For most attorneys, a key marketing goal is to create a steady stream of referrals—both from fellow lawyers and trusted business contacts. When those efforts pay off, the question of referral fees often comes up. Here’s what you need to know.
Clear Rules—Mostly
No referral fees to non-lawyers
The short answer is no—lawyers generally cannot share fees with non-lawyers. The ABA Model Rules of Professional Conduct, adopted in most states, make this clear. Rule 5.4(a) prohibits fee sharing with non-lawyers, and Rule 7.2(b) forbids giving anything of value in exchange for recommending a lawyer’s services. Since referral fees are “something of value,” they fall under these restrictions. (See Michael Downey’s ABA Litigation Journal article for details on small “thank you” gifts that may be permitted.)
Referral fees between lawyers
Lawyers can, however, share referral fees with other lawyers if they follow ethical rules. Under Rule 1.1, referrals must go to competent attorneys. Rule 1.5(e) sets out three key requirements:
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The fee split must reflect each lawyer’s work OR both must take joint responsibility for the case.
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The client must consent to the arrangement in writing, including each lawyer’s share.
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The total fee must be reasonable.
Joint responsibility means both lawyers could be liable for malpractice claims. Some believe simply stating this in the agreement is enough; others argue the referring lawyer must take some active role, such as occasional client check-ins or reviewing documents.
Structuring Referral Agreements
A solid referral agreement should clearly state:
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Fee percentages and payment terms
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Scope of the referral
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Each lawyer’s responsibilities
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A provision for joint responsibility
The agreement must be in writing, signed by both parties, and compliant with applicable ethics rules. Transparency with the client is essential—obtain their informed, written consent and document all communications.
Enforceability Considerations
To ensure enforceability, the agreement should:
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Be written and signed
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Specify fees and payment terms
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Comply with ethical rules in your jurisdiction
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Avoid unreasonable or excessive fees
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Include documented client consent
Bottom Line
While many state rules mirror ABA Rule 1.5(e), some differ. Always check your state’s specific requirements and, if in doubt, call your bar’s ethics hotline before paying a referral fee.
And remember—whether or not a fee changes hands, always thank your referral source.