referring attorney remains jointly responsible for the case.
The new ethics rules provide that client should agree to the foregoing in writing. See Rule 1.5 (g). The new rules also provide that the client should agree to the amount of the fee split, such as 2/3 to attorney of record and 1/3 to referrer.
If referring attorney has done work on the case, then there is no need for this writing.
Fee sharing between attorneys will not increase the client’s legal fee. The client is not paying twice. The legal fee is merely being split between the attorneys pursuant to their fee-splitting agreement.
In the practice of personal injury law fee sharing is part of the business, and it actually protects the client. The arrangement encourages the initial attorney to refer-out cases outside of his expertise so that the client is best served. For example, the fee-spliting arrangement encourages an attorney with little medical malpractice experience to refer these cases to a specialist rather than fumble with cases and risk either lower recoveries or no recoveries for his clients. This is a win-win for both the client and the initial, referring attorney.
Therefore, clients should be aware that it is legal and proper if a referring attorney shares part of the legal fee and that the arrangement benefits the client.
If you have been injured in an accident or by malpractice, please feel free to contact me at 800-581-1434 or firstname.lastname@example.org for a free consultation.
Mark E. Seitelman, 6/12/09, www.seitelman.com.