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Attorneys and law firms should have a clear understanding of California’s fee sharing requirements before transferring a case. Properly documenting the referral arrangement and complying with California Rule of Professional Conduct 1.5.1 will help prevent disputes, ethical lapses, and unnecessary complications for the client and all attorneys involved.
The Santa Barbara personal injury lawyers at NordstrandBlack PC welcome client referrals from other law firms. When we accept a referred matter, we strive to maintain open communication, transparency, and cooperation with the referring attorney throughout the process.
Our firm handles serious motor vehicle collisions, motorcycle crashes, commercial vehicle accidents, pedestrian accidents, brain injuries, birth injuries, premises liability, dog bites, and other types of catastrophic injury cases. We also handle wrongful death claims.
What Does California Rule 1.5.1 Require?
California Rule 1.5.1 establishes three central requirements for fee splitting between lawyers who are not in the same law firm.
- First, the lawyers must enter into a written agreement to divide the fee.
- Second, the client must consent in writing after receiving a full written disclosure. That disclosure must identify the fact that the lawyers will divide the fee, identify the lawyers or law firms participating in the division, and explain the terms of the division.
- Third, the total fee charged by all participating lawyers cannot be increased solely because the lawyers agreed to divide the fee.
The rule’s requirements make documentation a fundamental part of a compliant referral process. An oral understanding about a percentage or an undisclosed arrangement between firms does not satisfy the express requirements of Rule 1.5.1.
When Can a California Personal Injury Lawyer Receive a Referral Fee?
California permits divisions of fees between lawyers in different firms when the arrangement complies with Rule 1.5.1 and other applicable professional obligations.
Personal injury attorney referrals are common for various reasons, such as:
- A case requires litigation capabilities or experience outside the firm’s resources.
- A catastrophic injury claim falls outside the firm’s primary practice area.
- The firm does not have sufficient capacity to give the case the attention it requires.
- A case arises outside the firm’s usual geographic area.
- Another law firm is better positioned to investigate, litigate, or try the case.
A proper referral can allow the client to obtain representation from lawyers with the resources and experience appropriate for the matter at hand while permitting the referring attorney to participate in an agreed upon division of the fee.
The fee arrangement should never become more important than the client’s interests! Lawyers who are considering a referral should evaluate the receiving firm’s ability to handle the case and ensure that all required disclosures and agreements are completed.
How Do California Rules Differs From the ABA Model Rule?
Attorneys accustomed to practicing in other jurisdictions will have to make adjustments to comply with referral fee rules in California.
ABA Model Rule 1.5(e) provides that lawyers in different firms may divide a fee when the division is proportional to the services each performs or when each lawyer assumes joint responsibility for the representation. The client must also agree to the arrangement, including each lawyer’s share, with the agreement confirmed in writing, and the total fee must be reasonable.
However, California Rule 1.5.1 is structured differently.
The California rule does not expressly require the division of fees to correspond to the amount of work each lawyer performs. It also does not contain the ABA Model Rule’s alternative requirement that each lawyer assume joint responsibility when the fee is not divided according to services performed. Instead, Rule 1.5.1 expressly focuses on the written agreement between the lawyers, full written disclosure and written client consent, and ensuring that the client’s total fee is not increased solely because of the fee division.
In California Lawyers Can Receive a Referral Fee Without Working on the Case
Rule 1.5.1 does not expressly condition a lawyer’s share of the fee on performing a proportional amount of legal work. However, lawyers remain subject to other applicable professional, contractual, fiduciary, and ethical obligations.
California’s approach gives attorneys greater flexibility than the ABA Model Rule framework, but that flexibility makes careful documentation especially important. Lawyers should document the arrangement clearly, make the required disclosure, obtain the client’s written consent, and ensure that the referral is being made with the client’s interests in mind.
Lawyers Cannot Increase Client Fees Because of a Referral
Rule 1.5.1 contains an important protection for clients: the total fee charged by all lawyers cannot be increased solely because the attorneys have agreed to divide the fee. Therefore, the referring and receiving firms need to determine how the agreed fee will be allocated between them rather than simply adding a referral charge to what the client would otherwise pay.
NordstrandBlack PC Welcomes Referrals From Suitable Law Firms
NordstrandBlack PC welcomes opportunities to work with attorneys who are looking to refer personal injury matters. We would be happy to discuss the matter with you and find out whether a referral relationship would be appropriate.
To discuss a potential personal injury referral with NordstrandBlack PC, call (805) 962-2022. Our main office is located at 33 W Mission St., Suite 206, Santa Barbara, California 93101.
FAQs About California Personal Injury Referral Fees
Can California personal injury lawyers receive referral fees?
Yes. California Rule of Professional Conduct 1.5.1 permits lawyers who are not in the same law firm to divide a fee when they satisfy the rule’s requirements, including a written agreement between the lawyers and written client consent following full written disclosure.
Does a California attorney have to work on a case to receive a referral fee?
No. Rule 1.5.1 does not expressly require the division of fees to be proportional to the legal services each attorney performs. Attorneys must still comply with Rule 1.5.1 and all other applicable ethical, fiduciary, and professional obligations.
What must a California referral fee agreement include?
The lawyers must agree in writing to the fee division. The client must also receive full written disclosure of the fee division, including its terms and the identities of the participating lawyers or firms, and provide written consent.
Can a referral fee increase the amount the personal injury client pays?
No. Under California Rule 1.5.1, the total fee charged to the client cannot be increased solely because the lawyers have agreed to divide the fee.
How is California’s referral fee rule different from the ABA Model Rule?
ABA Model Rule 1.5(e) requires a fee division to be proportional to the services performed or for each lawyer to assume joint responsibility for the representation. California Rule 1.5.1 does not contain those express requirements, making it important for attorneys to follow California’s specific rules.