Is the estate of a deceased forwarding attorney entitled to a share of fees the receiving attorney later earns in a separate suit the client brought directly, after the forwarder's death?

Plain-English summary

The inquiring attorney, a matrimonial specialist, had been retained to represent a husband in an action his wife brought in a County Domestic Relations Court. The client had been referred by an attorney in a neighboring community, and the inquiring attorney paid that forwarding attorney his share of the original fee. Later, after the forwarding attorney died, the inquiring attorney received additional fees in the Domestic Relations Court matter, and the wife then brought a new action in the Superior Court of New Jersey, in which the inquiring attorney again received fees. He also received a fee for preparing a property settlement agreement. No further division was paid to the forwarder or his estate. The forwarder's estate now requested a forwarding fee on the Superior Court suit, and the question was whether, given the forwarder's death and non-participation, the estate was entitled to any part of those fees.

The Committee set out Canon 34, which provides that no division of fees for legal services is proper except with another lawyer, based on a division of service or responsibility. It presumed the original payment to the forwarding attorney had met that test, but observed that the representatives of the estate could neither have performed services nor shared responsibility. Drawing on its Opinion 74 (office associates) and Opinion 80 (sale of a law practice), and quoting Drinker at length, the Committee restated the rule that Canon 34 was meant to condemn the older custom of paying a forwarder a finder's share irrespective of real service or responsibility, and that no right to a division arises from a mere recommendation. It then quoted Drinker's statement that a lawyer who forwarded a claim has no right to share in a fee the forwardee obtains from the client in a later, independent case the client sends directly, adding that there is no usual basis for division and the Committee will not fix proportions, each case depending on its own facts.

Currency note

This opinion was issued in December 1965, before New Jersey's September 13, 1971 adoption of the Disciplinary Rules (Code of Professional Responsibility), and well before the 1984 Rules of Professional Conduct and all later revisions. It applied Canon 34 of the Canons of Professional Ethics on the division of fees. That subject is now treated under RPC 1.5, including the division-of-fees provisions for lawyers not in the same firm. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific requirement mentioned here.

Common questions

Q: Was the deceased forwarder's estate entitled to a share of the later Superior Court fees?

A: No. The Committee reasoned that under Canon 34 a fee division must rest on a division of service or responsibility, and the estate could neither perform services nor share responsibility, while the later suit was a separate, independent case.

Q: What is the rule for forwarding fees under Canon 34?

A: Per the opinion, Canon 34 was meant to abolish the old custom of paying a forwarder a finder's share regardless of real service, so no right to a division arises from a mere recommendation; the service or responsibility must relate to handling the case.

Q: Can a forwarder share in fees from a later, separate case the client brings directly?

A: No. The Committee quoted Drinker that a lawyer who forwarded a claim has no right to share in a fee the forwardee obtains from the client in another later independent case the client sent directly.

Background and rules framework

The opinion interpreted Canon 34 of the Canons of Professional Ethics, which allowed a division of fees between lawyers only on a division of service or responsibility, and relied on Drinker's treatment of forwarding fees together with the Committee's Opinions 74 and 80. In current New Jersey terms, the division of fees between lawyers not in the same firm is governed by RPC 1.5.

Citations and references

Other authorities:

• Canons of Professional Ethics, Canon 34 (division of fees)
• Drinker, Legal Ethics 186-189 (1953)

Other opinions cited:

• NJ ACPE Opinion 74, 88 N.J.L.J. 357 (1965): office associates and referral on a profit-sharing basis
• NJ ACPE Opinion 80, 88 N.J.L.J. 460 (1965): the sale of a law practice violates Canon 34

See also

• NJ ACPE Op. 273: Fee Sharing With a Suspended Forwarding Attorney
• NJ ACPE Op. 178: Disclosure of Finder's Fees to the Client
• NJ ACPE Op. 220: Of Counsel, a Nonresident, and Division of Fees

Source

• Landing page: https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp87-1.html

Original opinion text

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

88 N.J.L.J. 779
December 2, 1965

OPINION 87

Division of Fees Deceased Forwarder

An inquiry has been made by an attorney who specializes in matrimonial litigation wherein he alleges that he was retained to represent a husband in an action instituted against him by his wife in a County Domestic Relations Court. This client was referred to him by an attorney in a neighboring community. The inquiring attorney states that he received a fee from the client and paid the forwarding attorney the amount to which he was entitled therefrom.

Subsequently, and sometime after the client was originally referred to the inquiring attorney, the forwarding attorney died. After his death, the inquirer received additional fees in connection with the Domestic Relations Court proceeding and, subsequent thereto, the wife instituted an action in the Superior Court of New Jersey and, once again, the inquiring attorney received some fees. He goes on to say that in another related matter, he received additional fees for the preparation of a property settlement agreement. No division of fees or any forwarding fees were ever paid to the forwarding attorney or his estate, except as indicated in this inquiry. Now a request is being made by the representatives of the estate of the forwarding attorney, asking for forwarding fees with respect to the Superior Court suit, and the question that presents itself is whether by virtue of the death of the forwarder and, obviously, his non-participation in the services rendered, his estate is entitled to any part of these fees received by the attorney of record.

Canons of Professional Ethics, Canon 34 provides, "no division of fees for legal services is proper except with another lawyer, based upon a division of service or responsibility." We, therefore, at the outset must bear in mind that if any division of fees would be proper under any circumstances, it obviously must be based upon a division of service or responsibility. We must presume that the payment to the forwarding attorney met this test. Obviously, the representatives of the forwarding attorney's estate could neither have performed services nor shared responsibility.

In New Jersey Advisory Committee on Professional Ethics, Opinion 74, 88 N.J.L.J. 357 (1965), concerning office associates, this Committee held in effect that each attorney upon an occasion will refer work on the usual profit-sharing basis recognized by forwarding attorneys. Presumably, this is based on a division of service and responsibility in accordance with the provisions of Canons of Professional Ethics, Canon 34 (Division of Fees). Thus, on referral work, each attorney in the situation described in this inquiry, is working on the same case and is an "office associate."

In our Opinion 80, 88 N.J.L.J. 460 (1965), we outlined the applicable principle as enunciated in Drinker, Legal Ethics 189 (1953), to the effect that, "a lawyer's clients are not merchandise." We there held that a sale of a law practice was violative of Canon 34.

Drinker, Legal Ethics (1953) states in specific language the general rule with instructions to lawyers as to what the practice should be. It is stated in such basic language that we find it desirable to state it here as it appears at page 186 therein:

Canon 34 further provides that the division of fees for legal services between lawyers must be based exclusively on "a division of service or responsibility."

There was long at the bar a practice or custom whereby, when a lawyer, with authority from his client, forwarded a case to another lawyer for attention in the latter's jurisdiction, or merely recommended one, the forwarding lawyer was allowed one-third of the fee earned by his correspondent. This was in the nature of a Finder's Fee, and was payable irrespective of any real service performed or responsibility assumed by the forwarding lawyer.

It was obviously the purpose of Canon 34 to condemn this, and such purpose should not be frustrated by construing the necessity of "responsibility" as being satisfied by the bare recommendation. The service and responsibility must, to be effective, relate to the handling of the case.

Accordingly, it has been repeatedly held by the Committees that no right to a division arises from the mere recommendation.

At page 187, Drinker goes on to say:

A lawyer who forwarded a claim to another lawyer has no right whatever to share in the fee obtained by the forwardee from the client in another later independent case which the client sent direct to the forwardee. There is no "usual" basis for division, nor will the Committee undertake to fix the proportions in which fees should be shared, each case depending on its own peculiar facts.