Can a New York lawyer accept a referral fee and pass half of it to a former associate who has since been disbarred?

Plain-English summary

Two lawyers had worked together in an "ad hoc partnership" on particular matters, one of which was a products liability case referred to special trial counsel. Seven years later one of the lawyers was disbarred, and the following year the products liability suit settled. The committee was asked whether the lawyer could receive a referral fee from the case and pass half of it to the disbarred former associate. On whether the two were a "partnership," the committee said that is largely a question of law beyond its jurisdiction and is fact-intensive, noting (with reference to the Model Rule 1.10 comment, though the Model Rules are not adopted in New York) that lawyers may be a firm for confidentiality purposes without being partners for fee-splitting purposes. If they were not partners, DR 2-107(A) governs any division of fees; if they were a valid partnership, the division is a matter of contract, subject to the rules on sharing fees with a disbarred lawyer.

On referral fees, the committee restated DR 2-107(A): a division of fees between lawyers not in the same firm is proper only where the client consents after full disclosure that a division will be made, the division is in proportion to the services performed and responsibility assumed by each, and the total fee is reasonable. The mere forwarding of a client is not a proper basis for a fee split; the proportions agreed at the outset must be adjusted at the conclusion if the work and responsibility turn out to be grossly disproportionate to the agreed division. Whether a total fee is reasonable is a question of fact the committee could not decide.

On sharing fees with the disbarred lawyer, the committee noted the controlling court rules (for example, the Second Department's 22 NYCRR 691.10(b)) and explained the ethics: a disbarred lawyer may not share in any fee for legal services performed by another lawyer after removal from the bar, because from the time of disbarment the person is a nonlawyer and DR 3-102(A) bars sharing legal fees with a nonlawyer. As long as the disbarment was unrelated to the matter in which the fees were earned, the lawyer may share fees for work performed or responsibility assumed up to the time of disbarment, compensated on a quantum meruit basis, with the amount fixed by the court, which decides what proportion of the contingent fee was earned before the disbarment. A payment that would violate a law or court rule would itself be unethical under DR 7-102(A)(8).

Currency note

This opinion was issued in 1990, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. Subsequent rule amendments or later opinions may have changed the analysis, and the cited court rules on disbarred attorneys may have been renumbered or revised. 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 New York lawyer accept a referral fee?

A: Yes, if it complies with DR 2-107(A): the client consents after full disclosure that a division will be made, the division is in proportion to each lawyer's services and responsibility, and the total fee is reasonable.

Q: Is forwarding a client enough to earn a share of the fee?

A: No. The committee held that the mere forwarding of a client is not a proper basis for a fee split, and that the agreed proportions must be adjusted at the end if the work and responsibility actually performed are grossly disproportionate.

Q: Can the lawyer pay a share to a former associate who was later disbarred?

A: Only for work done before disbarment. The committee held a disbarred lawyer may be compensated on a quantum meruit basis, fixed by the court, for services rendered up to the date of disbarment, but may not share in fees for legal services performed after disbarment, because under DR 3-102(A) the disbarred person is a nonlawyer.

Q: Does it matter why the lawyer was disbarred?

A: Yes. The committee said the pre-disbarment share is available as long as the disbarment was unrelated to the matter in which the fees were earned.

Background and rules framework

The opinion interpreted DR 2-107(A) (division of fees among lawyers not in the same firm) and DR 3-102(A) (a lawyer may not share legal fees with a nonlawyer), with DR 3-101(A) (aiding the unauthorized practice of law) and DR 7-102(A)(8) (a lawyer shall not knowingly engage in conduct contrary to a disciplinary rule), alongside the court rules governing disbarred attorneys. The closest Model Rule analogues are Rule 1.5(e) (division of fees between lawyers not in the same firm) and Rule 5.4 (a lawyer's professional independence and the bar on sharing fees with nonlawyers).

Citations and references

Rules of Professional Conduct:

• MR 1.5 (fees; division of fees among lawyers)
• MR 5.4 (professional independence; sharing fees with nonlawyers)
• NY DR 2-107(A); DR 3-101(A); DR 3-102(A); DR 7-102(A)(8)

Other authority cited:

• 22 NYCRR 691.10(b) and parallel departmental rules: compensation of a disbarred attorney on quantum meruit for pre-disbarment services
• N.Y. State 414 (1975): proportional division of fees and end-of-matter adjustment
• N.Y. State 535 (1981): referral of improper fee-splitting disputes to an appropriate panel
• Garter v. Katz, Shandell, Katz & Erasmous, 12 Misc. 2d 1009 (1983): disclosure required of the client for a fee division

See also

• NY State Bar Op. 1159: Fee sharing with a deceased lawyer's estate
• NY State Bar Op. 1043: Referral fee from a real estate broker's commission
• NY State Bar Op. 625: Recorded legal messages and advertising on a 900 number

Source

• Landing page: https://nysba.org/opinion-609/