In less than twelve months, the Oregon State Bar Lawyer Referral Service (LRS) will implement a new fee system for bar members. Starting July 1, 2012, lawyers who accept a fee-generating case will begin returning a portion of the fees collected to the referral service.
Understandably, the switch from a flat registration fee to a percentage system has raised many questions, including:
- What exactly is a percentage fees revenue model?
- Why now? And, why is this happening so suddenly? Shouldn’t the Board of Governors take more time to study this change?
- Wouldn’t it be easier and just as effective to raise the panel registration
fees? Why can’t the LRS just increase registration fees to break even?
- Can’t the LRS collect and keep the $35 consultation fee currently collected and kept by LRS lawyers?
- Why would you even consider taking a percentage of low-fee cases and $35 consultations?
- Won’t the ethics rules require clarification? Isn’t this in violation of ethics rules on fee sharing?
- Wouldn’t implementation of a percentage fees revenue model greatly increase the amount of administrative work each lawyer has to do?
- What happens if the lawyer bills the client, but only gets paid some or none of the outstanding balance? Does the lawyer still have to pay the LRS?
- Is the entire amount earned and collected subject to the percentage remittance?
- How are confidential settlement amounts handled? Does the LRS have to know how much the settlement was for and, if so, how is that not in breach of the settlement agreement?
- What’s to stop a lawyer from increasing his/her hourly rate to compensate for the “new” amount owed under a percentage fees revenue model?
Thankfully, the bar has now addressed these and other issues. You can read a full explanation of how the new percentage fee system will work here. The short
- The LRS has been subsidized by bar dues since its inception in the ’70s. The annual budget shortfall for the LRS is approximately $275,000.
- Raising registration costs or restructuring referrals to allow the bar to keep initial consultation fees sounds simple and appealing, but there are significant drawbacks to both approaches.
- Approximately 80% of other states have adopted the percentage fee model.
- Other jurisdictions using the percentage fee model have successfully addressed potential fee-sharing and confidentiality issues by amending the Rules of Professional Conduct or adopting operating rules. The bar is currently examining whether Oregon RPC 7.2(a) should be amended to clarify that it does not prohibit percentage fees to non-profit referral programs.
- The bar has no plans to apply percentage fees to initial consults, small matters, or the Modest Means program.
- The fee paid by the lawyer to the bar will be based on a percentage of the amount collected, not the amount billed.
I encourage you to read the entire FAQ document.