Can an Illinois lawyer share fees with and pay a referral fee to an out-of-state lawyer who refers a personal-injury case?
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This page answers the general question as of 2021. Ezel answers yours: whether it's allowed on your facts, under the current Illinois Rules of Professional Conduct, with citations.
Plain-English summary
An out-of-state lawyer wants to refer a personal-injury case to an Illinois lawyer, and the Illinois lawyer wants to enter a fee-sharing agreement and pay a referral fee. The committee asks whether the Illinois Rules permit this for a matter litigated in Illinois.
The committee concludes they do. Illinois Rule 1.5(c) and (e) govern and do not prohibit the arrangement. Although the Rules do not address the cross-border question directly, the committee reads In re Storment (Ill. 2002) as implying that paying a referral fee to an out-of-state lawyer is permitted: the Illinois Supreme Court found a Rule 1.5(f) violation for failing to get the client's written consent to the fee division, but did not fault the receipt of a referral-fee share involving a Missouri lawyer. The committee supports the conclusion with ABA Formal Opinions 316 (1967) (lawyers need not be admitted in the same jurisdiction to divide fees) and 464 (2013) (cross-jurisdiction fee-sharing benefits clients), and with opinions from Michigan (RI-199), Pennsylvania (93-15), Arizona (10-04), and Connecticut (91-7) reaching the same result, reasoning that allowing out-of-state referrals helps clients obtain competent counsel in the litigation forum.
The committee adds an important condition: although Rule 1.5 contains no express requirement that the agreement comply with both jurisdictions' rules, the committee says it only makes sense that it must. It illustrates with Florida's rule capping personal-injury referral fees at 25 percent and restricting referral fees to out-of-state lawyers, noting that an agreement that does not satisfy both jurisdictions' rules invites a later refusal to pay.
In practice
Under this opinion, an Illinois lawyer who receives a personal-injury referral from a lawyer in another state may share the fee and pay a referral fee, provided the arrangement meets Illinois Rule 1.5 (including the client's written consent to the fee division) and the referring lawyer's home-jurisdiction rules. The opinion identifies compliance with both jurisdictions' rules as the practical safeguard against a fee dispute, pointing to Florida's percentage cap and out-of-state restrictions as an example of a home-jurisdiction limit that would control.
Common questions
Q: Can an Illinois lawyer pay a referral fee to a lawyer admitted only in another state?
A: Yes. The committee concludes Illinois Rule 1.5(c) and (e) do not prohibit a fee-sharing agreement and referral fee with an out-of-state referring lawyer in a personal-injury matter litigated in Illinois.
Q: Do the two lawyers have to be admitted in the same state to divide a fee?
A: No. The committee cites ABA Formal Opinion 316 that lawyers need not be admitted in the same jurisdiction to divide fees, and Opinion 464 that cross-jurisdiction fee-sharing benefits clients.
Q: Does the agreement have to satisfy the other state's rules too?
A: The committee says yes in practice. Although Rule 1.5 has no express dual-compliance requirement, the committee reasons the agreement should comply with both jurisdictions' rules, using Florida's 25 percent personal-injury referral-fee cap as an example of a home-state limit that would apply.
Q: What still must the Illinois lawyer do under Rule 1.5?
A: The committee's reading of In re Storment underscores the Rule 1.5(f) requirement of the client's written consent to the division of fees; failing to obtain it was the violation the court found.
Background and rules framework
The opinion interprets Illinois Rule of Professional Conduct 1.5 (fees), in particular 1.5(c) (contingent-fee writing), 1.5(e) (division of fees between lawyers not in the same firm), and 1.5(f) (client's written consent to a fee division). Rule 1.5 tracks Model Rule 1.5. The committee relies on In re Storment (Ill. 2002), ABA Formal Opinions 316 and 464, and out-of-state opinions from Michigan, Pennsylvania, Arizona, and Connecticut, plus the Florida personal-injury referral-fee rule.
Citations and references
Rules of Professional Conduct:
- MR 1.5 / IL RPC 1.5(c), (e), (f) (fees; division of fees; client consent)
Cases:
- In re Storment, 203 Ill. 2d 378 (2002), Rule 1.5(f) written-consent requirement
Other opinions cited:
- ABA Formal Opinions 316 (1967) and 464 (2013) (cross-jurisdiction fee division)
- Michigan RI-199; Philadelphia 93-15; Arizona 10-04; Connecticut 91-7; Florida R. Prof'l Conduct 4-1.5(f)(4)(D)
See also
- NY State Bar Op. 1160: Fee Sharing With a Federal-Only Out-of-State Lawyer
- ISBA Ethics Op. 16-04: Fee Division and Conflict Rules for "Of Counsel"
- ISBA Ethics Op. 15-04: Sharing Court-Awarded Fees With a Nonprofit Referral Source
Source
- Landing page: https://www.isba.org/ethics/opinions/2104
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