WHEN: If you are asking yourself the question “should I refer this case out,” the likely answer is “yes.” After all, the lawyer subconscious and instinct is keen and it is usually correct. The question itself is most likely the by-product of an internal recognition that you either lack the experience, the resources or the time to provide competent representation. It is a validation that while you may not recall the rules by name and number, your ethical baptism has instilled in you a strong desire to follow the rules and to do so in the best interests of the client. Your inner voice has reminded you that:
Model Rule 1.1 requires that for any engagement, the lawyer must provide competent representation which by definition assumes that the attorney has the “legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” NOTE: Comment 2 to Rule 1.1 permits the “association” of an attorney with established competence in the subject matter as a means of discharging the duty to provide competent representation.
Model Rule 1.3 requires that an attorney act with “reasonable diligence and promptness” in representing a client.
Practice Pointer: While no Model Rule specifically addresses the financial ability of an attorney to undertake representation, it seems fundamental that an attorney cannot provide competent representation in undertaking a matter for representation when the attorney lacks the resources which will be necessary in order to provide competent representation. The better practice in such situations is to refer the matter out and/or to associate outside counsel.
HOW: Congratulations. As Dirty Harry famously stated, “A man’s got to know his limitations.” You have recognized your limitations and have wisely decided to refer a matter out, rather than to commit malpractice. The real question is not how to refer out a case, but how to refer out a case and still participate in the fee – right? The following is a non-exhaustive list of the issues presented by this situation:
In house referrals: In house referrals are not subject to the rules on fee sharing. Model Rule 1.5(e) addresses the division of fees between lawyers “who are not in the same firm.” Implicitly, the Rule would apparently bless the referral of a matter within a firm to an attorney with experienced knowledge and still permit the referring attorney to participate in the fees. This makes some inherent sense as the referring member by virtue of their membership in the firm will have both financial and ethical responsibility over the matter.
Outside Referrals: Consistent with the Rules, the policy behind Model Rule 1.5(e) is client protection (not necessarily lawyer protection). Rule 1.5(e) permits the agreements for the division of fees between lawyers of different firms ONLY IF:
The division is in proportion to the services performed by each attorney OR each lawyer assumes joint responsibility for the representation; NOTE: While the division may be based on the proportion of work performed OR on the premise that each lawyer will assume joint responsibility, do not give mere lip service to the joint responsibility option. Comment 7 to Rule 1.5 clarifies that joint responsibility requires both financial and ethical responsibility and contemplates that in this arrangement both attorneys should be available to the client throughout the representation and should remain knowledgeable about the subject matter of the representation.
The client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and NOTE: While the Rule refers to “confirmation in writing”, as opposed to “signed by the client,” the better practice is to have the client sign. After all, there can be no better confirmation than the client’s signature.
The total fee is reasonable.
BOTTOM LINE: The failure to follow these Rules is a virtual invitation to have your referral counsel explain to you in the future that while he or she would love to remit a part of the fee on a nice case back to you, the Rules simply won’t permit it. While the lack of an agreement in compliance with the Rules is not a bullet proof shield, it does place the referring attorney in a very compromised position. If you follow the suggestions set forth herein, you should avoid this situation. Oh yes, one parting note: the association of outside counsel should not serve to increase the overall fee charged to the client. If it does, it begs the question of the benefit to the client when the referral or association is presumably to secure the services of an attorney with some level of experience who likely can handle the engagement without the aid of the associating counsel.
Ronnie Richter and Eric Bland