USA Referral Fee Attorneys
Mini Guide on USA Referral Fee: Attorneys Can Charge Fee for Referring!
633 West 5th Street Fl 26, 28 Los Angeles, CA 90071
Many law firms and lawyers are often confused about attorney referral fees as they’re unsure of what is ethical or allowable. The USA referral fee lawyers at Circle of Legal Trust created this mini-guide to provide attorneys and non-lawyers with information on attorney referral fees and forming a relationship with a vetted group with a practice of receiving and referring cases.
What Is an Attorney Referral Fee?
When an attorney refers a client to another lawyer, they may receive an attorney referral fee for referring clients. Some states, including California, may require written client consent to satisfy the letter of the law, even though you thought you had an open arrangement. The arrangement between attorneys for referral fees is complex and must fall within the rules, and these arrangements are commonly known as attorney referral fee agreements. Either way, how do the parties know they can trust each other? How do you establish trust they other lawyer has adopted proper standards?
We Vet The Parties for Trust
Who is looking into any past misconduct, violation, or unsavory conduct of the referred lawyer for both the client and referring attorney? Good luck finding Yelp! Reviews whether or to the lawyer you want to send a case to is a scumbag. Lawyers are ethically and professionally hesitant or barred from airing dirty laundry like this openly.
Our team seeks to change this by allowing a private rating system to review and grade each lawyer. How do we determine or decide if we get a raw deal until the case is settled and the fee recipient is getting a return call? This happens all this time, especially in Los Angeles. And we have the answer to your considerable problem here. Using procedures in referral service usually leaves you with no way of knowing you made the right choice either. This is why we offer this rating service and matchmaking as part of our duty to fellow lawyers. We report your stats, and the lawyer and client decide who or what the next steps will be in the event they wish to move forward.
Let’s look at a couple of examples of referral agreements between attorneys.
Example 1: A highly experienced and qualified attorney receives a simple case that doesn’t require the level of skills he has, so he passes it on to another lawyer at a small law firm. If the attorney passing the case and the one at the law firm receiving it has an attorney referral agreement, the lawyer at the small firm must pay a fee per the agreement to the attorney recommending the case.
Example 2: A new attorney receives a case that is above their skill set, and they pass it on to a large law firm instead. If the new attorney has a signed referral agreement between the large law firm and themselves, the firm will have to pay the attorney referring the case as per the agreement signed.
The above-mentioned examples are scenarios when an attorney may pay another lawyer a referral fee. However, it is crucial to understand that these referral agreements must comply with ethical rules that govern lawyers and law firms. Specifically, each state has its own requirements. And beyond this, there is the handshake.
There is the intended deal you cut after expending considerable time, money, and effort to acquire the client originally. Relationships like this are often fostered by a smooth tongue that turns out to be forked when it’s time to pay the referral source in compliance with state rules. Our group of trusted experts and ethics professionals attempts to restore civility and honor in contracts beyond mere pen and paper. Do you have the personal honor to pay your agreed fee in a timely fashion?
Interested in Getting Paid?
Are you someone like a trial lawyer seeking a permanent flow of good cases from other lawyers you may wish to share clients with? We speak your language if so! The fewer risks you have, the more support you can garner and provide others. This is the framework for a successful referral arrangement in a personal injury case, divorce case, or even an hourly DUI offense to compensate all lawyers in all jurisdictions they serve.
Let’s take a look at how our USA referral fee attorneys work intra-state and across state lines to help clients injured or harmed in one state and residing in another.
(Think cruise ship law, or a contractual provision requiring arbitration in another state, etc.)
Model Rules of Professional Conduct Governs Lawyer Referral Fees
Often, an attorney will generally avoid situations involving lawyer referral fees as they may not know if it complies with the ethical rules. If the attorney is unsure of what is allowable under the ethical practices and what isn’t, it’s best to stay clear of attorney referral fees to avoid any trouble.
But if you have an understanding, and reasonableness guides the parties, clients are able to get hooked up with lawyers YOU know are the best in their field. This is super important and advisable. Not all lawyers are necessarily the best fit for your client, right?
