Can a lawyer who referred a contingent-fee case and was then disbarred before settlement still collect a share of the fee from the lawyer who handled the case?

Plain-English summary

Attorney #1 referred a contingent-fee case to Attorney #2 and was then disbarred before Attorney #2 settled the case. The inquiry asked whether it is ethical for Attorney #1 to receive a fee from Attorney #2. The committee said the facts create a clear conflict between RPC 5.4(a), which prohibits sharing legal fees with nonlawyers, and RPC 1.5(e)(2), the fee-splitting provision, and concluded that RPC 1.5(e)(2) prevails. The committee assumed Attorney #1's disbarment was unrelated to the referred case or client.

The committee reasoned that RPC 5.4(a) allows fee sharing with a nonlawyer only in specified circumstances, none of which applied, but that Attorney #1 may have performed some services before disbarment as a lawyer in good standing (not a "nonlawyer"), which should entitle him to compensation for those services. It cited Washington and out-of-state authority allowing a discharged or disbarred attorney to recover for services rendered (Barr v. Day; Sympson v. Osborne; Harris Trust), and noted In re Hawkins required return of payments where the attorney performed no services. Barring recovery would not further the purpose of RPC 5.4(a), which the committee described as removing the possibility of a lay person controlling the litigation or lawyer for the lay person's own profit; a disbarred lawyer cannot influence the litigation.

The committee said fee splitting is acceptable only if RPC 1.5(e)(2) is met: the division is in proportion to each lawyer's services (or the client agrees in writing to joint responsibility); the client is advised and does not object; and the total fee is reasonable. Because Attorney #1 is disbarred, there is no opportunity for the client to agree to joint responsibility, so the division can only be in proportion to services provided. On the proposed flat 10% payment, the committee said RPC 1.5(e)(2) does not provide for a flat percentage: Attorney #1 is entitled to a share equal to the proportion of services he actually provided before disbarment, whether that is 10% or 90%.

Currency note

This opinion was issued in 2002, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. Washington's fee-division rule was later renumbered and revised (the current division-of-fees provision is RPC 1.5(e)). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

In practice

Under the Washington rules as they stood at the time of the opinion, the committee treated a disbarred referring lawyer who had performed services before disbarment as eligible to recover a share of a contingent fee, with RPC 1.5(e)(2) controlling over RPC 5.4(a). The opinion conditions that recovery on the client being advised and not objecting and the total fee being reasonable, and limits the share to the proportion of services the disbarred lawyer actually provided rather than a flat negotiated percentage. The committee assumed the disbarment was unrelated to the referred matter.

Common questions

Q: Can a disbarred lawyer who referred a case still get paid part of the fee?

A: The committee concluded that, assuming the lawyer performed services before disbarment, he may recover compensation in proportion to those services under RPC 1.5(e)(2), which the committee said prevails over RPC 5.4(a)'s bar on sharing fees with nonlawyers.

Q: Doesn't RPC 5.4(a) prohibit sharing fees with a disbarred lawyer as a nonlawyer?

A: The committee said RPC 5.4(a) allows fee sharing with a nonlawyer only in specified circumstances, but that work the lawyer performed before disbarment was done as a lawyer in good standing (not a "nonlawyer"); barring recovery would not serve RPC 5.4(a)'s purpose of preventing a lay person from controlling the litigation for profit, since a disbarred lawyer cannot influence the case.

Q: Can the two lawyers just agree on a flat 10% for the disbarred lawyer?

A: No. The committee said RPC 1.5(e)(2) does not provide for a flat percentage payment; the disbarred lawyer is entitled to a share equal to the proportion of services he actually provided before disbarment, whether that is 10% or 90%.

Q: What conditions must be met for the fee division?

A: The committee said the division must be in proportion to the services provided (joint responsibility is unavailable because the disbarred lawyer cannot share it with the client's agreement), the client must be advised and not object, and the total fee must be reasonable.

