![]() 1997) (referral agreement is unenforceable where the referral source was an employee of the lawyer). It goes without saying that the referral fee must be paid to a lawyer, not a layperson. ![]() This rule generally sets forth the following requirements for fee splitting agreements between lawyers who are not in the same firm: (1) the client must be informed that the lawyers will be splitting the fee (2) the client must consent to the arrangement (3) the total fee must be reasonable and (4) the division of fees must be in proportion to the work performed by each attorney. The American Bar Association's Model Rule is 1.5(e). In most states, the rules regarding fee splitting are contained in the Rules of Professional Conduct. See generally Annotation, Validity and Enforceability of Referral Fee Agreement Between Attorneys, 28 A.L.R. The failure to satisfy these requirements can be an ethical violation, can cause the loss of the fee, and can result in vicarious liability being placed upon the referring attorney for the misdeeds or negligence of the working attorney. There are, however, strict requirements which the referring attorney must meet in order to collect the referral fee. Most of these cases involve contingent fee matters, but it is also possible to pay the referring attorney a percentage of any hourly fee. It is also common for lawyers to collect a fee for those referrals. It is common practice for lawyers to refer cases to one another. Grossbaum, Esquire Cetrulo & Capone, LLP, Boston, Massachusetts ![]() ![]() Referral Fee Agreements: What are the Hidden Traps and How to Avoid Themīy David A. ![]()
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