May a lawyer pay a forwarding attorney his share of a fee for cases he referred, when the forwarding attorney was suspended from practice while the cases were pending?

Plain-English summary

The inquiry asked whether a New Jersey lawyer could share a fee with a Pennsylvania attorney who had forwarded several negligence cases to him, with the division to be made according to services rendered, where the forwarding attorney was suspended from practice while the cases were pending. The specific question was whether the forwarder would be entitled, at the conclusion of a case, to the portion of the fee based on services he actually rendered before his suspension.

The Committee set out DR 2-107, which permits dividing a fee with a lawyer outside the firm only where the client consents after disclosure, the division is in proportion to services performed and responsibility assumed, the total fee is reasonable, and the lawyer complies with the court rules on fee sharing. It stated that a lawyer may divide fees, or pay a so-called referral fee, only when there has been a division of service or responsibility, and that the subsequent disbarment of a referring attorney is immaterial if the referral was made before disbarment and the disbarment was not caused by the manner in which the referring attorney obtained the case; advanced costs should be reimbursed in any event. The Committee supported this with out-of-state authorities (Oregon, Philadelphia, and Arizona opinions collected in the Digest of Bar Association Ethics Opinions) reaching the same result for a disbarred forwarder.

Currency note

This opinion was issued in 1973, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and predates the 1984 replacement of the Disciplinary Rules by the RPCs. The division-of-fees rule it applied (DR 2-107) is now found in RPC 1.5(e), whose conditions for dividing fees among lawyers not in the same firm differ from the 1973 text. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a forwarding lawyer be paid his share after being suspended?

A: Under this opinion, yes, for services rendered before the suspension, provided the referral preceded the discipline and the discipline did not arise from how he obtained the case.

Q: What is the basic condition for sharing a fee with an outside lawyer?

A: The Committee held there must have been a division of service or responsibility; a bare referral fee without that is not permitted.

Q: What about costs the forwarder advanced?

A: The opinion states advanced costs should be reimbursed in any case.

Background and rules framework

The opinion applied DR 2-107 (division of fees among lawyers), which conditioned fee sharing on client consent, proportional division by service and responsibility, a reasonable total fee, and compliance with the court rules. In current New Jersey terms, division of fees among lawyers not in the same firm is governed by RPC 1.5(e).

Citations and references

Rules of Professional Conduct:

• DR 2-107 (division of fees among lawyers), as in effect 1973; now MR 1.5(e) / NJ RPC 1.5(e)

Court rules:

• R. 1:21-6 and R. 4:88-4 (sharing of fees), as referenced in DR 2-107

Other opinions cited:

• Oregon State Bar Opinion 108 (1962); Philadelphia Opinion 59-8 (1959); Arizona Opinion 240 (1968), as collected in the Digest of Bar Association Ethics Opinions

See also

• NJ ACPE Op. 279: A Disbarred Partner, the Firm Name, and Referred Cases
• NJ ACPE Op. 304: Multiple-Party Conflict and Fees Upon Withdrawal
• NJ ACPE Op. 420: Division of Fees Between a Professional Association and a Withdrawing Member

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp273-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls.

96 N.J.L.J. 1421, December 13, 1973

OPINION 273

Fee Sharing - Forwarding Attorney Suspended

An attorney has made inquiry as to whether a New Jersey lawyer may share a fee with a Pennsylvania attorney who forwarded several negligence cases to him, the division to be in accordance with services rendered. During the pendency of the cases for trial, the forwarder was suspended from the practice of law.

Would the forwarder, at the conclusion of a case, be entitled to that portion of the fee based upon the services actually rendered by him prior to his suspension?

The Disciplinary Rules of the Code of Professional Responsibility of the American Bar Association, as amended by the Supreme Court of New Jersey, provide:

DR 2-107. Division of Fees Among Lawyers

(A) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of his law firm or law office unless:

(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made.

(2) The division is made in proportion to the services performed and responsibility assumed by each.

(3) The total fee of the lawyers does not clearly exceed reasonable compensation for all legal services they rendered the client.

(4) He complies with the provisions of R. 1:21-6 and R. 4:88-4 (relating to sharing of fees) of the Rules Governing the Courts of the State of New Jersey.

A lawyer may divide fees, or pay a so called "referral fee," with another lawyer only when there has been a division of service or responsibility. The subsequent disbarment of the referring attorney is immaterial if the referral was made before disbarment and if the disbarment was not caused by the manner by which the referring attorney obtained the case. Advanced costs should be reimbursed in any case. 22 Ore. S.B.B. 8 (March 1962) (Opinion 108).

Opinion 4024, at page 442:

An attorney who has been substituted in a personal injury case for a disbarred attorney may pay the disbarred attorney part of his contingent fee as compensation for services rendered prior to the disbarment. Phila. (Opinion 59-8, September 9, 1959).

In the 1970 Supplement to the Digest of Bar Association Ethics Opinions, it is stated in:

Opinion 5994, at page 131:

A lawyer taking a case over from a disbarred attorney may share his fee with the disbarred attorney for services the attorney performed before his disbarment, provided the services were not the ones which gave ground for his disbarment 6 Ariz. B.J. 39 (December 1970) (Opinion 240, April 16, 1968)