These summaries were prepared by McGuireWoods LLP lawyer Thomas E. Spahn. They are based on the letter opinions issued by the Virginia State Bar. Any editorial comments reflect Mr. Spahn's current personal views, and not the opinions of the Virginia State Bar, McGuireWoods or its clients. 
 
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  Topic: 38 - Fee Splitting
LEO NumTopicsSummaryDate
1760

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12-Withdrawing Lawyers (Including Non-Compete Issues)

38-Fee Splitting

[WITHDRAWN 2006] As long as a court orders it, a law firm and a departed lawyer can share in personal injury case fees without the clients’ consent.10/11/2001
1003

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38-Fee Splitting

39-Miscellaneous

[WITHDRAWN 9/16] A lawyer can represent clients referred by a financial advisor, and work with the financial advisor to prepare various forms that the client needs (the lawyer would separately charge fees for the lawyer's services, and not split fees with the financial advisor). However, the lawyer must avoid aiding the financial advisor in completing any forms, to the extent that such action constitutes the unauthorized practice of law.11/24/1987
1380

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38-Fee Splitting

42-Payments to Solicit Recommendations

45-Law Firms - Miscellaneous

55-Firm Names and Letterhead

[WITHDRAWN 9/16] Although the Bar cannot determine if two affiliated professional corporations are a single entity for purposes of the ethics rules, a determination that they are two separate entities might mean that they are violating: the fee-splitting rules; the prohibition on paying compensation to recommend employment; the ban on using the name of a lawyer who has left the firm and is engaged in business elsewhere.11/30/1990
0835

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38-Fee Splitting

57-In-House Lawyers

71-Representing Corporations

[WITHDRAWN 9/16] An in-house lawyer who represents the company in collection matters may not split any attorneys' fees collected with the company, unless the amount is a reimbursement for the actual cost of the lawyer's services. [This Legal Ethics Opinion was overruled to the extent its holding is inconsistent with LEO 1783 which permitted a lawyer representing a lender in collecting on a note containing a provision for the award of 25% attorney's fees of the principal balance due to give the client/lender whatever portion of the 25% was not actually spent on attorney's fees.]10/9/1986
1370

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5-Lawyers Changing Jobs

8-Bills and Fees

38-Fee Splitting

45-Law Firms - Miscellaneous

A client paid a retainer to a law firm that later dissolved. The client retained one of the withdrawing lawyers. The Bar held that the former firm must return the unused portion of the retainer. 7/24/1990
1025

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8-Bills and Fees

38-Fee Splitting

A collection lawyer whose client does not always take steps to collect on judgments obtained (which include a 25% attorneys' fee provision) may not charge a "flat rate" with the client retaining all amounts that may later be collected, but may arrange to receive 25% of whatever collections the client ultimately makes, and may also arrange for judgments to be entered without the 25% attorneys' fee component (with arrangements to be made later for any enforcement work the lawyer might undertake). [ This LEO was further explained in LEO 1161.] [This Legal Ethics Opinion was overruled to the extent its holding is inconsistent with LEO 1783 which permitted a lawyer representing a lender in collecting on a note containing a provision for the award of 25% attorney's fees of the principal balance due to give the client/lender whatever portion of the 25% was not actually spent on attorney's fees.]1/21/1988
1676

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8-Bills and Fees

13-Marketing - Miscellaneous

38-Fee Splitting

42-Payments to Solicit Recommendations

A collections lawyer may not pay a percentage of the lawyer's fee to a company that offers an electronic communications system to facilitate the collections, because it would amount to impermissible fee-splitting with a non-lawyer. This rule would also apply if the company referred collections clients to the lawyer. 5/16/1996
ABA-392

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8-Bills and Fees

38-Fee Splitting

52-Fees in Family Law Cases

57-In-House Lawyers

A for-profit corporate employer may not share in fees generated by one of its in-house lawyers (above the level required to reimburse the corporation for any expenses incurred) and may not share in any court-ordered fees above the level required to reimburse the corporation.4/24/1995
1130

