The Florida Bar
Payment of referral fee to attorney who, subsequent to execution of fee-division agreement, has become suspended, disbarred, or resigned from The Florida Bar, is to be made on a quantum meruit basis.
(July 15, 1990)
(July 15, 1990)
Opinions: 65-21, 66-20, 72-16
Misc: Rule 3-7.11, Rules Regulating The Florida Bar
A client with a personal injury claim was referred to the inquiring attorney by another attorney in early 1988. The inquirer agreed to represent the client on a contingent fee basis. The inquirer also agreed to pay to the referring attorney 25% of the total attorney's fees received in the case.
In late 1988 or early 1989 the inquirer learned that the referring attorney was no longer a member of The Florida Bar. The client's case was settled in July 1989. The inquirer is now concerned about the propriety of paying the 25% referral fee to the referring attorney, who is not presently licensed to practice law in Florida.
The regulations governing division of fees between attorneys who are not in the same firm are set forth in Rule 4-1.5 of the Rules Regulating The Florida Bar. Section (G) of Rule 4-1.5 provides:
(G) Subject to the provisions of paragraph (F)(4)(d) [which limits a referring attorney's share of the fee in a personal injury-type case to 25% absent court approval], a division of fee between lawyers who are not in the same firm may be made only if the total fee is reasonable and:
(1) The division is in proportion to the services performed by each lawyer; or
(2) By written agreement with the client:
(a) Each lawyer assumes joint legal responsibility for the representation and
agrees to be available for consultation with the client; and
(b) The agreement fully discloses that a division of fees will be made and the basis upon which the division of fees will be made.
Presumably the inquirer and the referring attorney entered into the written agreement with the client described in section (G)(2).
The former Code of Professional Responsibility provided that the only permissible way in which attorneys not in the same firm could share a legal fee was in proportion to the work performed by each attorney. Referral fees were not authorized. When the Rules Regulating The Florida Bar became effective on January 1, 1987, this long-standing absolute prohibition on referral fees was modified. Rule 4-1.5(G), quoted above, now permits attorneys not in the same firm to divide legal fees either: (1) in proportion to the work performed by each; or (2) pursuant to a written agreement, signed by the client and all attorneys who are to participate in the fee, that sets forth the manner in which the fee is to be divided and provides that each attorney will assume joint legal responsibility for the representation and be available for consultation with the client. In situations where the fee is to be divided other than in proportion to the work performed (e.g., the typical referral situation), an at torney's acceptance of joint legal responsibility for the case and agreement to be available to consult with the client is the quid pro quo for the attorney's receipt of a portion of the fee that does not represent payment for work performed.
As noted, the former Code allowed attorneys who were not in the same firm to divide fees only in proportion to the work performed by each attorney. In various advisory opinions issued under the old rule, the Professional Ethics Committee stated that it was not unethical for an attorney to pay a suspended or disbarred attorney for services that the suspended or disbarred attorney performed prior to suspension or disbarment. See Florida Opinions 72-16; 66-20; 65-21.
The current fee-division rule, however, allows an attorney who does not perform services to receive a portion of the fee in exchange for his or her written agreement to assume joint legal responsibility and to be available for consultation. In view of this rule, the Committee concludes that it is ethically permissible for an attorney to pay, pursuant to a properly executed fee-division agreement, a suspended or disbarred referring attorney for the responsibility that the attorney did assume and the time that he or she was available for consultation prior to suspension or disbarment.
This quantum meruit approach is both logical and reasonable. Because the Florida Supreme Court decided that it is permissible for an attorney to receive a portion of a fee simply for agreeing in writing to assume joint responsibility for a representation and to be available for consultation with the client, a referring attorney who is suspended or disbarred during the course of the representation should not be denied all of his or her portion of the fee. On the other hand, a referring attorney who is suspended or disbarred at some point during the representation becomes unable to fulfill the contractual obligations of responsibility and availability and, therefore, should not receive the entire portion of the fee that he or she contracted for in the required written agreement. Instead, the suspended or disbarred referring attorney ethically may receive payment on a quantum meruit basis for the responsibility that he or she did assume and the time that he or she was available for consul tation while licensed to practice.
This opinion also applies to attorneys who resign from The Florida Bar pursuant to Rule 3-7.11.