Let’s go over some of the considerations and rules governing attorney referral fees and the agreements to investigate closely, lest someone declare them later unenforceable.
The Model Rules of Professional Conduct govern the rules regulating attorney referral fee agreements, which may be difficult to understand and vary from state to state.
- Model Rule 5.4(a): An attorney may not share referral fees with someone who is not a lawyer.
- Model Rule 7.2(b): An attorney cannot give another person something of value for recommending their business or lawyer’s services. However, there are certain exceptions to this.
The following are some scenarios in which an attorney can pay another lawyer the referral fee:
- The client accepts the referral arrangement, including how much the attorneys involved will receive, and the referral agreement is confirmed in writing.
- The total fee is reasonable.
- The legal fees are proportional to the legal services performed by the attorneys involved, or each lawyer assumes joint responsibility for legal representation.
The first two points are pretty straightforward, but there may be some confusion in the third type option.
Let’s look at an example and understand what joint responsibility means and how it’ll work out in a referral agreement.
Suppose a freelance attorney, bogged down with too many cases, receives another case he decides to pass over to a small personal injury firm.
However, he lets the client know that he will handle some aspects of the case while the law firm will manage the entire paperwork.
When the client agrees, the attorney passes on the case and signs a referral fee agreement with the small personal injury law firm. Once the attorneys recover compensation, the lawyer referring the case can take the legal fees proportional to the legal services they performed.
The agreement should mention the proportion of legal fees and services offered.
How Does the Referral System Prevent Unethical Practices?
In businesses involving referrals, greed or negligence are the factors that can harm clients. Referring is an easy way to make money, but it isn’t there to incentivize attorneys to refer cases without carrying out some work.
The American Bar Association (ABA) rules ensure that attorneys do not abuse the referral fee system and taint the legal industry. Under the Model Rules of Professional Conduct, it’s only ethical for the attorney to refer the case to a competent attorney.
If a lawyer sends a case to another attorney they know does not have the experience to handle it, it may violate the rules. The referring lawyer may face liability (malpractice) if the client suffers from such a referral.
Is the Model Rules of Professional Conduct the Same Across All States?
Before entering into an attorney referral agreement, the lawyer needs to take some time to research the state rules on referral fees. Although ABA provides general guidelines, each state has its own rules.
For example, California statute and Texas do not require the division of legal fees according to work performed, meaning an attorney can receive the fee even if they don’t work on the case. The classic fee-sharing arrangements here involve lawyers in other states forced to sue Carnival Cruise Lines in Florida for a cruise ship accident. Make sure you don’t send your client to just anyone. We know of many lawyers in Miami who can honor you and your client properly, in writing or not! The Florida bar has it’s own fee agreement rules that make it harder to get a full fee percentage unless legal work is performed by each lawyer, which may require a pro hac vice arrangement with court approval in most states, if not all states.
Best Practices for Attorney Referral Agreements
Referring a case to another attorney is risky, and many attorneys avoid such agreements as both parties are responsible. If the attorney receiving the case is negligent, adversely affecting the case’s outcome, the referring lawyer can end up in trouble.
The following are some of the best practices for attorneys to follow when entering into a referral agreement.
Make Expectations Clear in Referral Fee Agreement
The most crucial document in referrals is the agreement, which should mention the responsibility of both attorneys, their workload, and the fee they will be taking.
A vague agreement can lead to serious issues affecting the client, leading to liability. It’s best to mention the arrangement in as much detail as possible, as the last thing any attorney wants is misunderstanding during the legal process.
Pay or Receive Reasonable Attorney Fees
Typically, the referring lawyer receives 30% of the legal fees for referring a case to another attorney. However, depending on the state, the standard referral fee may be lower than 30%.
It is essential for the referring attorney to know the average referral fees in their state and how much the total fee is considered reasonable. Once the attorney knows how much payment they will charge, they must inform the other lawyer and mention it in the agreement.
Only Forward Cases to Reputable Attorneys or Law Firm
Each lawyer assumes joint responsibility, and the referring attorney is responsible for the behavior of the lawyer they’re referring the case. If there is no accountability, attorneys may take advantage of the referral system at the client’s expense by referring the case to another attorney without repercussions of what happens next.
