Legal Definitions - fee-splitting

Fee-splitting, also known as fee-sharing, refers to the practice of dividing the legal fees earned from a client's case between two or more attorneys. This often happens when one attorney refers a client to another lawyer who specializes in a particular area, or when lawyers from different law firms work together on a complex legal matter.

It's important to note that while fee-splitting between lawyers is permissible under certain conditions in most jurisdictions (such as with client consent and proportionality of services or joint responsibility), ethical rules strictly prohibit attorneys from splitting fees with individuals who are not licensed lawyers.

• Example 1: Referral Arrangement

  A client approaches Attorney Smith, who primarily handles family law matters, with a serious medical malpractice claim. Recognizing that this specialized area is outside her expertise, Attorney Smith refers the client to Attorney Jones, a highly experienced medical malpractice lawyer. They agree that if Attorney Jones takes the case, Attorney Smith will receive a percentage of the final legal fee as a referral fee, provided the client consents to this arrangement and the division meets ethical guidelines.

  This illustrates fee-splitting because Attorney Smith and Attorney Jones, though not working together on the daily aspects of the medical malpractice case, divide the legal fees generated from the client's case due to the initial referral.

• Example 2: Co-Counsel Collaboration

  A large corporation is facing a complex environmental lawsuit that involves both state and federal regulations. The corporation hires Attorney Chen, who is an expert in federal environmental law. However, Attorney Chen realizes the case also requires specialized knowledge of state-specific environmental statutes. Attorney Chen partners with Attorney Davis, who works at a different firm and specializes in state environmental regulations. They both represent the client, dividing the workload and agreeing to split the total legal fees earned from the case based on their respective contributions and the terms agreed upon with the client.

  Here, fee-splitting occurs because Attorney Chen and Attorney Davis, who are from separate law firms, are jointly representing a client and have an agreement to divide the total legal fees generated from their combined efforts on the case.

• Example 3: Prohibited Fee-Splitting with a Non-Lawyer

  A marketing consultant, who is not a licensed attorney, frequently sends potential clients to Attorney Miller's law office. Attorney Miller, in an effort to encourage these referrals, agrees to pay the marketing consultant a percentage of the legal fees earned from any cases the consultant brings in.

  This scenario illustrates a prohibited form of fee-splitting. Attorney Miller is dividing legal fees with a marketing consultant, who is a non-lawyer. Ethical rules for attorneys strictly forbid sharing legal fees with individuals who are not licensed to practice law, as it can compromise professional independence and client protection.