Legal Definitions - fee-sharing

Fee-sharing, also commonly referred to as fee-splitting, describes the practice where two or more lawyers or law firms divide the legal fees earned from a single client matter. This arrangement typically occurs when multiple attorneys contribute to a case, either through referral, collaboration, or by providing distinct services. Ethical rules strictly govern fee-sharing to ensure transparency, protect client interests, and often require the client's informed consent to the arrangement.

• Example 1: Referral to a Specialist

  A client approaches Attorney Lee, a general practice lawyer, with a complex medical malpractice claim. Recognizing the specialized expertise required, Attorney Lee refers the client to Attorney Kim, who exclusively handles medical malpractice cases. With the client's full understanding and written consent, Attorney Lee and Attorney Kim agree that Attorney Lee will receive a percentage of Attorney Kim's final fee for the referral and initial client intake, while Attorney Kim handles the litigation.

  This illustrates fee-sharing because Attorney Lee and Attorney Kim are dividing the legal fees generated from the client's single medical malpractice case, with Attorney Lee receiving a portion for the referral and Attorney Kim for the specialized legal work.

• Example 2: Co-Counsel in a Complex Case

  A small law firm, "Summit Legal," takes on a large and intricate environmental lawsuit that requires significant resources and specific regulatory knowledge. To effectively represent their client, Summit Legal partners with a larger firm, "EcoLaw Advocates," to serve as co-counsel. They establish an agreement, approved by the client, to share the total legal fees earned from the lawsuit based on their respective contributions, division of labor, and shared responsibilities throughout the litigation process.

  This demonstrates fee-sharing as the two law firms are jointly representing the client in a single matter and have agreed to split the overall legal fees generated from the case according to their collaborative efforts and shared workload.

• Example 3: Multi-Jurisdictional Representation

  A business client requires legal assistance for a merger and acquisition deal that involves operations and legal considerations in two different states. Attorney Davis, licensed in State A, handles the aspects of the transaction relevant to that state. For the parts of the deal occurring in State B, Attorney Davis collaborates with Attorney Chen, who is licensed and specializes in corporate law in State B. With the client's informed consent, they agree to share the total legal fees for the entire transaction, reflecting their distinct contributions and jurisdictional expertise.

  Here, fee-sharing occurs because Attorney Davis and Attorney Chen are dividing the single fee paid by the client for a unified legal matter, with each contributing their specific expertise and authority in different jurisdictions.