Attorney Referral Fee Laws in Texas
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What Are Attorney Referral Fees?
Attorney referral fees may be paid when a lawyer receives a case or a client from another person. The ABA Model Rules generally allow referrals between lawyers, subject to a few guidelines. They do not allow referral fees to be paid to a non-lawyer or someone who is not licensed to practice law.
Each state has their own unique laws when it comes to referral fees. This is because each state interprets/adopts the Model Rules differently. Many attorneys feel that their practice and business benefits greatly from referrals from other lawyers.
Are Lawyer Referral Fees Allowed in Texas?
In past years, there has been some debate regarding attorney referral fees in Texas. This was due to proposed legislation, which may have caused some confusion for clients and attorneys. Current Texas rules regarding lawyer referral fees indicate that:
- Referral fees between lawyers are definitely permitted, but not between a lawyer and non-lawyer
- The referring lawyer does not have to do any amount of work or “proportionate amount of work” in order to collect a referral fee
- For any type of referral fee arrangement, the client must be informed of the arrangement and must approve it in writing.
- The fee must not be “unconscionable” (i.e., unreasonable according to an average attorney’s standards, taking into consideration the lawyer's level of skill and experience)
So, for instance, if an attorney in Texas has a client with a case and does not wish to take that case, they can refer the case to a lawyer peer of theirs. They can then collect a fee for such a referral. However, they must follow the requirements set out above.
Can Lawyer Fee Divisions Be Made between Lawyers Who Are Not in the Same Firm?
Texas laws allow lawyers to split the work and fees (“fee splitting”) in a case, so long as:
- The fees will be divided in a way that is proportionate to the legal services provided by each respective lawyer;
- The lawyers are in fact assuming a joint responsibility for the case representation; AND
- The client consents to such arrangements in writing.
Here, the client needs to consent to all known factors regarding the split responsibilities, including the identity of each lawyer and firm engaged in the fee-sharing, the manner in which the fees will be divided, and each lawyer’s share.
Violations of these requirements can result in complications for the case and may even result in a malpractice claim. For instance, if the attorneys do not obtain the client’s written consent, they may not be able to collect a referral fee. Also, such confusion can cause delays or other issues during trial.
Do I Need a Lawyer for Help with My Case?
Finding the right lawyer is important for the success of your case. In some cases, it may be advantageous to have your case referred to a different lawyer. This can help ensure that you receive the best possible representation for your case. If you have any questions or need representation, you may need to hire a qualified Texas lawyer in your area. Your attorney can provide you with assistance for your case and can inform you of your rights in a referral situation.
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Last Modified: 10-04-2016 01:55 PM PDT
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