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38-Fee Splitting

41-Non-Virginia Lawyers

A foreign lawyer may refer cases to a Virginia lawyer and retain one-half of the fee as long as the lawyers comply with the fee-splitting rules (including client consent and assumption by both lawyers of responsibility to the client). [This LEO was overruled by Rule 1.5(e), which does not require that a lawyer sharing in fees also share responsibility, thus allowing "referral fees" if the client consents after full disclosure.] 10/18/1988
0844

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38-Fee Splitting

45-Law Firms - Miscellaneous

A group of law firms may incorporate to share their expertise. A fee-sharing arrangement does not have to be proportional to the different firms' effort as long as the client consents after full disclosure and both lawyers are responsible for the client. [This LEO was partially overruled by Rule 1.5(e), which does not require that a lawyer sharing in fees also share responsibility, thus allowing "referral fees" if the client consents after full disclosure.]9/2/1986
1735

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8-Bills and Fees

11-"Of Counsel" Relationship

38-Fee Splitting

42-Payments to Solicit Recommendations

45-Law Firms - Miscellaneous

A law firm may employ independent contractor lawyers under the following conditions: whether acting as independent contractors, contract attorneys or "of counsel," the lawyers must be treated as part of the law firm for confidentiality and conflicts of interest purposes; the firm must advise clients of any "mark-up" between the amount billed for the independent contractor lawyers' services and the amount paid to them if "the firm bills the amount paid to the Attorney as an out-of-pocket expense or disbursement," but need not make such disclosure to the clients if the firm bills for the lawyers' work "in the same manner as it would for any other associate in the Firm" and the independent contractor lawyer works under another lawyer's "direct supervision" or the firm "adopts the work product as its own;" the independent contractor lawyers may be designated as "of counsel" to the firm if they have a "close, continuing relationship with the Firm and direct contact with the firm and its clients" and avoid holding themselves out as being partners or associates of the firm; the firm must disclose to clients that an independent contractor lawyer is working on the client's matter if the lawyers "will work independently, without close supervision by an attorney associated with the Firm," but need not make such disclosure (and obtain consent)if the "temporary or contract attorney works directly under the supervision of an attorney in the Firm;" the firm may pay a "forwarding" or "referral" fee to the independent contractor lawyers for bringing in a client under the new Rules.10/20/1999
1658

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13-Marketing - Miscellaneous

16-Lawyer's Personal Interests

31-Protecting and Disclosing Confidences and Secrets

32-Lawyers Acting in Other Roles (Miscellaneous)

38-Fee Splitting

50-Lawyer-Owned Businesses

53-Office Sharing with Non-Lawyers

A law firm may establish a non-legal consulting firm (to provide human resource advice) and share common directors, use similar logos and letterheads, share overhead expenses (such as secretarial support, library resources and lobby space), engage in joint marketing and refer clients to each other, as long as: the public would not be confused by any advertising; the joint marketing does not result in any misperceptions; the firms avoid sharing any confidential client information; the firms do not split fees or pay one another a referral fee; the firms advise their clients of other available referral options; the firms adopt "adequate conflicts screening procedures"; any lawyers involved in the consulting firm "comply at all times with applicable rules of the Code of Professional Responsibility, whether or not the attorney is acting in a professional capacity as a lawyer." 12/6/1995
1403

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12-Withdrawing Lawyers (Including Non-Compete Issues)

14-Ownership of Files and Attorney Lien Issues

38-Fee Splitting

A law firm may not prohibit a withdrawing associate from contacting any of the firm's clients until they decide on counsel, because such a rule would restrict the withdrawing lawyer's right to practice. Likewise, the law firm may not declare that all client files belong to the firm and that the withdrawing associate must share fees with the law firm. 3/12/1991
1438

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16-Lawyer's Personal Interests

28-Law Firm Staff

38-Fee Splitting

45-Law Firms - Miscellaneous

50-Lawyer-Owned Businesses

A law firm may not share profits with an advertising agency unless its employees are bona fide and regular employees of the law firm. [Approved by the Supreme Court of Virginia 11/2/16].10/21/1991
0534

