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Handling Fee Splitting With an Outside Attorney

There is much confusion out there when it comes to ethically handling fees between lawyers. One of the most common scenarios involves a primary attorney (from the client's point of view) working with another attorney. But the arrangement has its ethical hazards and every practitioner should be aware of potential ethical pitfalls when splitting fees.

We'll go over one scenario here that gets people tripped up: the solo who splits fees with another on a contingency basis.

Fee Splitting With an Outside Attorney

In general, and assuming that conflicts have been cleared away, fee splitting with an outside attorney is kosher in California under the Model Rules and California's rules so long as: the fees are split proportionally to the work done, the client agrees to the arrangement, each lawyer accepts joint responsibility for the representation, and it's all in writing. Fees get more room so long as the fees are not unconscionable. Although this is true in California, you should always check with the rules in your own state.

"Joint Responsibility"

There's debate as to what "joint responsibility" means for purposes of the rules, but a recent opinion by the ABA generally address this question. In a nutshell, it sounds like joint responsibility entails both ethical and financial liabilities and responsibilities, as if the lawyers were operating under a partnership.

Contracting for Tasks

Alternatively, another form of "fee sharing" has been tried by many attorneys, which usually goes something like this. The lawyer agrees to represent the client up until a certain trigger (usually appeal of a case) but will contract with other outside attorneys who may be better at particular tasks associated with representation. This may be as mundane as a demand letter, to as complicated as handling discovery.

Payment for tasks completed is usually out of the pocket of the original lawyer -- a percentage arrangement tends to only complicate ethics issues as it suggests joint representation.

There's a gray area with these types of arrangements that raises further ethical issues. First, even assuming the client agrees to all of this, at what point can the lawyer still in good faith claim that it is he who is representing the client's interests and not all the other lawyer? The inclusion of a clause in one's fee agreement that allows the lawyer to associate himself with other attorneys in regards to expertise and work done is only good practice, but it can turn around and become a nightmare.

Rules of Thumb

It's a rule of thumb that if an attorney wants to share in the contingency pie, she must also assume joint responsibility to represent the client, as the ABA notes. One cannot ethically dance around that limitation by arranging for a percentage to be paid without assuming responsibility when the going gets tough. However, working with other attorneys for specific tasks is ethical so long as the client is aware of this -- and best practices demands that you get this approval in writing.

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