Legal Ethics Practice of Law

Splitting Fees? Get Client Consent ASAP

124041823Common scenario: You do some work for a client and then pass off the client to another attorney, agreeing to split the attorney fees. Later you want to get your share of the fees. The Rules of Professional Conduct require that you get the client’s written consent to any fee-splitting agreement. Did you get the client’s consent right away, or are you now at the mercy of the other attorney?

Under Cal Rules of Prof Cond 2-200, an attorney can’t divide a fee for legal services with an attorney who isn’t a partner, associate, or shareholder with the attorney unless:

  1. The client has given written consent after full disclosure stating that a division of fees will be made and giving the terms of the division; and
  2. The total fee charged by all attorneys is not unconscionable and not increased due to the fee-dividing provision.

A fee-sharing agreement that doesn’t comply with this rule is unenforceable. Margolin v Shemaria (2000) 85 CA4th 891.

The court in Mink v Maccabee (2004) 121 CA4th 835 held that Rule 2-200 requires only that the client’s written consent be obtained before any division of fees. There’s no required time frame, but don’t wait for the last minute—get the client’s written consent as early as possible. Down the road when you’re negotiating with the other attorney about what your fee should be, you may not be in a position to contact the client directly to get consent, leaving yourself at the mercy of the other attorney.

What if the other attorney promised you that he or she will get the client’s written consent to your fee-sharing agreement? Unfortunately, that’s a promise you generally can’t enforce (Margolin v Shemaria (2000) 85 CA4th 891), leaving you stuck if the other attorney doesn’t come though unless you fall into one of two exceptions:

  • In class action lawsuits you can rely on the statement of the attorney who is going to be litigating the class action to secure the approval of clients to division of fees because it wouldn’t be practical for the attorney who refers a class action to get the client’s written consent.
  • In situations in which an attorney refuses to comply with the disclosure and consent requirements and inequitably blocks the other attorney from complying with them, the offending attorney is equitably estopped from claiming that the agreement is unenforceable under Rule 2-200.

If you don’t fall under one of these exceptions, you may be left with the sole option of getting fees in quantum meruit. Huskinson & Brown, LLP v Wolf (2004) 32 C4th 453.

Get more practical advice on avoiding disputes when fee splitting in CEB’s California Civil Procedure Before Trial, chap 3, with a sample form Disclosure and Consent on Fee Splitting (Referral) and in CEB’s Fee Agreement Forms Manual, chap 1, which includes sample fee agreement provisions and commentary.

Other CEBblog™ posts you may find useful:

© The Regents of the University of California, 2015. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

7 replies on “Splitting Fees? Get Client Consent ASAP”

It seems (as is so often the case when dealing with attorney-client issues) that there is more than a little nanny-statism going on here. Always demanding client consent, even when it doesn’t affect the client in any real way. Much like the Fletcher v. Davis situation, where the Calif. Supreme Court ruled that a lawyer could not impose a lien for his fee on the recovery he obtained for his client because he charged an hourly fee instead of a percentage and didn’t advise his client of the client’s right to consult another attorney and get the client’s written consent.

It’s like the Boy Who Cried Wolf. We now live in a society (especially in California) where we receive so many warnings that it is impossible to discern when we really need to take protective action.

All these proclamations and demands to get the client’s informed consent for every little thing sound good in the abstract, but the result is so many unnecessary warnings and advisories that when the client really DOES need to be warned about something that is actually important, he might well miss it or ignore it. See the excellent commentary by Steven A. Lewis entitled “Fletcher v. Davis, a Dramatic and Ill-Advised Departure from Decades of California Jurisprudence”

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