Referral Fees

A lawyer, yes. It's usually around 1/4 to 1/3. With a CPA, doubtful, I think that's a sharing of fees but I'm sure folk who still practice know that better than I do.

I believe that's correct. A lawyer can collect a referral fee from another lawyer, but I don't think it's ethical to split fees with a non-lawyer.

Why? I don't get why a referral from a lawyer is ethically different from a non-lawyer or why the fee would be.

What am I missing?

It all has to do with a lawyer's duty to remain independent. Here's the ABA model rule:

(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 purchases the practice of a deceased, disabled, or disappeared lawyer may, pursuant to the provisions of Rule 1.17, pay to the estate or other representative of that lawyer the agreed-upon purchase price;

(3) a lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement; and

(4) a lawyer may share court-awarded legal fees with a nonprofit organization that employed, retained or recommended employment of the lawyer in the matter.

COMMENT: [1] The provisions of this Rule express traditional limitations on sharing fees. These limitations are to protect the lawyer's professional independence of judgment. Where someone other than the client pays the lawyer's fee or salary, or recommends employment of the lawyer, that arrangement does not modify the lawyer's obligation to the client. As stated in paragraph (c), such arrangements should not interfere with the lawyer's professional judgment.

[2] This Rule also expresses traditional limitations on permitting a third party to direct or regulate the lawyer's professional judgment in rendering legal services to another. See also Rule 1.8(f) (lawyer may accept compensation from a third party as long as there is no interference with the lawyer's independent professional judgment and the client gives informed consent).

In order to avoid corruption, conflict of interest, etc? If so, what I don't get is how paying other lawyers is different.

Is it because with other lawyers there is recourse against their license in case of unethical behavior?

Well, sorta'. I think it has more to do with the fact that other lawyers also have the same obligations, so that minimizes the danger that fee-splitting won't interfere with the lawyer's independence.

Keep in mind, however, that these ethical rules were often written to justify practices that pre-date the rules. Fee-splitting among lawyers is a well-established tradition, so it's likely that the rule conformed to the practice rather than the other way around. In other words, fee-splitting among lawyers is ethical because that's the way it has always been done, it's not done that way because it's ethical.

I will dig for the article from a few weeks back, but I was going to start a thread on it then.

A local small county prosecutor was dragging his heels, and the wife of a victim was hot on him to keep moving on the case. (car crash wrongful death)

he told her to pursue it as a civil case and gave her a name.

move forward 3 years or so.

settlement comes in.

prosecutor has a $90,000 thank you from civil attorney included in the split.

lady says no flippin way. (charges were not brought)


thoughts?

I have serious ethical reservations about a public prosecutor getting referral fees in connection with a civil suit.

It struck me wrong as well.

don't think they really wanted it in the papers...

she went public after they told her she had to approve the settlement, and asked her to please reconsider his cut...

I believe the legal profession (guild?) started during the Middle Ages to maximize the income of its members. The subject rule helps achieve that goal.

The Arizona Ethics Rules for lawyers places a limitation on such fee-splitting between lawyers:

What if Lawyer 1 (the Referrer) refers his client to Lawyer 2 (the Referee)? The client pays the fee rendered by Lawyer 2 who is the only lawyer rendering a service to the client.

May Lawyer 1 charge Lawyer 2 a fee for the referral (i.e., for being a rainmaker)?

That's exactly how referral fees work.

In Arizona, the referral may only be paid if Lawyer 1 has assumed joint responsibility for the representation, and the client consents in writing.