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38-Fee Splitting

A lawyer collecting delinquent county taxes may not pay the county any portion of fees the lawyer receives. [This was withdrawn for reconsideration on 9/8/83.] [This Legal Ethics Opinion was overruled to the extent its holding is inconsistent with LEO 1783 which permitted a lawyer representing a lender in collecting on a note containing a provision for the award of 25% attorney's fees of the principal balance due to give the client/lender whatever portion of the 25% was not actually spent on attorney's fees.]12/16/1983
1744

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8-Bills and Fees

15-Representing Other Entities - Miscellaneous

38-Fee Splitting

A lawyer employed by a non-profit organization and a private practitioner who sometimes handles cases pro bono for the non-profit organization may share court-awarded attorneys’ fees with the organization (although it would be unethical for a lawyer who accepts a pro bono case to charge or collect a contingent fee for the representation). The court’s review of the fees and the fact that the client is not paying the fees eliminate any worry about fee-sharing or overreaching by the lawyers. 6/27/2000
1563

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8-Bills and Fees

38-Fee Splitting

A lawyer in a civil rights case has a contingent fee arrangement with the plaintiff. The lawyer may ethically include the court-awarded attorneys' fees in considering the plaintiff's award from which the lawyer calculates the contingent fees. The court-awarded attorneys' fees are not considered "fees" for purposes of the fee-splitting rules. 12/14/1993
1047

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27-Litigation Tactics (Including Misrepresentations, Tape Recordings)

38-Fee Splitting

A lawyer may engage a medical consulting firm that receives compensation on a contingent fee basis as long as the lawyer does not share any portion of a fee with a consulting firm and as long as no payments to any expert witness the consulting firm might provide are contingent on the outcome of the case in which the expert testifies. 3/8/1988
0558

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8-Bills and Fees

16-Lawyer's Personal Interests

38-Fee Splitting

40-Trust Accounts

A lawyer may engage in a "barter" arrangement in which the lawyer renders services in return for other goods, as long as: the lawyer does not share legal fees (in cash or in kind) with any non-lawyers; the client consents; the legal fees are reasonable; and the lawyer keeps the legal fees in a trust account (or segregated in the case of goods) until the fees are earned. [Under Rule 1.8(a), a lawyer may not enter into a "business transaction" with a client unless the client is given an opportunity to seek independent advice, and there has been full disclosure and consent in writing.]4/10/1984
0885

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28-Law Firm Staff

38-Fee Splitting

A lawyer may enter into a compensation plan with a non-lawyer employee as long as it complies with the ethics code. 3/11/1987
ABA-464

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38-Fee Splitting

41-Non-Virginia Lawyers

A lawyer may ethically share fees with another lawyer who is authorized to participate in the matter and share fees, even if that other lawyer practices in a law firm (in jurisdictions like the District of Columbia and the United Kingdom) owned in part by nonlawyers. Model Rule 5.4(a) generally prohibits fee-sharing with a nonlawyer, although it contains an exception "for firm compensation and retirement plans [which] depends on whether the profits being shared are 'tied to particular clients or particular matters.'" (citation omitted); "[A] division of a legal fee by a lawyer or law firm in a Model Rules jurisdiction with a lawyer or law firm in another jurisdiction that permits the sharing of legal fees with nonlawyers does not violate Model Rule 5.4(a) simply because a nonlawyer could ultimately receive some portion of the fee under the applicable law of the other jurisdiction."; Among other things, "there is no reason to believe that the nonlawyer in the [other jurisdiction] might actually influence the independent professional judgment of the lawyer in the Model Rules jurisdiction, who practices in a different firm, in a different jurisdiction."8/19/2013
1329

