Can a Washington lawyer pay or receive a fee from another lawyer purely for referring a client, where the referring lawyer does no work and takes no responsibility?

Plain-English summary

The inquirer asked whether a lawyer may pay to or receive from another lawyer a fee solely for a referral, where the referring lawyer neither performs work on the matter nor assumes any responsibility for the representation. The committee concluded that such a pure referral fee is prohibited under RPC 7.2(b) and RPC 1.5(e).

The committee explained that RPC 7.2(b), with exceptions not applicable here, prohibits a lawyer from giving "anything of value to a person for recommending the lawyer's services." Separately, RPC 1.5(e), as revised in 2006, permits fee splitting between lawyers not in the same firm only through an authorized WSBA or county bar lawyer referral service, or where the division is in proportion to each lawyer's services or each assumes joint responsibility, the client agrees in a writing confirming each lawyer's share, and the total fee is reasonable. Because the proposed referral fee is not proportioned to services and the referring lawyer assumes no responsibility, it fails RPC 1.5(e); and because RPC 7.2(b) bars paying anything of value for a recommendation, the payment is independently prohibited. The committee relied on Washington appellate cases applying prior, similar versions of the rule to forbid pure "forwarding" and "referral" fees as fee splitting in substance, including Belli v. Shaw and McNeary v. American Cyanamid Co., and on Professor Aronson's observation that pure referral fees are impermissible under RPC 7.2(b) even if not barred by RPC 1.5(e).

In practice

Under the Washington rules as they stood at the time of the opinion, the committee treated a naked referral fee between lawyers as prohibited on two independent grounds. RPC 7.2(b) bars giving anything of value for recommending a lawyer's services, and the committee read "person" to include another lawyer. RPC 1.5(e) allows inter-firm fee division only where it tracks the services performed or is backed by joint responsibility, with client agreement confirmed in writing and a reasonable total fee, or where it runs through an authorized bar referral service. The opinion holds that a fee paid purely for sending a client, with no work and no responsibility, satisfies neither rule, consistent with Washington appellate decisions treating such forwarding fees as fee splitting in substance.

Common questions

Q: Can a Washington lawyer pay another lawyer just for sending a client?

A: No. The committee concluded that a pure referral fee, with no work performed and no responsibility assumed, is prohibited under RPC 7.2(b) and RPC 1.5(e).

Q: When can two lawyers in different firms split a fee?

A: Under RPC 1.5(e), only where the division is in proportion to each lawyer's services or each assumes joint responsibility, the client agrees in a writing confirming each share, and the total fee is reasonable, or where the division runs through an authorized WSBA or county bar referral service.

Q: Does RPC 7.2(b) apply when the recipient is another lawyer rather than a non-lawyer?

A: Yes. The committee read RPC 7.2(b)'s bar on giving anything of value "to a person" for recommending a lawyer's services to reach another lawyer, citing Professor Aronson's analysis that pure referral fees are impermissible under that rule.

Background and rules framework

The opinion interpreted Washington RPC 7.2(b) (Model Rule 7.2, the bar on giving anything of value for recommending a lawyer's services) and RPC 1.5(e) as revised in 2006 (Model Rule 1.5, division of fees between lawyers not in the same firm). It applied Washington appellate decisions construing earlier versions of the fee-splitting rule to forbid pure forwarding and referral fees.

Citations and references

Rules of Professional Conduct:

• Model Rule 7.2 / Washington RPC 7.2(b) (anything of value for recommending a lawyer's services)
• Model Rule 1.5 / Washington RPC 1.5(e) (division of fees between lawyers not in the same firm)

Cases:

• Belli v. Shaw, 29 Wn. App. 875, 631 P.2d 980 (1981), aff'd, 98 Wn.2d 569, 657 P.2d 315 (1983), pure forwarding/referral fees treated as fee splitting
• McNeary v. American Cyanamid Co., 105 Wn.2d 136, 712 P.2d 845 (1986), application of the fee-splitting rule

Other authorities:

• Robert H. Aronson, An Overview of the Law of Professional Responsibility: The Rules of Professional Conduct Annotated & Analyzed, 61 Wash. L. Rev. 823, 840 n.82 (1986)

See also

• WA Ethics Op. 2171: legal disclaimer for a lawyer referral database
• WA Ethics Op. 2169: limited-scope legal services to a brokerage's customers
• AL Ethics Op. 1993-20: Rule 5.4 bars fee splitting with a non-lawyer

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1634

Original opinion text

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

Advisory Opinion: 2189
Year Issued: 2008
RPC(s): RPC 7.2(b), 1.5(e)
Subject: paying or accepting referral fees from another lawyer for client referrals

The inquirer asks whether it is permissible for a lawyer to pay to or receive from another lawyer a fee solely for referral, in which the referring lawyer neither performs work on the matter nor assumes any responsibility for the representation of the referred client. The payment to or receipt from another lawyer of a fee solely for referral is prohibited under RPC 7.2(b) and RPC 1.5(e). See also Belli v. Shaw, 29 Wn. App. 875, 881-82, 631 P.2d 980 (1981), aff'd, 98 Wn.2d 569, 577-78, 657 P.2d 315 (1983); Robert H. Aronson, An Overview of the Law of Professional Responsibility: The Rules of Professional Conduct Annotated & Analyzed, 61 WASH. L. REV. 823, 840 n.82 (1986).

DISCUSSION

With specified exceptions not applicable here, RPC 7.2(b) prohibits a lawyer from giving “anything of value to a person for recommending the lawyer’s services.” In addition, RPC 1.5(e), as revised in 2006, permits fee splitting between lawyers who are not in the same firm only where the division involves an authorized WSBA or county bar association lawyer referral service, or where the following requirements are met:

(a) the division is in proportion to the services provided by each lawyer or each lawyer assumes joint responsibility for the representation; (b) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and (c) the total fee is reasonable.

Washington appellate cases have applied prior, similar versions of the “fee splitting” rule to prohibit the payment between lawyers of pure “forwarding” and “referral” fees, recognizing that payment of such fees is in substance a fee-splitting arrangement. See, e.g., Belli v. Shaw, 29 Wn. App. 875, 881-82, 631 P.2d 980 (1981), aff'd, 98 Wn.2d 569, 577-78, 657 P.2d 315 (1983); McNeary v. American Cyanamid Co., 105 Wn. 2d 136, 139-42, 712 P.2d 845 (1986).

Paying a pure referral fee to anyone is generally prohibited by RPC 7.2(b). Also, because the referral fee proposed by the inquirer is not in proportion to services rendered, and the referring lawyer is not assuming any responsibility for the representation, payment and receipt of the fee is prohibited under RPC 1.5(e). As Professor Robert Aronson noted when the RPCs were first adopted in Washington, “Unless another lawyer is not considered ‘a person,’ then pure referral fees are impermissible under RPC 7.2(c) [now subsection (b)], even if not barred by RPC Rule 1.5(e)(2).” Robert H. Aronson, An Overview of the Law of Professional Responsibility: The Rules of Professional Conduct Annotated & Analyzed, 61 WASH. L. REV. 823, 840 n.82 (1986). The same result is reached under the current version of the rules.