There are certain circumstances where a Florida lawyer can ethically share fees with an out of state or foreign attorney. I will discuss these situations shortly.
For purposes of this article, “foreign attorney” or “out of state lawyer” means an attorney who is:
- An active member in good standing of the bar of another state (not Florida); and
- Currently eligible to practice law in a state other than Florida; and
- Not licensed in Florida.
For purposes of this article, an “out of state attorney” is the same as a “foreign attorney.”
I use the terms interchangeably in this article.
Referral fees between attorneys are called “fee divisions” under the Rules of Professional Conduct.
What is the General Rule on Splitting an Attorney’s Fee?
The general rule on fee divisions is Rule 4-1.5(g), Rules Regulating The Florida Bar:
(g) Division of Fees Between Lawyers in Different Firms. Subject to the provisions of subdivision (f)(4)(D), a division of fee between lawyers who are not in the same firm may be made only if the total fee is reasonable and:
(1) the division is in proportion to the services performed by each lawyer; or
(2) by written agreement with the client:
(A) each lawyer assumes joint legal responsibility for the representation and agrees to be available for consultation with the client; and
(B) the agreement fully discloses that a division of fees will be made and the basis upon which the division of fees will be made.
In contingency fee cases, attorneys additionally must comply with the contingency fee provisions of Rule 4-1.5(f). Contingency fee is a case where payment of an attorney’s fee only occurs if there is a recovery. The recovery is usually an injury settlement.
In Injury Cases, Client Needs to Consent in Writing to the Referral Fee
Rule 4-1.5(f)(2) requires that all referral fees in contingency fee cases have the consent of the client in writing and that:
each participating lawyer or law firm shall sign the contract with the client and shall agree to assume joint legal responsibility to the client for the performance of the services in question as if each were partners of the other lawyer or law firm involved.
This subsection requires all referral fees in contingency fee cases to comply with Rule 4-1.5(g)(2).
Referring Attorney’s Fee Is Limited to 25% of the Fee, Unless Court Approves More
In personal injury and wrongful death matters there is a further restriction. The restriction is that the primary attorney gets at least 75% of the fee and the secondary attorney gets a maximum of 25% of the fee unless a court approves a different division. Rule 4-1.5(f)(4)(D).
The above rules are applicable to members of The Florida Bar. The Preamble of the Rules of Professional Conduct defines the term “lawyer” for purposes of the rules, as “a person who is a member of The Florida Bar or otherwise authorized to practice in any court of the State of Florida.”
Attorneys who are not members of The Florida Bar are considered nonlawyers for purposes of the Rules of Professional Conduct. Rule 4-5.4(a) prohibits Florida Bar members from sharing fees with nonlawyers. Thus, the general rule is that Florida lawyers cannot share fees with foreign attorneys.
However, in Florida Ethics Opinion 90-8, the Professional Ethics Committee opined that there are certain circumstances where a Florida lawyer can ethically share fees with such foreign attorneys. Any Florida lawyer who is paying a referral fee to foreign attorney should read Opinion 90-8. Any non-Florida attorney is who receiving a fee from a Florida lawyer should know this rule.
Unethical To Pay Fees to Out of State Lawyer if the Client Resides in Florida, and Was Injured in Florida
It’s unethical for a Florida lawyer to give a referral fee to a foreign lawyer if the client resides in Florida and is injured in Florida. (However, there may be an exception, which I’ll discuss in a little bit.)
The same is true even if the foreign attorney resides in Florida and wants to appear pro hac vice. This is because the Florida Rule of Judicial Administration Rule 2.510 does not let a Florida resident, who is a foreign attorney, appear pro hac vice in Florida.
The exception is if the foreign attorney (1) is a Florida resident, unless the attorney has an application pending for admission to The Florida Bar and has not previously been denied admission to The Florida Bar.
Rule 2.510 of the Florida Rules of Judicial Administration requires that the form motion which is part of the rule be filed. The court needs to approve this.
In addition, the foreign attorney must send the Florida bar a Verified Statement Pursuant To Rule 1-3.11, Rules Regulating The Florida Bar. Also, the co-counsel agreement should possibly be entered into only after the court approves the out of state attorney to be admitted in Florida pro hac vice.
But see below as the Florida lawyer must comply with certain requirements.
OK to Pay Out of State Lawyer Referral Fee, if Client Lives and Was Hurt in Florida if Referring Lawyer Appears Pro-Hac Vice
It’s ethical to give a referral fee to a foreign attorney if the client resides in Florida and is injured in Florida if the foreign attorney appears pro-hac vice in Florida. This is because the foreign attorney could provide legitimate legal services as mentioned in Ethics Opinion 90-8. The lawyer licensed in another state cannot live in Florida.