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38-Fee Splitting

50-Lawyer-Owned Businesses

A lawyer may not assist a title agency in preparing documents (with a single fee for both services submitted to the client) because it would involve sharing of legal fees with a non-lawyer and may also involve the lawyer helping a non-lawyer in the unauthorized practice of law. [Approved by the Supreme Court of Virginia 11/2/16].4/20/1990
0387

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13-Marketing - Miscellaneous

38-Fee Splitting

42-Payments to Solicit Recommendations

76-Trust and Estate Lawyers

A lawyer may not discount fees for preparing a will contingent on the client's contributing money to a charity which advertises the lawyer's services. 9/12/1980
0809

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38-Fee Splitting

59-Disbarred and Suspended Lawyers

A lawyer may not divide a contingent fee with a lawyer whose license was revoked after the fee was received. [This LEO was overruled in LEO 1218.] 6/25/1986
1572

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13-Marketing - Miscellaneous

38-Fee Splitting

42-Payments to Solicit Recommendations

83-Solicitation

A lawyer may not engage in an arrangement with a non-lawyer under which the non-lawyer refers cases to the lawyer, assists in helping the lawyer for a fee and in personal injury cases receives a percentage of the client's recovery. The arrangement impermissibly involves a lawyer: (a) paying the non-lawyer a referral fee for soliciting clients and; (b) splitting fees with a non-lawyer. 2/8/1994
1764

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8-Bills and Fees

38-Fee Splitting

40-Trust Accounts

A lawyer may not enter into a fixed fee retainer arrangement in which a finance company pays the lawyer the fixed fee amount (minus a discount) at the beginning of the case, with the client being responsible for making monthly payments to the finance company for the full fee amount plus interest, because the discount retained by the finance company at the beginning of the case amounts to impermissible fee-sharing; any advanced fee must be kept in the lawyer's trust account until the lawyer has "performed the corresponding services."5/6/2002
0615

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4-Witness-Advocate Rule

38-Fee Splitting

A lawyer may not hire a private investigator to be paid out of any settlement or award if the use of the private investigator as a rebuttal witness cannot be ruled out. 10/31/1984
0609

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38-Fee Splitting

42-Payments to Solicit Recommendations

A lawyer may not share fees with a non-lawyer intermediary who recommends the lawyer's employment. 11/14/1984
1111

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38-Fee Splitting

59-Disbarred and Suspended Lawyers

A lawyer may not split a fee with another lawyer who had worked on the matter but whose license was later suspended because the lawyer became mentally disabled (the lawyer was not guilty of any wrongdoing). [To the extent it is inconsistent, this LEO was overruled by LEO 1218.]8/1/1988
0934

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28-Law Firm Staff

38-Fee Splitting

45-Law Firms - Miscellaneous

59-Disbarred and Suspended Lawyers

A lawyer may not: pay a lump sum to a disbarred lawyer to take over the practice; pay for the disbarred lawyer's yellow page advertisement; divide a contingent fee with the disbarred lawyer; employ the disbarred lawyer as a legal assistant on a set salary; and take over the disbarred lawyer's phone number and answer the telephone as "law offices." [To the extent it is inconsistent, this LEO was overruled by LEO 1218.]6/16/1987
0407

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38-Fee Splitting

47-Lawyer Referral Services

A lawyer may participate in a local bar association's lawyer referral service, since any forwarding fee paid to the referral service is not impermissible fee-splitting. 7/21/1981
0946

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31-Protecting and Disclosing Confidences and Secrets

38-Fee Splitting

A lawyer may refer client to a collection agency as long as the lawyer preserves confidences and secrets and avoids the fee-splitting prohibitions. 6/25/1987
ABA-374

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8-Bills and Fees

38-Fee Splitting

A lawyer may share court-awarded fees with a pro bono organization the lawyer is representing. 6/7/1993
1160

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38-Fee Splitting

A lawyer referring a case to another firm because of a conflict may not accept a forwarding fee because the lawyer may not "expressly assume responsibility to the client" and therefore fails to satisfy the fee-splitting requirements. [This LEO was overruled by Rule 1.5(e), which does not require that a lawyer sharing in fees also share responsibility, thus allowing "referral fees" if the client consents after full disclosure.] 11/16/1988
0823

