What ethical duties does a lawyer take on by receiving or paying a referral fee in Wisconsin?
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This page answers the general question as of 2010. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion EF-10-02 (October 27, 2010) addresses the ethical duties that attach when one lawyer pays another a referral fee, and withdraws the earlier Opinion E-00-01 while reaffirming and extending its analysis. The committee describes the typical referral: a lawyer who does not wish to take a matter refers the client, with permission, to a willing lawyer who agrees to pay an agreed share of the fee, often a percentage of a contingent fee in personal-injury work. A referral fee differs from a fee division based on services because the referring lawyer usually performs little or no substantive work.
The committee explains that when Wisconsin's rules were revised in 2007, SCR 20:1.5(e)(3) replaced the old "joint responsibility" language with a requirement that each lawyer "assumes the same responsibility for the representation as if the lawyers were partners in the same firm." Reading this against the ABA comment and SCR 20:5.1, the committee concludes the new wording does not change the standard: partner-level responsibility still applies. Drawing on E-00-01, the committee details the referring lawyer's duties. The referring lawyer must stay aware enough of the receiving lawyer's performance to tell whether the matter is being handled in conformity with the rules, by periodically checking with the receiving lawyer, the client, or both, and remaining available to the client; must refer only to lawyers reasonably believed competent, selecting them for ability rather than willingness to share a fee; and must assume financial responsibility for the matter, with the allocation of costs being a matter of agreement with the client. The ongoing protection of the client's interests justifies the referring lawyer's fee beyond the proportion of work performed.
The committee then extends the analysis. Because the referring lawyer shares partner-level responsibility under SCR 20:5.1(c)(2), the lawyer must act to mitigate or correct the receiving lawyer's misconduct, and must be prepared to step in if the receiving lawyer becomes unable to act, for example by entering an appearance, seeking adjournments, dealing with opposing counsel, and helping the client find new counsel, though the referring lawyer need not be capable of assuming sole responsibility for complex litigation. The committee underscores client-consent requirements: SCR 20:1.5(e)(3) requires informing the client of the referral terms (each lawyer's share and whether the fee increases) and obtaining the client's consent in a signed writing (which may be an acknowledged email under SCR 20:1.0(q)), obtained upon or before the referral. The lawyer must also obtain the client's informed consent under SCR 20:1.6 before discussing a possible referral with a lawyer in another firm, and a lawyer who would have a non-waivable conflict in accepting the matter, or who cannot maintain a lawyer-client relationship (for example, a suspended or inactive lawyer), may not receive a referral fee.
In practice
Under this opinion, conduct matching its fact pattern is treated as follows. As the rules stood at the time of the opinion, a Wisconsin lawyer receiving a referral fee under SCR 20:1.5(e)(3) took on partner-level responsibility for the representation. The committee concludes the referring lawyer must obtain the client's informed consent to discuss the referral, refer only to competent counsel, obtain the client's signed written consent to the referral terms, monitor the matter and remain available, assume financial responsibility, and be prepared to step in if the receiving lawyer cannot act, while the receiving lawyer must cooperate in fulfilling these duties.
Common questions
Q: Can a Wisconsin lawyer collect a referral fee for little or no work on the matter?
A: Yes, with shared responsibility. The committee concludes a lawyer may receive a referral fee under SCR 20:1.5(e)(3) but must assume the same responsibility for the representation as a partner of the receiving lawyer.
Q: What must the client be told and agree to?
A: The referral terms, in a signed writing. The committee concludes the client must be informed of each lawyer's share and whether the overall fee increases, and must consent in a writing signed by the client, obtained upon or before the referral.
Q: Does the referring lawyer have to monitor the case?
A: Yes. The committee concludes the referring lawyer keeps a lawyer-client relationship and must monitor the matter, remain available, and be prepared to step in if the receiving lawyer becomes unable to act.
Q: Can a lawyer with a conflict or a suspended license take a referral fee?
A: No. The committee concludes a lawyer who cannot form or maintain a lawyer-client relationship, such as one with a non-waivable conflict or a suspended or inactive license, may not receive a referral fee.
Background and rules framework
The opinion interprets SCR 20:1.5(e) / Model Rule 1.5 (division of fees between lawyers not in the same firm, including the referral provision in 20:1.5(e)(3)), SCR 20:5.1 / Model Rule 5.1 (responsibilities of partners and supervisory lawyers, used to define partner-level responsibility), SCR 20:1.6 / Model Rule 1.6 (consent before discussing a referral), and SCR 20:1.7(b) / Model Rule 1.7 (waivable conflicts), together with SCR 20:1.1 (competence) and the signed-writing definition in SCR 20:1.0(q).
Citations and references
Rules of Professional Conduct:
- Wis. SCR 20:1.5(e), 20:1.5(e)(3) / Model Rule 1.5 (division of fees; referral fees)
- Wis. SCR 20:5.1 / Model Rule 5.1 (responsibilities of partners and supervisory lawyers)
- Wis. SCR 20:1.6 / Model Rule 1.6 (consent before discussing a referral)
- Wis. SCR 20:1.7(b) / Model Rule 1.7 (waivable conflicts)
- Wis. SCR 20:1.1 (competence); 20:1.0(q) (signed writing)
Other opinions cited:
- Wisconsin Ethics Op. E-00-01 (withdrawn by this opinion; analysis reaffirmed)
See also
- ABA Formal Op. 474: Referral Fees and Conflicts of Interest
- DC Ethics Op. 245: Referral Fee for Recommending a Registered Agent
- DC Ethics Op. 253: Referral Fee Arrangement With an Insurance Company
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/EF-10-02.pdf
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