Background and rules framework

The opinion applies Washington RPC 5.4(a) (sharing legal fees with a nonlawyer; corresponding to Model Rule 5.4) and RPC 1.5(e)(2) (division of fees between lawyers; corresponding to Model Rule 1.5(e)). The committee treated the work a lawyer performs before disbarment as services of a lawyer in good standing and let the fee-division rule control, conditioning recovery on proportional division, client notice without objection, and a reasonable total fee. The opinion reflects Washington's pre-2006 rule numbering.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5 / Washington RPC 1.5(e)(2) (division of fees between lawyers)
• Model Rule 5.4 / Washington RPC 5.4(a) (sharing legal fees with a nonlawyer)

Cases:

• Barr v. Day, 124 Wn.2d 318, 879 P.2d 912 (Wash. 1994), attorney discharged under a contingency agreement before the contingency may recover for services under quantum meruit.
• In re Hawkins, 81 Wn.2d 504, 503 P.2d 95 (Wash. 1972), suspended attorney required to return payments because he performed no services.
• Sympson v. Osborne, 406 S.W.2d 26 (Mo. 1966), disbarred attorney may recover compensation for services performed before disbarment from the attorney who assumes the litigation; distinguishing disbarment from abandonment.
• Harris Trust & Savings Bank v. Chicago College of Osteopathic Medicine, 116 Ill. App. 3d 906, 452 N.E.2d 701 (Ill. App. 1983), reviewing cases allowing a disbarred attorney to recover the reasonable value of services provided before disbarment.
• Contrary authority noted in the opinion's footnote (which the committee declined to follow): Royden v. Ardoin, 160 Tex. 338, 331 S.W.2d 206 (Tex. 1960); Brandon v. Newman, 243 Ga. App. 183, 532 S.E.2d 743 (2000); Lee v. Cherry, 812 S.W.2d 361 (Tex. App. 1991).

Other opinions cited:

• Connecticut Bar Ass'n Committee on Professional Ethics, Op. 97-22 (1997): a firm may compensate a former partner who surrendered his license, based on work actually performed, with client consent and within the original fee arrangement.

See also

• WSBA Ethics Op. 1172: Dividing Fees With a Lawyer About to Be Suspended
• WSBA Ethics Op. 1072: Referral Fee Division and Joint Responsibility
• WSBA Ethics Op. 1117: Dividing a Contingent Fee With a Departing Lawyer
• WSBA Ethics Op. 1211: Fee-Splitting With a Service Center

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1224

Original opinion text

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

Advisory Opinion: 1981
Year Issued: 2002
RPC(s): RPC 5.4(a), RPC 1.5(e)(2)
Subject: sharing attorney fees with disbarred lawyer

The inquiry concerns a situation where Attorney #1 refers a contingent fee case to Attorney #2, and Attorney #1 is disbarred prior to settlement of the contingent fee case by Attorney #2. Is it ethical for Attorney #1 to receive a fee from Attorney #2?

The committee opined that while the factual circumstances present a conflict between RPC 5.4(a) and RPC 1.5(e)(2), RPC 1.5(e)(2) should prevail and, assuming Attorney #1 provided services prior to disbarment, he is entitled to recover compensation in proportion to the services he provided so long as the client is advised of the circumstances and does not object, and the total fee is reasonable. Although not specified in the inquiry, the committee assumes that Attorney #1’s disbarment is not related to the case or client that was referred to Attorney #2.

The factual circumstances presented in the inquiry result in a clear conflict between RPC 5.4(a), the prohibition of fee sharing with non-lawyers and RPC 1.5(e)(2), and the fee-splitting provisions. It is the opinion of the authors of this response that the provisions of RPC 1.5(e)(2) prevail over RPC 5.4(a); and, therefore, Attorney #1 should be allowed to recover a proportion of the fees in compliance with the provisions of RPC 5.4(e)(2).