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8-Bills and Fees

38-Fee Splitting

A lawyer representing a client in collection cases may reimburse the client for time spent by the client's employees in administrative and clerical matters, although it would be best for the client to periodically bill the lawyer for the services rather than have the client offset the services against attorneys' fees. 9/19/1986
1783

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8-Bills and Fees

38-Fee Splitting

A lawyer representing a lender in collecting on a defaulted note that included a provision requiring the borrower to pay attorney's fees equal to 25% of the principal balance due may give the client/lender any portion of the 25% that exceeds the actual cost of the legal services. The 25% attorney's fee provision is "an agreed upon contract term" which provides "commercial certainty for all parties." Allowing the nonlawyer client/lender to receive a portion of the 25% does not threaten the "independent judgment of an attorney from improper nonlawyer interference," and therefore does not amount to an unethical sharing of legal fees with a nonlawyer [overruling LEOs 534, 835 and 1025 to the extent that they are inconsistent].12/22/2003
1459

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5-Lawyers Changing Jobs

18-Consent and Prospective Waivers

38-Fee Splitting

A lawyer who worked on plaintiffs' litigation moved to a defense firm. The lawyer may continue to share in the former firm's income from cases completed before the lawyer joined the new firm. The new firm would not be disqualified as long as the clients consented to the lawyer's receipt of those fees. The lawyer may not share in income earned by the former firm on cases completed after the lawyer left the firm because the lawyer could not assume responsibility for the client's case (a prerequisite to the fee-splitting the lawyer seeks). [Although the summary seems confused in discussing the lawyer's earlier clients and which consents would be required, it explicitly states that a firm's unilateral imposition of an ethics screen does not cure a conflict -- only informed consent can cure a conflict.] [Rule 1.5(e) does not require that a lawyer sharing in fees also share responsibility, thus allowing "referral fees" if the client consents after full disclosure.]4/28/1992
1232

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12-Withdrawing Lawyers (Including Non-Compete Issues)

38-Fee Splitting

A professional corporation's agreement may not contain a covenant not to compete after withdrawal. The corporation may not demand part of withdrawing lawyer's future fees because it would be impermissible fee-splitting. 4/6/1989
1598

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38-Fee Splitting

39-Miscellaneous

A town may charge lawyers a license fee based on legal fees generated, because the prohibition on sharing fees with a non-lawyer envisions consensual arrangements rather than an imposed tax. 6/14/1994
1035

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13-Marketing - Miscellaneous

38-Fee Splitting

42-Payments to Solicit Recommendations

An arrangement under which a lawyer would join a trade and barter association would violate the fee-splitting roles if the lawyer shared 10% of the lawyer's fee with the association, because the 10% fee would be seen as compensation for the referral. [Rule 1.5(e) does not require that a lawyer sharing in fees also share responsibility, thus allowing "referral fees" if the client consents after full disclosure.]2/19/1988
ABA-475

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38-Fee Splitting

40-Trust Accounts

Because another lawyer who has entered into a fee-split arrangement with a lawyer is a "third person" under ABA Model Rule 1.15's trust account rules, the lawyer receiving a fee that will be split with the other lawyer must: notify the other lawyer of the fee's receipt; hold the money in a trust account until it is appropriate to disburse it; promptly "deliver" any earned fee to the other lawyer; provide a full accounting if the other lawyer asks for one; keep any disputed funds in the trust account until any dispute is resolved.12/7/2016
1843

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28-Law Firm Staff

38-Fee Splitting

41-Non-Virginia Lawyers

Federal regulations governing "the specific practice of patent law before the USPTO" preempt the Virginia ethics rules, and thus allow a Virginia licensed lawyer on associate status to form a partnership with non-lawyer patent practitioners (as defined in the CFR) and share legal fees with non-lawyer registered patent agents.4/16/2008
1488

