Attorney Referral Fee Laws in New York
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What Are Referral Fees for Attorneys?
In a legal setting, an attorney referral fee is compensation that one attorney receives as a result of them recommending or referring a case to another lawyer. New York laws allow this under state laws and in accordance with various professional conduct and ethics rules.
One rule is that the client must be informed in writing regarding the agreement, and must consent to the fee arrangement. Also, attorneys are prohibited from collecting referral fees from persons who are not licensed lawyers. Other rules regarding lawyer referrals only govern referral services and agencies.
Can Lawyers Divide Fees with Lawyers from a Different Firm?
Yes. However, New York laws prohibit lawyers from collecting a “pure referral fee,” which is a fee for referring a client without taking on any of the work or responsibility associated with the case. Under New York codes, the referring attorney needs to perform services in connection with the case, or they must assume “joint responsibility” for the legal representation. Also, the rules state:
- The client must consent to the agreement in writing after a full disclosure has been made regarding the fee divisions
- The division of fees is proportionate to the services rendered by each lawyer
- The fees are not excessive, and do not exceed to total amount of charges issued to the client
New York laws and guidelines do not really give exact definitions regarding the “joint responsibility” requirement. However, legal commentary agrees that joint responsibility entails that the referring lawyer will be financially accountable to the client for the services rendered as a whole. Also, they will still likely be held liable when it comes to malpractice and other similar issues. However, there currently debate about whether the referring lawyer needs to supervise the other lawyer’s work.
When Are Attorney’s Fees Considered Excessive under New York Laws?
Again, there are no exact definitions for what an excessive legal fee is. However, courts may analyze several factors to determine if a fee or referral fee is excessive. These may include:
- The amount of time and labor involved in completing the case, as well as the complexity of the legal issues involved
- The amount of damages involved
- The fees that are normally paid to clients in similar cases
- Time limitations and other restraining factors
- Experience and abilities of each lawyer involved
- The extent of the professional relationship between attorney and client
- Whether the legal fee is contingent or fixed
Should I Hire a Lawyer for Help with a Legal Case?
Legal fees and referral arrangements can affect the way a case is processed. You may need to hire a qualified lawyer if you have any legal issues or conflicts. When you do, it may be necessary in some cases for your case to be referred to a different lawyer. If this happens, it may affect the outcome and processing of your case. Be sure to consult with your lawyer if you have any questions regarding your legal rights and options.
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Last Modified: 01-07-2015 03:56 PM PST
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