But see below as the Florida lawyer must comply with certain requirements. Also, the co-counsel agreement should possibly be entered into only after the court approves the out of state attorney to be admitted in Florida pro hac vice.
OK To Pay Fees to Out of State Lawyer if the Client Was Hurt in Florida, and Lives in Referring Attorney’s State
It’s Ethical for a Florida lawyer to give referral fee to out of state attorney if client is injured in Florida and client resides in the out of state lawyer’s resident state. But see below as the Florida lawyer must comply with certain requirements.
Basically, such fee divisions are permissible only where they can be done in compliance with The Florida Bar rules without the out of state attorney committing the unlicensed practice of law in Florida.
It may be tempting to pay a referral fee to an out of state attorney in a personal injury case where the client does not live in the referring attorney’s home state. I would not do it. The exception may be if the out of state lawyer is able to appear pro-hac vice in Florida.
Florida Courts Won’t Enforce Oral Fee-Sharing Agreements
If the referral isn’t proper, you’ll have no right to get paid your fee.
A referring attorney cannot enforce an oral agreement that does not comply with Rule 4-1.5(g)(2). Noris v. Silver, 701 So.2d 1238, 1240 (Fla.Dist.Ct.App.1997). In Noris, the court said:
It is true that if Falk had recovered attorney’s fees, Silver could not have enforced the purported oral agreement against Falk since the agreement did not comply with Rule 4-1.5(g)(2). See Chandris, S.A. v. Yanakakis, 668 So.2d 180, 185 (Fla.1995).
In another case, a referring attorney sued for an alleged oral fee-sharing agreement. The court found the alleged-fee sharing agreement between the attorneys was unenforceable because it wasn’t in writing.
In addition, the alleged fee-sharing agreement between the attorneys was unenforceable due to the fact that the agreement was never communicated or disclosed to the client. The referring attorney lost the lawsuit against the recipient attorney, and got nothing. Marcus v. Garland, Samuel & Loeb, PC, 441 F. Supp. 2d 1227 (S.D. Fla. 2006)
Not complying with the referral fee rules may also lead to aiding the unlicensed practice of law by the out of state attorney in Florida
Can an Improper Fee-Sharing Agreement Lead to a Florida Bar Complaint?
Yes. In The Florida Bar v. Carson, 737 So. 2d 1069 – Fla: Supreme Court 1999, attorney Charles Holloman, on behalf of attorney Carson, filed a bar complaint alleging that another attorney, Steven Vasilaros, improperly disbursed “a portion of the proceeds from a personal injury action to himself after being placed upon notice that a portion of the fee was disputed as to ownership.”
The complaint further explained that the disputed portion of the proceeds was a 25% percent “referral fee” claimed by Carson. He asked that the Bar investigate the matter and “sanction the appropriate individuals.”
After that complaint filed on Carson’s behalf, the Bar filed a formal complaint against Carson, alleging that he had referred clients to Vasilaros, that Carson and Vasilaros had entered into an oral agreement for a twenty-five percent referral fee in three cases, that Carson had performed no legal services in any of these cases, and that none of the clients had ever agreed in writing to the payment of a referral fee to Carson.
The complaint also alleged that after one of the cases was settled, Vasilaros paid Carson a referral fee of $650, which represented 25% of the total attorney’s fees recovered. Finally, the complaint alleged that after another of these cases was settled, Carson contacted Vasilaros about the payment of the referral fee, but Vasilaros refused to pay such a fee because the agreement had not been reduced to writing and signed by the client.
The circuit court ruled that Carson was not entitled to receive a referral fee in the case, and on appeal, the Fifth District Court of Appeal affirmed without an opinion. See Carson v. Vasilaros, 681 So.2d 1154 (Fla. 5th DCA 1996).
The Bar Filed a Complaint Against the Referring Attorney
As a result of the conduct described above, the Bar charged Carson with violating rule 4-1.5(f)(2) of the Rules Regulating The Florida Bar “for participating in a fee without the consent of a client in writing and for failing to agree to assume joint legal responsibility to the client for the performance of the services in question as if each of the participating lawyers were partners of the other lawyers involved.”
The Florida Supreme Court said that a fair reading of this rule supports a conclusion that it has been violated where, as here, an attorney enters into an oral agreement to divide the fee and pursues collection of the fee despite the fact that the agreement was never reduced to writing, the client never consented in writing to such a fee and no responsibility for the case was assumed.