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38-Fee Splitting

Fee-splitting is permissible as long as both lawyers take "responsibility" for the case. "The mere recommendation or referral of a case to another lawyer, with nothing further, does not constitute assumption of responsibility. Furthermore, the legal services provided must be "meaningful," rather than merely the performance of "ministerial or mechanical tasks." If both lawyers assume responsibility, the fee-splitting need not be in proportion to the services performed, as long as the client consents to the fee division. [This LEO was overruled by Rule 1.5(e), which does not require that a lawyer sharing in fees also share responsibility, thus allowing "referral fees" if the client consents after full disclosure.]10/19/1992
ABA-465

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13-Marketing - Miscellaneous

38-Fee Splitting

40-Trust Accounts

82-Advertising

Lawyers may engage in "daily deal" marketing, but must comply with all of their Model Rules obligations, "including avoiding false or misleading statements and conflicts of interest, providing competent and diligent representation, and appropriately handling all money received." Under a "coupon deal" arrangement, a lawyer sells a coupon entitling the purchaser to a certain number of hours of legal service at a discounted rate. The marketing organization handling the arrangement collects purchasers' payments and forwards them to the lawyer, retaining a contractually-agreed upon percentage of the payments. The purchaser later directly pays the lawyer at the discounted rate when the lawyer provides the services. Under a "prepaid deal" arrangement, the purchaser pays the marketing organization the entire legal fee, and then receives services that would normally have cost more than that payment. Despite some state bars conclusion that such daily deal marketing are per se unethical, the ABA Model Rules do not automatically prohibit such daily deals if lawyers follow the Rules. First, payments to the marketing organization do not constitute unethical fee splitting. Instead, they essential constitute "payment for advertising and processing services." However, "one caveat is that the percentage retained by the marketing organization must be reasonable." Second, lawyers may not advertise daily deals in a false or misleading fashion. For instance, lawyers must "define the scope of services offered," and "explain under what circumstances the purchase price of a deal may be refunded, to whom, and what amount." Third, lawyers must explain that until the lawyer and the daily deal purchaser engage in a "consultation," no client-lawyer relationship exists. Lawyers must further warn anyone trading for, or receiving as a gift, any daily deal rights must carefully review all the terms and conditions. Fourth, before entering into a client-lawyer relationship, lawyers must assure that they are competent to undertake the representation, and warn any prospective clients if their matters will require more of the lawyers' time than the prospective client purchased under the daily deal. Lawyers must also assure that they do not accept so many daily deal clients that they cannot competently and diligently represent them all. Fifth, lawyers must properly handle any payments they receive from the marketing organization. Under a coupon deal, payments collected by the marketing organization and sent to lawyers are not legal fees -- and must be deposited into lawyers' operating account. Under a prepaid deal, payments lawyers receive from the marketing organization constitute "advance legal fees," and must be deposited into the lawyers' trust account. Lawyers must explain to anyone purchasing a prepaid deal what amount of the payment "is not a legal fee and will be retained by the marketing organization." Although it may be difficult, lawyers must also coordinate with marketing organizations to obtain required information about the purchasers whose funds the lawyers deposit into their trust account. Sixth, lawyers must properly handle money they have received in connection with purchasers who never use the lawyer's services. If a coupon purchaser never uses the lawyer's services, the lawyer may retain such payments (despite some state bars' disagreement) -- if the lawyer has "explained as part of the offer that the cost of the coupon will not be refunded." If a prepaid deal purchaser never uses the lawyer's services, the lawyer "likely" must refund any unearned advanced fees -- unless the prepaid offer was "for a simple service at a modest charge," in which case "it is possible no refund would be required, provided proper and full disclosure of a no-refund policy had been made." Seventh, lawyers must properly handle money they receive from daily deal purchasers whom the lawyer cannot represent because of a conflict or other "ethical impediment." In such a situation, lawyers must provide a full refund to the purchaser under either a coupon or a prepaid deal -- and cannot avoid this duty by disclosing otherwise in marketing materials. Because the lawyer is unable to undertake the representation "through no fault of the purchaser," the lawyer must refund all the money the purchaser has paid -- even if the lawyer cannot recoup the money retained by the marketing organization.10/21/2013
1161