Under the ABA Model Rules, attorneys must only refer a case to competent lawyers they believe have the skills and experience and can handle the case. If the receiving attorney makes a serious mistake, the referring lawyer can face legal consequences, and the client can sue them for medical malpractice.
It’s best to refer cases to attorneys you know, and if you haven’t worked with the lawyer previously, make sure you do a background check and research their reputation to understand whether they can handle your client’s case. It’s a good idea to review in advance to see what the agreement states in proportion to the services and who, if anyone is jointly responsible, etc. Most attorneys in our group share fees with their referral source and we disinvite lawyers who dishonor other attorneys or refuse a full disclosure as to the reasoning.
Our Participants Pay Their Agreed To Fees in a Timely Fashion, or Risk Expulsion from COLT
However, we do this on a case-by-case basis as part of our ethical fact-checking of sources and mandate that two lawyers with such a problem with a dispute have their matter decided by their state bar or private arbitration/mediation, or we will take administrative steps based upon what we feel is best for the referral group as a whole.
The ultimate goal here is to place the client with different firms who respect the fee agreement in order to always be able to find the appropriate match and trust background. In other words, we go beyond mere ethics rules and require our participants to take full responsibility for the representation as well as honoring their fiduciary duty, when legal, written agreement or not!
Referral arrangements with our team mean lifelong reciprocal referrals so long as no conflict of interest and laws exists with respect to paying a nonlawyer, a legal fee are followed. Although we do not offer referral services per see, we will refer businesses and clients to other lawyers who have been vetted and qualified for acceptance. We think a network of trusted lawyers trying to help clients and meet each other will help avoid a negligent referral and foster an environment of comradeship and fellowship.
Pay Referral Fees
We understand that many lawyers in states like California, especially in the Beverly Hills and Westwood area,, refuse to share legal fees once they get the referral and basically harm the attorney-client and attorney-attorney relationship. This is the original reason we started this referral system. Now, when you refer business, you know that our participants have a proven track record for paying their agreed fees, period. Our rating system even gives vetted members of the referral group the to rate other lawyers with a confidential 5-star rating system based upon proven trust criteria.
Finding clients for your legal business can be a tiring process. If you’re receiving a case from another attorney, holding your end of the attorney referral fee agreement is crucial by paying them the agreed referral fee. If you don’t pay referral fees or hold onto it for a long time, attorneys won’t trust you, and you’ll lose confidence in the legal industry. When you see the Circle of Legal Trust logo embedded into your site, or that of a competitor, you know that same firm abides by our elite standards when it comes to retaining and maintaining potential clients in need of legal services performed by trustworthy, expert lawyers.
Are you seeking a co-counsel and not a straight referral? We may be able to place you today! Firms, attorneys, non-lawyers seeking legal representation, or those involved in referring cases are welcome to join our discussions about lawyer referral arrangements at Circle of Legal Trust as well. There are many states subject to many rules. Becuase of this, we make each group member signify they honor all division of fees guidelines and percentage agreements under the law and applicable circumstances per court jurisdiction.
If you’re unsure of your professional responsibility when forwarding the case or need more assistance regarding attorney referral fees, or quantum meruit, contact our USA referral fee attorneys to learn more. If you are unsure whether a non lawyer or out of state lawyer can receive referral fee in your state, call the local State Bar ethics hotline. for all others, practice smart business by only referring cases to a proven network of trustworthy lawyers who will keep you in the loop about your case and your client. The expertise we bring means you should be able to obtain the right referral arrangement where another less qualified lawyer cannot!
Feel free to call us to learn more about compliance with our ethical rules, how we handle a breach, and when we can permit non-lawyers like judges, law students, and paralegals to participate in our discussions.
- “Rewarding Your Referral Sources, “ — Sally Schmidt, for smart ways to stay in the good graces of your network.
- “Lawyer-to-Lawyer Referral’s” — Clarifying the Rules NYPRR Archive By Lazar Emanuel. [Originally published in NYPRR June 2001.]