|FROM:||The Legal Taxi|
|RE:||Attorney Fee Sharing/ Referral Fee|
Attorney Fee Sharing/ Referral Fee
Whether the attorney's fees and/or referral fees can be inquired into during the course of trial examinations as evidence?
Mac suffered severe third-degree burns over most of his body. He survived the incident for almost 3 years until he died earlier this year. At that point in time, we were required to have an Administrator ad Prosequendum appointed to continue on prosecuting our clients case. We have done so and appointed the decedent's father, but we would like to appoint a different relative of the deceased as the father has his own lawsuit arising out of the same incident. The only other relative of the deceased is his grandfather, who happens to be an attorney and referred the case to our office and as such, we would provide him a referral fee for referring the deceased's case to our office.
The research I would like you to undertake involves whether or not, attorney's fees and/or referral fees can be inquired into during the course of trial examinations as evidence.
Originating Jurisdiction only
Standard Research Memo
- 1) Whether or not an Administrator ad Prosequendum is entitled to any fee for their service in acting in that regard and if so, can that also be inquired into during trial examinations as evidence?
2) Whether or not, attorney's fees and/or referral fees can be inquired into during the course of trial examinations as evidence?
Statutes and Case Law
Attorneys across the state routinely refer cases to attorneys whose specialty matches the client’s particular case. Many of the referrals are from lawyers who do not handle personal injury; these referrals can be from the personal injury lawyers or non lawyers that do not have the expertise, time or resources to properly pursue complex cases. Each state in US has its own separate set of rules governing the attorney referral fees. However, the current situation is different as the referring attorney is also the legal representative of the deceased plaintiff. This research memo focuses on differentiating this situation.
The issue at hand deals with the sharing of the attorney fees / paying referral fees to an attorney who is appointed as administrator ad Prosequendum in the matter which he has referred to the Attorney. The issue is dealt in a diverse manner by law of different states. Certain states restrict referral fees, whereas the jurisdiction in question allows referral fees subject to certain statutory restrictions. The below mentioned Rules of Professional Conduct (RPC) 1.5 (1), 5.4 (a), 7.2 (c) and 7.3 (d) and New Jersey Court Rules (NJCR) 1:39 6(d) governs the provision of Attorney Fees and the sharing of such fees.
Here-in-below are the statutes and case that we have reviewed for the above mentioned query
- “RPC 1.5 Fees
- (1) the division is in proportion to the services performed by each lawyer, or, by written agreement with the client, each lawyer assumes joint responsibility for the representation; and
(2) the client is notified of the fee division; and
(3) the client consents to the participation of all the lawyers involved; and (4) the total fee is reasonable.”
- “RPC 5.4 Professional Independence of a Lawyer Except as otherwise provided by the Rules of Court:
(a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that:
- 1. an agreement by a lawyer with the lawyer's firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer's death, to the lawyer's estate or to one or more specified persons;
2. a lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation that fairly represents the services rendered by the deceased lawyer;
3. lawyers or law firms who purchase a practice from the estate of a deceased lawyer, or from any person acting in a representative capacity for a disabled or disappeared lawyer, may, pursuant to the provisions of RPC 1.17, pay to the estate or other representative of that lawyer the agreed upon price;
4. a lawyer or law firm may include non-lawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement; and
5. a lawyer may share court-awarded legal fees with a nonprofit organization that employed, retained, or recommended employment of the lawyer in the matter.”
- “RPC 7.2 Advertising
- (c) A lawyer shall not give anything of value to a person for recommending the lawyer's services, except that: (1) a lawyer may pay the reasonable cost of advertising or written communication permitted by this Rule; (2) a lawyer may pay the reasonable cost of advertising, written communication or other notification required in connection with the sale of a law practice as permitted by RPC 1.17; and (3) a lawyer may pay the usual charges of a not-for-profit lawyer referral service or other legal service organization.”
- RPC 7.3 Personal Contact with Prospective Clients
- (d) A lawyer shall not compensate or give anything of value to a person or organization to recommend or secure the lawyer's employment by a client, or as a reward for having made a recommendation resulting in the lawyer's employment by a client except that the lawyer may pay for public communications permitted by RPC 7.1 and the usual and reasonable fees or dues charged by a lawyer referral service operated, sponsored, or approved by a bar association.”
- RULE 1:39. Specialty Certification of Attorneys
- 1:39-6. Effect of Certification
- (d) Division of Fees. A certified attorney who receives a case referral from a lawyer who is not a partner in or associate of that attorney's law firm or law office may divide a fee for legal services with the referring
- attorney or the referring attorney's estate. The fee division may be made without regard to services performed or responsibility assumed by the referring attorney, provided that the total fee charged the client relates only to the matter referred and does not exceed reasonable compensation for the legal services rendered therein. The provisions of this paragraph shall not apply to matrimonial law matters that are referred to certified attorneys”
In Goldberger, Seligsohn & Shinrod, P.A., v. Mark Baumgarten, 875 A.2d 958, 2005, the Supreme Court has discussed that:
- “Under R.P.C. 7.2(c) and R.P.C. 7.3(d), lawyers are generally precluded from giving "anything of value" to a person for recommending the lawyer's services, or to secure the lawyer's employment. However, R. 1:39-6(d) permits the division of fees by a certified attorney in certain circumstances:
- A certified attorney who receives a case referral from a lawyer who is not a partner in or associate of that attorney's law firm or law office may divide a fee for legal services with the referring attorney or the referring attorney's estate. The fee division may be made without regard to services performed or responsibility assumed by the referring attorney, provided that the total fee charged the client relates only to the matter referred and does not exceed reasonable compensation for the legal services rendered therein. The provisions of this paragraph shall not apply to matrimonial law matters that are referred to certified attorneys.”
It is clear that, even though the Referral fees is prohibited by the RPC 7.2 (c) and RPC 7.3(d), the exception to this rule is provided under NJCR 1:39 6 (d), wherein it is expressly stated that a certified attorney can share the fee with a referring attorney or his estate, without regard to the services performed or responsibilities assumed by the referring attorney.
Being Administrator ad Prosequendum and an attorney as well, the referring attorney and his estate are entitled to fee sharing regardless of whether he assume any responsibilities of prosecution or not. With regard to whether attorney's fees and/or referral fees can be inquired into during the course of trial examinations as evidence, no specific instance could be found in personal injury matters. All other instances of such queries found were of not during the trial but of after the trial procedure. Moreover, such instances mostly related to litigations pertaining to breach of fee sharing contracts only.
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