The court also said:
As we stated in Florida Bar v. Rubin, 709 So. 2d 1361, 1364 (Fla.1998), “[t]his Court expects strict compliance with … rules requiring a client’s written consent to an attorney’s fee regardless of the circumstances involved. These requirements must be diligently adhered to and enforced in order … to preserve public confidence in the legal profession.” See also Chandris, S.A. v. Yanakakis, 668 So. 2d 180, 185-86 (Fla.1995) (holding that a contingent fee agreement that is not in compliance with the Rules of Professional Conduct is void as against public policy and not enforceable). It was undisputed that Carson performed no legal services in the case, there was no written agreement for a referral fee, and the client never consented in writing to a referral fee.
Referring Lawyer Should Be On the Contract, and Statement of Client Rights
Assuming the fee split is ethical, always make sure that you are listed on the fee contract, statement of client rights. Do not take the other attorney’s word that he or she will pay you. If they tell you that you don’t need to be on the fee contract and statement of client rights, that should be a red flag.
You should also ask the referring attorney whether he will include you on the closing statement. In the event there is a recovery, at the end of the representation, the lawyer must prepare a closing statement reflecting an itemization of all costs and expenses, together with the amount of fee received by each participating lawyer or law firm.
The Statement of Client’s Rights (Paragraph 8) says that:
You, the client, has the right to receive and approve a closing statement at the end of the case before you pay any money. The statement must list all of the financial details of the entire case, including the amount recovered, all expenses, and a precise statement of your lawyer’s fee.
Until you approve the closing statement your lawyer cannot pay any money to anyone, including you, without an appropriate order of the court. You also have the right to have every lawyer or law firm working on your case sign this closing statement.
Thus, all attorneys must sign the closing statement. If the attorney who you refer a case to won’t include you on the closing statement, this is a red flag. It is unethical.
Why should you be on these three documents?
First, it is unethical not to comply. Second, I have heard plenty of stories where the attorney receiving the referral does not pay a fee to the referring lawyer. Don’t become one of those stories.
I Put Referring Attorneys on the Fee Contract, and Closing Statement
I recently settled a case that was a referred from Connecticut injury attorney Duane Lueders in Connecticut. Duane found me online.
He was researching whether someone from Connecticut, who was a taxi passenger in Florida, needed a permanent injury in order to be entitled to money for pain and suffering if another car caused the crash. (Car accident and injury laws vary widely from state to state.)
In most Florida car accident cases, the injured person needs to meet the tort threshold in order to be entitled to money for pain and suffering. However, there are exceptions to this rule. One of the exceptions is for many taxi passengers.
I could represent the client since he was hurt in Florida. The client lived in Connecticut, and the referring attorney was licensed in Connecticut.
Duane found me online. I included him on the fee contract, statement of client rights, and the closing statement. He, myself and the client signed these documents.
We settled the soft tissue car accident case with the careless driver’s car insurer. The referring attorney was happy enough with our work that he referred us other car accident cases.
Other attorneys refer to me based on our good reputation. They’ve seen some of our Florida personal injury settlements. Browse our website and blog. You’ll see links to other referring attorneys who’ve sent us accident cases.
I love paying referral fees to out of state attorneys (and Florida lawyers too).
Do the Right Thing, Get the Referral Fee in Writing
It is best to do it right. Make sure that the referral is in writing, and that the client consents.
My law firm gladly accepts cases and pays a referral fee on personal injury (and cruise ship accident cases) referred to me by out of state attorneys.
The referral fee is usually 25% of the gross (total) attorney’s fees. I welcome any calls from out of state attorneys to see if I can co-counsel a case in Florida with them.
What Types of Cases Do I Handle?
I represent injured victims in any case where someone else’s negligence caused an injury.
I handle Uber accidents and much more.
I Want to Pay You Attorney Fees as a Referring Attorney
Our Miami law firm represents people anywhere in Florida if someone’s carelessness caused their injuries in car accidents, truck accidents, slip, trip and falls, motorcycle accidents, bike accidents, drunk driving crashes, pedestrian accidents, cruise ship or boat accidents, store or supermarket accidents, accidents at someone else’s home, condo or apartment, accidents involving a Uber or Lyft Driver, and many other types of accidents.
We want to work with you on a personal injury or wrongful death case. I can do so so long as your client was hurt in an accident in Florida, or on a cruise.
Call Us Now!
Call us now at (888) 594-3577 to find out for FREE if we can represent your client and agree to pay you a referral fee if we collect money. We answer calls 24 hours a day, 7 days a week, 365 days a year.
No Fees or Costs if We Do Not Get You Money
Editor’s Note: This post was originally published in February 20, 2013 and has been completely revamped and updated.