Common 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:
- 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
- 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 Lifeblood of Your Practice: Getting Your Attorney Fees
- Getting Your Fees Along the Way
- Don’t Lose Out on Your Fees in a Neighbor Dispute Case
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