In Kentucky, may a lawyer divide a fee with a referring lawyer in another firm who does no work but assumes responsibility for the case?

Plain-English summary

Lawyers asked whether KBA E-55 (1971) still controlled fee splitting between lawyers not in the same firm. The Committee explained that E-55 had interpreted DR 2-107 of the old Code, which permitted a division "made in proportion to the services performed and responsibility assumed by each lawyer," and that fee splitting was now governed by Rule 1.5(e). Under that rule, lawyers may split fees either in proportion to the services each performs, or without regard to work performed so long as the referring lawyer assumes responsibility for the work, there is a written agreement and client consent to the participating lawyers, and the total fee is reasonable.

Applying that framework, the opinion concluded that a referring lawyer who performs no legal service and assumes no responsibility may not share the fee, while a referring lawyer who performs no service but assumes responsibility for the case may, provided the other Rule 1.5(e) conditions are met. The Committee characterized the rule's premise as the idea that responsible brokering serves the client's interest by moving the case into competent hands and removing the economic disincentive to refer. It quoted ABA Informal Opinion 85-1514 (1985) for the view that assumption of responsibility is comparable to that of a partner in a firm under Rule 5.1, including financial responsibility and responsibility for adequate representation and client communication.

Currency note

This opinion was issued in 1994 and predates the Kentucky Supreme Court's substantial 2009 revisions to the Rules of Professional Conduct (SCR 3.130). The Kentucky Bar Association notes that Rule 1.5(e) was later amended to require that the fee-division agreement with the client be confirmed in writing, and that lawyers should consult the current version of the rules before relying on this opinion. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could a lawyer share a fee with a referring lawyer who did no work and took no responsibility?

A: No. The opinion answered that question "no"; a referring lawyer who performs no legal service and assumes no responsibility cannot share the fee.

Q: Could the referring lawyer share a fee by assuming responsibility instead of doing the work?

A: Yes. Per the opinion, a referring lawyer who performs no service but assumes responsibility for the case may share, assuming all conditions of Rule 1.5(e) are met.

Q: What did "assuming responsibility" mean?

A: The opinion adopted ABA Informal Op. 85-1514, describing it as responsibility comparable to a partner's under Rule 5.1, including financial responsibility and responsibility for the adequacy of the representation and client communication.

Background and rules framework

The opinion interprets KRPC 1.5(e) (division of fees between lawyers not in the same firm; Model Rule 1.5(e)) and references Rule 5.1 (responsibilities of partners; Model Rule 5.1) in describing what assuming responsibility entails. It treats Rule 1.5(e) as having replaced DR 2-107 of the former Code.

Citations and references

Rules of Professional Conduct:

• MR 1.5(e) / KRPC 1.5(e) (division of fees between lawyers not in the same firm)
• MR 5.1 / KRPC 5.1 (responsibilities of partners and supervisory lawyers)

Other opinions cited:

• KBA E-55 (1971): prior fee-splitting opinion under DR 2-107, partially overruled
• ABA Informal Op. 85-1514 (1985): meaning of "assumption of responsibility" under Rule 1.5(e)

See also

• KBA Ethics Op. E-390: Sharing an Investment Advisor's Referral Fee
• KBA Ethics Op. E-394: Paying Experts and Litigation-Support Providers
• KBA Ethics Op. E-367: Gifts to Realtors for Referrals

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-366.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-366
Issued: June 1994

Since the adoption of the Rules of Professional Conduct in 1990, the Kentucky Supreme Court has adopted various amendments, and made substantial revisions in 2009. For example, this opinion refers to Rule 1.5(e), which was amended to require that the agreement with the client be confirmed in writing. Lawyers should consult the current version of the rules and comments, SCR 3.130 (available at http://www.kybar.org), before relying on this opinion.

Question:

(1) Under what conditions may lawyers who are not practicing in the same firm split a legal fee? (2) May an attorney divide a legal fee with a referring attorney where the latter performs no legal service and assumes no responsibility? (3) May an attorney divide a legal fee with a referring attorney where the latter performs no legal services but assumes responsibility for the case?

Answer:

The conditions are set forth in Rule 1.5(e). The answer to the second question is "no". The answer to the third question is "yes," assuming that all conditions of Rule 1.5(e) are met.

References:

Rule 1.5(e), partially overruling KBA E-55 (1971).
OPINION

Several lawyers have inquired as to the continued validity of KBA E-55 (1971). That opinion interpreted DR 2-107, which has been replaced by Rule 1.5(e). Under the old Code section a division of fees between lawyers [not in the same firm] could be "made in proportion to the services performed and responsibility assumed by each lawyer." DR 2-107(a)(2). Fee splitting is now governed by Rule 1.5(e). Lawyers may now split fees in proportion to services performed by each lawyer, or they may split them without regard to work performed, so long as the referring lawyer assumes responsibility for the work performed, there is written agreement with and consent of the client to the representation of the particular lawyers and the total fee is reasonable. The idea underlying the new rule seems to be that responsible brokering is in the client's interests - it gets the case into competent hands by eliminating the economic disincentive to referral. In ABA Informal Op. 85-1514 (1985) the ABA Committee interpreted the term responsibility in Rule 1.5(e). The Committee stated that "assumption of responsibility does not require substantial services to be performed by the lawyer since assumption of responsibility is the alternative to a division of fees in proportion to services performed. The Committee is also of the opinion that assumption of 'joint responsibility for the representation' includes assumption of responsibility comparable to that of a partner in a law firm under similar circumstances, including financial responsibility, ethical responsibility for actions of other partners in a law firm in accordance with Rule 5.1, and the same responsibility to assure adequacy of representation and adequate client communication that a partner would have for a matter handled by another partner in the firm under similar circumstances."
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Note to Reader
This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor rule). The Rule provides that formal opinions are advisory only.