An attorney referral fee is a monetary sum paid by an attorney for someone who has referred a case or a client to them. In most cases, this is allowed, so long as the person who made the referral is a competent, licensed lawyer. In other words, referral fees generally cannot be paid from a lawyer to a non-lawyer who has referred a case to them.
The ABA Model Rules of Professional Conduct provide general guidelines for attorney referral fees. These rules have been adopted by most states and incorporated into their laws, although there can be slight differences in the laws governing professional conduct from state to state.
California allows referral fees to be paid by lawyers to other lawyers. In fact, California is one of the few states to allow referral fees for “bare naked referrals.” This means the lawyer may collect a referral fee simply for handing a case over to different lawyer, even if they have not formally participated in the legal case yet. This is done with the client’s best interest in mind, as the idea is that the lawyer will be motivated to transfer the case to the most competent lawyer possible.
California rules of professional conduct require that any attorney referral fees be subject to certain formal requirements, including:
- The client must consent to the fee arrangement in writing, after being given a full and thorough explanation of the referral or fee splitting
- The overall service charges cannot be increased due to the existence of a fee
- The fee must not be “unconscionable”
Like other states, California does not allow its lawyers to share legal fees with non-lawyers. However, California does allow “fee splitting,” in which two or more lawyers share in the overall payments rendered by the client, but only if the client is informed of this arrangement in writing.
The lawyer is legally bound to obtain the client’s consent regarding attorney referral fees or special fee-splitting arrangements. Failure to obtain the client’s consent can cause the referral fee agreement to become void, especially if the agreement would cause the total legal fee amount to be excessive. Also, there may be complications regarding representation of the client, such as where an attorney has transferred a case to another attorney without informing the client that they have done so. In such cases, the attorney may also face professional conduct sanctions for misconduct or a malpractice lawsuit.
Referral fees can often help a client obtain the best possible representation for their legal claim. However, state laws can differ drastically regarding lawyer referral fees. You may wish to contact or hire a California lawyer if you have experienced any conflicts or if you have any questions regarding lawyer fees in California. Lawyer fee arrangements can sometimes affect the way a case is handled, so you may need legal assistance if you have any concerns regarding those issues.