When a client fires one of two lawyers who agreed to split a fee and then objects to paying the discharged lawyer, can the other lawyer honor the agreed split, and what should happen to the disputed money?

Plain-English summary

The inquiry concerned a fee-splitting arrangement between two lawyers in different firms (Lawyer A and Lawyer B) who had agreed to a 20%/80% division, after the client objected to any payment to Lawyer A. The committee first noted that under Rule 1.16(a) a client's right to discharge a lawyer is essentially absolute absent a contrary court order, and that under Rule 1.16(d) (and its Opinion 90-13) a discharged lawyer acting in good faith is generally entitled to a reasonable fee for work done up to termination.

Turning to the split itself, the committee explained that Rule 1.5(e) permits a fee division between lawyers not in the same firm only if the division is proportional to the services each performed or, by written agreement with the client, each lawyer assumes joint responsibility, and the client is advised and does not object and the total fee is reasonable. Because the client here objected to paying Lawyer A, the only permissible basis for the split would be proportionality to services performed, unless a true written client agreement existed. The committee concluded that supplying the client a copy of a letter between the lawyers confirming joint representation and the split did not reach the level of the written client agreement Rule 1.5(e)(1) contemplates, and that the client's objection meant there was no consent in any event.

Drawing on its Opinion 98-32A, the committee concluded that where a lawyer has not properly secured the client's agreement to a disproportionate split, the lawyer is best advised to retain the disputed funds in trust until the dispute between the client and the other lawyer is resolved, citing Rule 1.15(c) and Opinion 02-07 (a lawyer holding contested funds should not unilaterally resolve who is entitled to them but should hold them in trust until the parties agree or a court decides).

In practice

Under the South Carolina rules as they stood at the time of the opinion, the committee held that a fee division between lawyers in different firms must satisfy Rule 1.5(e), meaning it is proportional to services performed or supported by a genuine written client agreement to joint responsibility, and that a copy of the lawyers' own fee-splitting letter is not such an agreement. Where the client objects, the committee concluded the contested fee should be held in the lawyer's trust account under Rule 1.15(c) until resolved by agreement or by a court. South Carolina revised its Rules of Professional Conduct effective 2005; verify the current text of Rules 1.5(e), 1.15, and 1.16 before relying on the specific subsections cited.

Common questions

Q: Two lawyers in different firms agreed to split a fee. What makes the split ethical?

A: The committee concluded the split must satisfy Rule 1.5(e): it is either proportional to the services each lawyer performed or, by written agreement with the client, each assumes joint responsibility, with the client advised and not objecting and the total fee reasonable.

Q: Does sending the client a copy of the lawyers' fee-splitting letter count as the client's agreement?

A: The committee concluded no: a copy of a fee-splitting letter between the lawyers does not reach the level of the written client agreement Rule 1.5(e)(1) contemplates, especially where the client objects.

Q: The client objects to paying the discharged lawyer. What do I do with the disputed money?

A: The committee concluded the holding lawyer should keep the disputed funds in trust under Rule 1.15(c) and not unilaterally resolve the dispute, waiting for the parties to agree or a court to decide.

Background and rules framework

The opinion interprets South Carolina RPC 1.5(e) (division of fees between lawyers in different firms), 1.15(c) (holding disputed funds in trust), and 1.16(a) and (d) (discharge and a discharged lawyer's earned fee), corresponding to the like-numbered Model Rules. The committee relied on its Opinions 90-13, 98-32A, and 02-07.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 1.5(e) / Model Rule 1.5(e): division of fees between lawyers not in the same firm.
• South Carolina RPC 1.15(c) / Model Rule 1.15: holding disputed property in trust pending resolution.
• South Carolina RPC 1.16(a), (d) / Model Rule 1.16: discharge by the client and the lawyer's earned fee on termination.

Other opinions cited:

• S.C. Bar Ethics Advisory Ops. 90-13, 98-32A, 02-07 (earned fees, disproportionate splits, holding disputed funds).

See also

• SC Bar Ethics Op. 02-19: Successor firm names and a deceased partner's name in wind-down
• SC Bar Ethics Op. 02-14: Client files when a lawyer winds down a practice
• ABA Formal Op. 00-420: Surcharge for the work of a contract lawyer

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-03-05/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 03-05

Rule 1.16(a) provides that a lawyer shall withdraw from the representation of a client if the lawyer is discharged. The rule is unambiguous, and the client’s right to terminate the representation is absolute absent a Court order to the contrary.Rule 1.16(d) provides that upon termination of representation, a lawyer may retain a reasonable non-refundable retainer. In S.C. Bar Ethics Advisory Op. #90-13, we stated that an inference can be drawn from 1.16(d) that a lawyer is entitled to receive the fee that he has earned upon termination of the representation. Based on several South Carolina Supreme Court and appellate court rulings, it would appear that an attorney acting in good faith should be entitled to recover a reasonable fee up to the time of termination.4

Rule 1.5(e) provides: "A division of a fee between lawyers who are not in the same firm may be made only if: (1) the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation; (2) the client is advised of and does not object to the participation of all the lawyers involved; and (3) the total fee is reasonable."

Under the facts presented, it would appear that the requirements of 1.5(e)(2) have been met, and nothing in the facts suggest that the requirement of 1.5(e)(3) was not also met. Thus, the 20%/80% split agreed to between Lawyers A and B must either be in proportion to the services performed OR by written agreement with the client. Absent the client’s consent, the only permissible fee split must be in proportion to the services performed by each lawyer.The issue is whether supplying Client with a copy of a letter from Lawyer B to Lawyer A confirming joint representation and the fee splitting arrangement to which Client does not object coupled with a retainer agreement between Client and Lawyer B constitutes a "written agreement with the client in which each lawyer assumes joint responsibility for the representation."

While a copy of a fee-splitting agreement may have been sent to Client, it does not appear to reach the level of the kind of agreement with the client anticipated by 1.5(e)(1). In any event, it would appear the Client does not admit to consent by virtue of his objection to any payment of fees to Lawyer A.

In S.C. Ethics Advisory Op. #98-32a, the issue was solely whether a lawyer can ethically share an earned fee with another lawyer in a manner disproportionate to the services performed without having advised client of the agreement. We answered that, where a lawyer has failed to do so, lawyer is best advised to retain the disputed funds in the lawyer’s trust account until any dispute between the client and the other lawyer is resolved. We believe the facts in this case warrant similar treatment.See Rule 1.15(c) and S.C. Bar Ethics Adv.Op. #02-07 (lawyer who is holding unearned fees received from brother of client should not unilaterally attempt to resolve issue of who is entitled to fees but should hold fees in trust until the parties reach agreement to resolve the dispute or a court determines their rights).