Can a lawyer accept a referral fee in a case where a conflict of interest bars the lawyer from representing that client?

Plain-English summary

Attorney X represented Client A on a traffic charge and a personal-injury claim arising from a collision with a train; A's passenger was killed. X referred the passenger's estate (Client B) to Attorney Y for a wrongful-death claim and was to receive a one-third referral fee from any recovery, and separately referred Client A's personal-injury claim to Attorney Z for a one-third referral fee. X asked whether he could accept each referral fee.

On the referral from Attorney Z (Client A's own personal-injury claim), the opinion concluded acceptance was not prohibited if the Rule 1.5(f) and (g) requirements were met: Attorney Z would have to disclose in writing that X has or will receive an economic benefit and its extent and basis, X would have to assume the same legal responsibility for Client A's representation as if a partner of Z, and the total fee could not exceed reasonable compensation. The committee noted the facts did not show all those prerequisites were satisfied.

On the referral from Attorney Y (the estate's wrongful-death claim), the opinion concluded X could not accept the fee. Taking it would require X to assume legal responsibility for Client B as though a partner of Y, putting X in the position of representing both A and B, whose interests would inevitably conflict because A's conduct would be at issue in the wrongful-death claim (and a third-party contribution complaint against A would worsen the conflict). Citing Rule 1.7 and ISBA Opinions 644 and 870 (doubts about multiple representation resolved against it), the committee concluded the ethical impediment that barred X from representing B also barred X from accepting a referral fee from Y, even assuming the clients' consents and the Rule 1.5 disclosures were in place.

Currency note

This opinion was issued in 1991, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in May 2010 as generally consistent with the 2010 Rules (Rules 1.5(e) and 1.7, with Comments [23] and [29]-[33]), while cautioning that the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a lawyer accept a referral fee when a conflict bars him from handling that client's matter himself?

A: No. The opinion concluded that because accepting a referral fee requires the referring lawyer to assume legal responsibility as if a partner of the receiving lawyer, an ethical impediment (here a Rule 1.7 conflict) that bars representing the client also bars accepting the referral fee.

Q: What does a valid fee division between lawyers in different firms require?

A: The opinion concluded the client must consent in a signed writing disclosing that a division will be made, its basis and the economic benefit to the other lawyer, and the responsibility each lawyer assumes (Rule 1.5(f)), and the division must be proportionate to services or follow the referral rule with the referring lawyer assuming partner-like responsibility (Rule 1.5(g)).

Q: Why was the wrongful-death referral fee improper but the personal-injury one potentially allowed?

A: The opinion concluded the lawyer already represented the driver (a potential defendant), so accepting responsibility for the decedent's estate would create a Rule 1.7 conflict; the personal-injury referral involved only his own client and could be proper if the Rule 1.5 conditions were met.

Background and rules framework

The opinion interpreted Rule 1.5(f) (written client consent to fee division) and Rule 1.5(g) (proportionality, or the referral exception requiring the referring lawyer to assume partner-like legal responsibility), together with Rule 1.7(b)-(c) (material-limitation conflicts and the disclosure required for common representation) (Model Rules 1.5, 1.7).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5 (fees; division of fees) / Illinois Rule 1.5(f), 1.5(g)
• Model Rule 1.7 (conflict of interest) / Illinois Rule 1.7(b), 1.7(c)

Other opinions cited:

• ISBA Advisory Opinion Nos. 644 and 870 (doubts about multiple representation resolved against it)

See also

• ISBA Ethics Op. 16-04: Of Counsel, Fees and Conflicts
• ISBA Ethics Op. 03-06: Fee Share to Former Partner

Source

• Landing page: https://www.isba.org/ethics/opinions/9011