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8-Bills and Fees

38-Fee Splitting

The conclusion in LEO 1025 was based on the fact that the lawyer had already obtained a judgment on the account balance and the 25% attorneys' fees; different facts might lead to a different conclusion. 10/20/1988
1732

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12-Withdrawing Lawyers (Including Non-Compete Issues)

38-Fee Splitting

The fee-splitting rules prohibit a law firm employment agreement under which a lawyer who leaves the firm must share a diminishing percentage of whatever contingent fee is earned on cases the lawyer takes from the firm (depending on how soon the case is settled), but which does not require client consent to the fee splitting arrangement. In addition to violating the fee-splitting rules, the provision "creates an improper financial disincentive which has the effect of penalizing the attorney for leaving and competing with the old law firm, and impairs the client's right to select counsel of his choice." [Amended on 10/23/12 to indicate that Rule 1.5(f) allows fee sharing between former law firm colleagues without client consent.]6/29/1999
1712

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5-Lawyers Changing Jobs

8-Bills and Fees

18-Consent and Prospective Waivers

31-Protecting and Disclosing Confidences and Secrets

38-Fee Splitting

45-Law Firms - Miscellaneous

This is a comprehensive opinion dealing with temporary lawyers ("lawyer temps"). A lawyer temp is treated like a lateral hire for conflicts purposes (although lawyer temps who are not given "broad access to client files and client communications" could more easily argue that they had not obtained confidences from firm clients for which they had not directly worked). As with lateral hires, screening lawyer temps does not cure conflicts. Lawyer temps may reveal the identity of other clients for which they have worked unless the clients request otherwise or the disclosure would be embarrassing or detrimental to the former clients.Paying a staffing agency (which in turn pays the lawyer temp) does not amount to fee-splitting because the agency has no attorney-client relationship with the client and is not practicing law (the New York Bar took a different approach, suggesting that the client separately pay the lawyer temp and agency). If a firm lawyer closely supervises the lawyer temp, the hiring of lawyer temps need not be disclosed to the client. A lawyer must inform the client before assigning work to a lawyer other than one designated by the client.Because "a law firm's mark-up of or surcharge on actual costs paid the staffing agency is a fee," the firm must disclose it to the client if "payment made to the staffing agency is billed to the client as a disbursement, or cost advanced on the client's behalf." On the other hand, the firm "may simply bill the client for services rendered in an amount reflecting its charge for the Lawyer Temp's time and services" without disclosing the firm's cost, just as firms bill a client at a certain rate for associates without disclosing their salaries. In that case, the "spread" between the salary and the fees generated "is a function of the cost of doing business including fixed and variable overhead expenses, as well as a component for profit."Because the relationship between a lawyer temp and a client is a traditional attorney-client relationship, the agency "must not attempt to limit or in any way control the amount of time a lawyer may spend on a particular matter, nor attempt to control the types of legal matters which the Lawyer Temp may handle." Agencies may not assign lawyer temps to jobs for which they are not competent.7/22/1998
0945

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11-"Of Counsel" Relationship

38-Fee Splitting

45-Law Firms - Miscellaneous

Two firms may not characterize themselves as "of counsel" to each other when the firms in essence have created only a referral relationship. Among other things, the firms may not agree to a 10% "referral fee" between themselves. [Rule 1.5(e) does not require that a lawyer sharing in fees also share responsibility, thus allowing "referral fees" if the client consents after full disclosure.] 6/10/1987
ABA-474

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38-Fee Splitting

Under the ABA Model Rule 1.5(e) fee-split provision, lawyers in different firms who split a fee have both "undertaken representation of the client", and therefore each must be able to satisfy all of the ABA Model Rules' conflicts provisions. A fee split agreement "must be agreed to either before or within a reasonable time after commencing the [joint] representation.4/21/2016

Copyright 2000, Thomas E. Spahn