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Prof Responsibility • Financial Duties
PR#017
Legal Definition
Under Rule 1.5(e), a lawyer may split their fee with another lawyer so long as: (1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation; (2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and (3) the total fee is reasonable.
Plain English Explanation
When lawyers from different firms work together on a case, they sometimes want to split the fee. But this isn't as simple as splitting a lunch bill. The law has strict rules about how this can happen, and for good reason.
First, the split has to be fair. This can happen in one of two ways. Either the lawyers divide the fee based on how much work each one does - if one lawyer does 70% of the work, they get 70% of the fee. Or, both lawyers can agree to be equally responsible for the whole case, no matter who does what. This ensures that lawyers aren't just passing cases around for easy money without doing any work.
Second, the client has to know about and agree to this arrangement. It's not enough for the lawyers to decide among themselves. The client needs to be told exactly how the fee will be split, and they have to agree to it in writing. This transparency protects the client from any behind-the-scenes deals they're not aware of.
Lastly, the total fee has to be reasonable. Splitting the fee can't be an excuse to charge the client more than they would normally pay. This rule makes sure that fee-splitting arrangements benefit the lawyers and the client, not just the lawyers.
These rules serve several important purposes. They ensure that clients know exactly who's working on their case and how they're being paid. They prevent lawyers from getting paid for work they didn't do. And they make sure that bringing in another lawyer doesn't unfairly increase the cost to the client.
In practice, this might happen when a lawyer with a specific expertise is brought in to help on a case, or when a lawyer refers a case to another lawyer who's better suited to handle it.
First, the split has to be fair. This can happen in one of two ways. Either the lawyers divide the fee based on how much work each one does - if one lawyer does 70% of the work, they get 70% of the fee. Or, both lawyers can agree to be equally responsible for the whole case, no matter who does what. This ensures that lawyers aren't just passing cases around for easy money without doing any work.
Second, the client has to know about and agree to this arrangement. It's not enough for the lawyers to decide among themselves. The client needs to be told exactly how the fee will be split, and they have to agree to it in writing. This transparency protects the client from any behind-the-scenes deals they're not aware of.
Lastly, the total fee has to be reasonable. Splitting the fee can't be an excuse to charge the client more than they would normally pay. This rule makes sure that fee-splitting arrangements benefit the lawyers and the client, not just the lawyers.
These rules serve several important purposes. They ensure that clients know exactly who's working on their case and how they're being paid. They prevent lawyers from getting paid for work they didn't do. And they make sure that bringing in another lawyer doesn't unfairly increase the cost to the client.
In practice, this might happen when a lawyer with a specific expertise is brought in to help on a case, or when a lawyer refers a case to another lawyer who's better suited to handle it.
Hypothetical
Hypo 1: Sam hires Bob, a general practice lawyer, for a complex medical malpractice case. Bob realizes he needs help and wants to bring in Amy, a specialist in medical malpractice. Bob and Amy agree to split the fee 50-50, with both taking joint responsibility for the case. They explain this to Sam, who agrees and signs a written consent form detailing the arrangement. Bob and Amy's combined fee is within the normal range for such cases. Result: This fee-splitting arrangement is permissible. It meets all three requirements: (1) the lawyers are assuming joint responsibility, (2) the client has agreed in writing after being informed of the share each lawyer will receive, and (3) the total fee is reasonable. This scenario demonstrates how fee-splitting can work to benefit the client by bringing in specialized expertise.
Hypo 2: Sam approaches Bob about a personal injury case. Bob, who doesn't handle such cases, refers Sam to Amy, a personal injury specialist. Bob asks Amy for 30% of her fee for the referral, without planning to do any work on the case. Amy agrees but doesn't inform Sam of this arrangement. Result: This fee-splitting arrangement violates the rule. While referral fees are not inherently prohibited, this arrangement fails on multiple counts: (1) the division isn't proportional to services performed, and Bob isn't assuming joint responsibility, (2) the client hasn't been informed or agreed to the arrangement in writing, and (3) the reasonableness of the total fee hasn't been considered. Both Bob and Amy could face ethical violations for this arrangement.
Hypo 3: Sam hires Bob for a complex corporate litigation case. Bob brings in Amy, a litigation specialist, to help. They agree to split the fee with Bob getting 30% and Amy 70%, based on their expected workload. They inform Sam verbally, and Sam agrees, but they don't get Sam's agreement in writing. Result: While this arrangement meets some of the requirements - the division is proportional to services and the client has agreed - it falls short because Sam's agreement isn't in writing. The rule specifically requires written confirmation of the client's agreement, including the share each lawyer will receive. Without this written agreement, the fee-splitting arrangement is not compliant with the rule.
