Rules of the Road for Sharing Fees

Lawyers who are not members of the same firm may only divide fees under
Oregon RPC 1.5(d) if the client gives informed consent and the total fee of the lawyers for all services is not clearly excessive.

Sound easy?  It is – but surprisingly there are misconceptions about fee sharing.

tug of warMyth #1 – Referral Fees are not Subject to the Oregon RPCs

This is a mistake in semantics.  Any time two or more lawyers seek to divvy up a fee and they are not practicing as members of the same firm, Oregon RPC 1.5(d) applies.  The label placed on this arrangement is irrelevant.  Referral fees, fee splitting, fee sharing, and dividing fees are treated the same under the rule.

Myth #2 – Consent is Not Required if I am a Contract Lawyer

This is not so black and white.  Whether client consent is required will depend on your financial arrangement with the principal lawyer.  Consider these possibilities:

Principal lawyer has a written fee agreement with her client which includes the use of contract lawyers to provide legal services.  The agreement specifies the client will be billed at the rate of $100 for contract work.  Oregon RPC 1.5(d) does not apply.

Same arrangement as above, except the principal lawyer’s written fee agreement provides that any contract work will be billed for cost (similar to billing the client for court reporting fees, use of an investigator, or medical expert).  Oregon RPC 1.5(d) does not apply.

Contract lawyer agrees to provide contract services to principal attorney for 10% of principal attorney’s contingent fee recovery.  Oregon RPC 1.5(d) applies.  Disclosure and consent is required.

Myth #3 Verbal Consent Complies with the Rule

This is technically true – informed consent in writing is not expressly required by Oregon RPC 1.5(d), but it is a very good idea.  Otherwise, how will you prove that you adequately disclosed the fee arrangement to your client and he or she consented?

Resources

For a sample fee sharing arrangement, and further discussion of dividing fees among non-members of the same firm, see BarBooks – specifically Michael A. Greene, “Referral Agreement Between Lawyers,” Fee Agreement Compendium (2007). [Chapter 12.]

All Rights Reserved – Beverly Michaelis [2014]

4 thoughts on “Rules of the Road for Sharing Fees

  1. this was “funny” in that when the issue came before the BOG, Sylvia and others clearly stated that referral fees are fine, no consent necessary. I suspect you need to do more on the idea that they are the same. Most of the then BOG members gave and received them, including the then president. (it came up in one of oour first discussion about changing the lawyer referral service.)

    Ann L. Fisher Legal & Consulting Services Mail to: PO Box 25302 Portland, Oregon 97298 located at: 4800 SW Griffith Ave, Ste 125 Beaverton, Oregon 97005 503-721-0181; facsimile 503-291-1556

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    • Thanks Ann! Fortunately the chapter on splitting fees in the Fee Agreement Compendium focuses specifically on referrals and the sample form is a referral agreement. If lawyers are doing another kind of fee split, the sample form has to be modified. Maybe that emphasis was chosen for a reason.

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