RPC 5.4(a) allows an attorney to share legal fees with a nonlawyer only under certain circumstances, none of which are applicable under the factual circumstances presented in this inquiry. However, the factual circumstances presented here indicate that Attorney #1, prior to his disbarment, may have performed some services as an attorney in good-standing (i.e., not a “nonlawyer”), which should entitle Attorney #1 to compensation for such services. See Barr v. Day, 124 Wn.2d 318, 329-30, 879 P.2d 912 (1994) (holding attorney under contingency agreement that is discharged prior to contingency is entitled to recover for services rendered under quantum meruit); In re Hawkins, 81 Wn.2d 504, 508-10, 503 P.2d 95 (1972) (requiring disbarred attorney to return retainer payments received after he was suspended because attorney performed no services to be entitled to such payments); see Sympson v. Osborne, 406 S.W.2d 26, 32 (Missouri 1966) (holding disbarred attorney is entitled to recover compensation for services performed prior to disbarment from attorney who assumes control of the litigation); Harris Trust & Savings Bank v. Chicago College of Osteopathic Medicine, 116 Ill. App. 3d 906, 452 N.E.2d 701 1983) (reviewing cases where disbarred attorney held to be entitled to compensation for the reasonable value of services provided before disbarment). (See Footnote) Prohibiting Attorney #1 from recovering compensation for services performed would not further the purpose of RPC 5.4(a), which is to remove the possibility of control over the litigation or lawyer by a lay person interested in his or her own profit rather than the client’s well-being. See Annotated Model Rules of Professional Conduct 444 (4th ed. 1999). Here, Attorney #1 is prohibited from providing legal services by way of his disbarment and, therefore, cannot influence Attorney #2 in the litigation subsequent to Attorney #1’s disbarment.

The sharing of fees or a fee-splitting agreement is ethically acceptable only if the requirements of RPC 1.5(e)(2) are met: (1) the fee division is in proportion to the services provided by each lawyer or the client agrees in writing that each lawyer assumes joint responsibility; (2) the client is advised and does not object to the participation of both attorneys; and (3) the total fee is reasonable. Barr v. Day, 124 Wn.2d 318, 329-330 n.2, 879 P.2d 912 (1994); see also Conn. Bar Ass’n Comm. on Professional Ethics, op. 97-22 (1997) (law firm may compensate former law partner, who has voluntarily surrendered license and no longer practices law, in amount rationally based on work partner actually performed, provided each affected client consents to payments and fee within original fee arrangement with client as required by ethical rules). Here, because Attorney #1 is disbarred, there is no opportunity for the client to agree to the joint responsibility of the attorneys and, therefore, the fee division can only be in proportion to the services provided by each lawyer. The inquiry fails to identify any services provided by Attorney #1 prior to disbarment. Assuming Attorney #1 provided some services prior to disbarment, the client is advised of the circumstances and does not object, and the total fee is reasonable, Attorney #1 should be entitled to compensation in proportion to the services he provided prior to disbarment.

The factual circumstances presented in the inquiry request guidance on the propriety of paying Attorney #1 10% of the total fees. RPC 1.5(e)(2) does not provide for a flat percentage-based payment to Attorney #1. If the services provided by Attorney #1 prior to disbarment amount to 10% of the total services provided to the client, then Attorney #1 is entitled to 10% of the total fees pursuant to RPC 1.5(e)(2). Otherwise, RPC 1.5(e)(2) specifically requires that Attorney #1 be compensated for the proportion of services he provided, whether such proportion is 10% or 90%.

(Footnote: It should be noted that there is an abundance of authority that suggests an attorney who is disbarred while working under a contingency agreement may not necessarily be entitled to a fee at all. See Annotated Model Rules of Professional Conduct 58-60 (4th ed. 1999) (explaining that under Model Rule of Professional Conduct 1.5, while a discharged attorney may be entitled to fees under quantum meruit, “[a] lawyer who withdraws from a contingent-fee case risks forfeiture of all fees, even in quantum meruit.”); Brandon v. Newman, 243 Ga. App. 183, 187, 532 S.E.2d 743 (2000) (refusing to enforce fee-sharing agreement where disbarred attorney would be compensated for referral and other services because agreement violated public policy of ethical rules prohibiting fee-splitting contracts with non-lawyers); Lee v. Cherry, 812 S.W.2d 361, 364 (Tex. App. 1991) (holding that attorney who was licensed at the time of referrals but subsequently disbarred may receive referral fees as long as the attorney has completed the legal work on the case prior to disbarment); Royden v. Ardoin, 160 Tex. 338, 331 S.W.2d 206, 209 (Tex. 1960) (holding that an attorney who is disbarred or suspended prior to the completion of his contingent fee contract is not entitled to collect fees for services rendered). However, these authorities liken the circumstances to where an attorney abandons the client. Here, Attorney #1 did not abandon the client, but rather took affirmative steps to ensure the client would be represented upon the attorney’s disbarment. Accordingly, these authors disagree with the underlying rationale of the authorities contained in this footnote and do not rely upon such authorities. See Sympson v. Osborne, 406 S.W.2d 26, 32 (Missouri 1966) (distinguishing disbarment from abandonment))