Hypo 4: Sam hires Bob for a divorce case. Bob brings in Amy, a family law specialist, to assist. They agree to split the fee 50-50 and both assume joint responsibility. They inform Sam in writing, and Sam signs an agreement. However, their combined fee is significantly higher than the usual rate for similar divorce cases in their area. Result: This scenario meets two of the three requirements: the division is based on joint responsibility, and the client has agreed in writing. However, it fails on the third requirement - the total fee must be reasonable. Even if the client agrees, if the fee is significantly above the normal rate for similar services, it may be deemed unreasonable. In other words, the law doesn't want a premium charged and then disguised as a fake fee split. If Bob was always going to charge $1,000 for the service, and Amy usually charges $1,000, the new fee shouldn't be $2,000. This isn't a fee split, it's just doubling the cost.
Hypo 5: Sam hires Bob for an employment discrimination case. Bob realizes he needs Amy's expertise and proposes a fee split where Bob will do 40% of the work and receive 40% of the fee, while Amy will do 60% of the work and receive 60% of the fee. They explain this to Sam, who agrees and signs a written consent. Their combined fee is within the normal range for such cases. However, as the case progresses, Bob ends up doing only 20% of the work while still taking 40% of the fee. Result: While the initial arrangement met all the requirements, the actual execution violates the rule. The division of fees must be proportional to the services performed (unless there's joint responsibility, which wasn't specified here). Bob's taking a larger share than the work he performed goes against the rule. This scenario highlights the importance of ensuring that the actual division of work aligns with the agreed-upon fee split, or that joint responsibility is clearly established.
Hypo 2: Sam approaches Bob about a personal injury case. Bob, who doesn't handle such cases, refers Sam to Amy, a personal injury specialist. Bob asks Amy for 30% of her fee for the referral, without planning to do any work on the case. Amy agrees but doesn't inform Sam of this arrangement. Result: This fee-splitting arrangement violates the rule. While referral fees are not inherently prohibited, this arrangement fails on multiple counts: (1) the division isn't proportional to services performed, and Bob isn't assuming joint responsibility, (2) the client hasn't been informed or agreed to the arrangement in writing, and (3) the reasonableness of the total fee hasn't been considered. Both Bob and Amy could face ethical violations for this arrangement.
Hypo 3: Sam hires Bob for a complex corporate litigation case. Bob brings in Amy, a litigation specialist, to help. They agree to split the fee with Bob getting 30% and Amy 70%, based on their expected workload. They inform Sam verbally, and Sam agrees, but they don't get Sam's agreement in writing. Result: While this arrangement meets some of the requirements - the division is proportional to services and the client has agreed - it falls short because Sam's agreement isn't in writing. The rule specifically requires written confirmation of the client's agreement, including the share each lawyer will receive. Without this written agreement, the fee-splitting arrangement is not compliant with the rule.
Hypo 4: Sam hires Bob for a divorce case. Bob brings in Amy, a family law specialist, to assist. They agree to split the fee 50-50 and both assume joint responsibility. They inform Sam in writing, and Sam signs an agreement. However, their combined fee is significantly higher than the usual rate for similar divorce cases in their area. Result: This scenario meets two of the three requirements: the division is based on joint responsibility, and the client has agreed in writing. However, it fails on the third requirement - the total fee must be reasonable. Even if the client agrees, if the fee is significantly above the normal rate for similar services, it may be deemed unreasonable. In other words, the law doesn't want a premium charged and then disguised as a fake fee split. If Bob was always going to charge $1,000 for the service, and Amy usually charges $1,000, the new fee shouldn't be $2,000. This isn't a fee split, it's just doubling the cost.
Hypo 5: Sam hires Bob for an employment discrimination case. Bob realizes he needs Amy's expertise and proposes a fee split where Bob will do 40% of the work and receive 40% of the fee, while Amy will do 60% of the work and receive 60% of the fee. They explain this to Sam, who agrees and signs a written consent. Their combined fee is within the normal range for such cases. However, as the case progresses, Bob ends up doing only 20% of the work while still taking 40% of the fee. Result: While the initial arrangement met all the requirements, the actual execution violates the rule. The division of fees must be proportional to the services performed (unless there's joint responsibility, which wasn't specified here). Bob's taking a larger share than the work he performed goes against the rule. This scenario highlights the importance of ensuring that the actual division of work aligns with the agreed-upon fee split, or that joint responsibility is clearly established.
Visual Aids
Related Concepts
How and when must a lawyer determine fee arrangements with a new client?
How does California rule on fee splitting differ from the ABA?
How may a contingent fee be calculated?
In California, how and when must a lawyer determine fee arrangements with a new client?
In California, what constitutes "reasonable fees"?
Under the ABA, which types of cases are prohibited from contingent fee arrangements?
What constitutes "reasonable fees"?
What is a contingency fee?
What must a contingent fee offer warn the client of, and how?
