Kelley | Uustal Law Firm in South Florida regularly assists other law firms with significant personal injury, wrongful death, auto accident, and commercial litigation on contingency, amongst other types of cases. Our firm pays referral fees – also known as co-counsel fees – to other attorneys in accordance with the Florida Rules of Professional Conduct and the American Bar Association’s guidelines.
There’s a lot of misconception surrounding attorney referral fees, with some law firms under the impression that they are off-limits. This isn’t the case at all. When done correctly, attorney referrals can be beneficial for both law firms and the client, but it’s critical that you know and follow the rules surrounding attorney referral fees.
What Is an Attorney Referral Fee?
There are many reasons an attorney might refer a case to our law firm. A client may come to them with a situation that requires experience and knowledge that’s outside their skill set, or the referring attorney might have too much on their plate and can’t take on a new case that would strain their resources.
When cases like this are referred, all parties benefit. The new attorney receives a vetted client and a case to pursue in exchange for a referral fee. The referring attorney receives a fee and lessens their workload, and most importantly, the client obtains highly qualified representation to protect them and pursue maximum recovery.
How Attorney Referral Fees Are Determined
Attorney referral fee structures are largely governed by jurisdiction. In other words, the Florida Bar gets to decide what’s permitted as far as the maximum allowable referral fees in this state.
In cases where the referring attorney has a co-counsel relationship on the case, the maximum allowable is 25% of the total attorney fee. Any greater percentage would be considered excessive unless justified. The lawyer receiving a referral fee must sign the fee agreement and closing statement if the case is a contingency fee case.
Rules Surrounding Attorney Referral Fees
Attorney referral fees are beneficial for all parties, but that doesn’t mean there aren’t ethical considerations and rules to follow. The American Bar Association (ABA) Model Rules of Professional Conduct outlines clear standards for attorney referral fees, and individual states, including Florida, impose their own rules.
When Attorney Referral Fees Are Not Permitted
In reference to the ABA’s guidelines, Model Rule 5.4(a) indicates that attorneys are not permitted to share legal fees with non-attorneys. Taking things even further, the ABA states that attorneys should not exchange anything of value to someone for recommending their services.
These rules exist so that lawyers don’t simply refer clients as an additional source of income for their firm. While referral fees are beneficial to attorneys, the primary goal is to help the client. When this motivation exists, there are exceptions to the rules.
When Attorney Referral Fees Are Permitted
Under Model 1.5(e), the ABA makes exceptions to its rules, allowing attorney referral fees under these particular circumstances:
– The client agrees to the referral, including any division of fees, and the agreement is placed in writing.
– Each attorney accepts joint responsibility for the representation or the division of fees is in proportion to the services performed by each attorney.
– The total fee is reasonable.
Florida Rules Regarding Attorney Referral Fees
Many states follow Rule 15(e) closely, and Florida is one of those. According to Rule 4-1.5(g), referral fees are permitted if they meet the criteria outlined by the ADA. The Florida Bar outlines in Rule 4-1.5(f)(4)(D) that the primary attorney must receive at least 75% of the total fee.
Must the Referring Attorney Participate in the Case?
Some attorneys mistakenly believe that they are required to continue working on the case due to the rule stating, “division of fees is in proportion to the services performed by each attorney.” This isn’t the case because there is another option. By accepting “joint responsibility,” the referring attorney is entitled to share in the fees without necessarily doing the work. What does this mean?
Joint responsibility means that attorneys are not only responsible for their own duties and professional actions but also the actions and professional conduct of the other attorneys in the agreement. It’s similar to the responsibility that law firm partners share for each other’s conduct.
While you don’t need to participate in the case to receive a referral fee, you should take care in who you refer your cases to. Specifically, you want to partner with a law firm that is known for its ethical work and positive results on behalf of clients.
Creating Attorney Referral Agreements
The ABA recommends that attorneys craft a formal agreement for referrals to maintain transparency, establish long-term relationships, and avoid potential disputes. Referral agreements should meet the three criteria listed in Model Rule 1.5(E) to conform with the rules. Additionally, the ABA recommends the following when creating these agreements:
– Avoid making a referral without having a written agreement in place.
– Clearly state how the fees will be split — either joint representation or proportional earnings.
– Secure the agreement and written consent of the client for the referral and sharing of fees.
– Have the attorney referral agreement specify who the primary billing law firm for the client will be.
– If fees are based on proportional earnings, determine how this is to be reported and tracked.
– Specify whether a law firm trust account will be used to record deposits and disbursements of shared fees.
When you refer cases to trusted attorneys, you can establish long-term relationships that help your clients and produce additional income for your firm.
Partner With Kelley | Uustal
If you have a catastrophic injury or wrongful death case, or a case that seems impossible to figure out, don’t turn it down before speaking with us first. We specialize in finding cases others may have missed. Give us a call at 954-287-3035 or contact us online to learn more about our attorney referral program.
