Fee Sharing: The Ethics of Attorney Referral Fees

When you reach out to a law office, you may not realize that sometimes your case is referred to another attorney. When this happens, the original office may receive what’s called a referral fee. This is common in the legal industry, especially in areas like personal injury and property damage cases.

When handled ethically, referral fees can benefit all parties. Clients are connected to the right lawyer for the job, the referring attorney is compensated for instigating the connection, and the working attorney gains a case in their area of expertise.

The Law Offices of Kanner & Pintaluga regularly assists other law firms throughout the country with personal injury cases including auto accidents, wrongful deaths, and slip and falls, and property damage cases including, hurricane damage, roof leaks, and plumbing.

Here’s a closer look at the ethical considerations behind attorney referral fees.

What Is a Referral Fee?

A referral fee is a portion of a legal fee paid by an attorney to another counsel for referring a case. The attorney who receives the referral usually takes primary responsibility for the case, while the referring lawyer steps back from active involvement.

Referral fees differ from co-counsel agreements. In a co-counsel arrangement, both attorneys work on the case and share the workload. While in a referral arrangement, the referring lawyer’s role is to connect the client with another lawyer who can best handle the case.

Why Lawyers Refer Cases

There are a variety of reasons a lawyer may choose to refer a case to outside counsel including:

• Jurisdiction: The case is in a state or court where the lawyer is not licensed.
• Specialization: The matter requires niche expertise.
• Capacity: The lawyer’s caseload is too full at the time of the request.

Ethics and Legal Guidelines for Fee Sharing

Because referral fees involve dividing legal fees, they are subject to strict ethical and legal requirements.

ABA and State Bar Rules

The ABA Model Rule 1.5(e) on attorney fees states that fee sharing between lawyers in different firms is allowed if:

1. The division is proportional to the services performed or both lawyers assume joint responsibility for the case.
2. The client agrees to the arrangement, including the share each lawyer will receive.
3. The agreement is confirmed in writing.
4. The total fee is reasonable.

The Rule permits the lawyers to divide a fee either in proportion to the services they render, or the lawyers may limit the scope of the representation with the client’s informed consent, but importantly both lawyers must remain “jointly responsible” to the client for the entire representation.

Joint responsibility is defined by both attorneys accepting responsibility for their own duties and the duties of the other attorneys in the agreement. The key factor is that the client, in all situations, must consent to the fee sharing agreement. It is best practice to obtain client consent before referring the client to the other lawyer or before accepting a referral.

When Is It Allowed?

The ABA Rule is widely adopted, but states have variations. For example:

• Florida guidelines (Rule 4-1.5(g)) limit the maximum referral fee in a co-counsel arrangement to 25%, unless a higher amount is justified and approved by the court. All co-counsel receiving a fee share must sign the Fee Sharing Agreement and be listed on the closing statement in contingency fee cases.
• Georgia guidelines require full client disclosure, written consent, and compliance with proportional work or joint responsibility standards.
• In February 2025, the New Jersey Supreme Court ruled that certified attorneys may pay referrals to out-of-state lawyers not licensed in New Jersey, without raising unauthorized practice of law concerns.

Because rules vary, lawyers must review the specific regulations in the jurisdiction where the case will be handled.

What Clients Should Know About Referral Fees

Referral fees will have no impact on the outcome of your case, but all referral fees should be disclosed and approved in writing before moving forward with a case.

Does It Affect My Settlement?

No. Referral fees do not reduce a client’s compensation. The total legal fee will remain the same as agreed upon by the client and representation. That fee is simply split between the referring attorney and the working attorney.

Disclosure and Consent Requirements

Ethical rules require full disclosure and written consent before any referral fee is paid or received. Clients should be informed:

• Who will be handling their case.
• How the attorneys will divide fees.
• That their recovery will not be reduced because of the referral.

Best practice is to obtain client consent before making or accepting a referral.

Common Pitfalls and How to Avoid Them

While ethical referral fees are allowed, improper agreements can lead to disciplinary action.

Unethical Arrangements

Referral fees can be deemed unethical when:

• The client is not informed of the referral.
• The division of fees is disproportionate with no joint responsibility.
• The total fee is excessive.
• The referring lawyer is not licensed to practice and the arrangement violates local rules.

Lawyers and law firms must understand the local rules in every jurisdiction where they refer cases. Many states issue ethics opinions that clarify tricky situations, and failing to follow these guidelines can lead to serious consequences.

Lead Generation vs. Referral Fees

Referral fees are not the same as paying for leads through lead generation tactics.

• Referral fee occurs when one lawyers receives payment from another lawyer for a specific client or case.
• Lead generation occurs when a law office pays for marketing services to attract more clients and is not tied to a specific case.

Why Work With Kanner & Pintaluga

The Law Offices of Kanner & Pintaluga has built a strong national network by partnering with law firms in both personal injury and property damage cases. We follow the highest ethical standards in attorney referral fees and legal fee sharing to ensure every client gets the representation they need without additional cost to them.

Our experience handling co-counsel arrangements across multiple jurisdictions means we can navigate complex rules, protect clients’ interests, and maximize case outcomes. Whether you are an attorney seeking a trusted partner or a client looking for the right lawyer, our attorneys are ready to help.