(March 1, 1991)
Note: Out-of-state lawyers may obtain pro hac vice admission in Florida no more than 3 times in a single 365 day period. See, Rules Regulating The Florida Bar 1-3.10, 1-3.11, and 4-5.5; Rule of Judicial Administration 2.510.
RPC: 4-1.5; 4-1.5(F); 4-1.5(F)(1) and (2); 4-1.5(F)(3)(b); 4-1.5(F)(4)(d); 4-1.5(G) 4-1.5(G)(1) and (2); 4-5.4(a)
Opinions: 60-18, 62-3, 88-10
Case: The Florida Bar re Amendments to the Rules Regulating The Florida Bar, 519 So.2d 971 (Fla. 1987)
The Committee has been asked to render an opinion whether a Florida attorney may ethically divide a fee with a non-Florida attorney. This inquiry has been made by a number of Florida Bar members who have questioned the propriety of sharing, usually in a referral context, a fee with an attorney who is not admitted to The Florida Bar.
Four possible fee division scenarios will be discussed. They are:
1. A member of an out-of-state bar lives in a condominium in Florida. A resident of the condominium who needs legal advice talks to the out-of-state attorney. The attorney refers the resident to a Florida attorney.
2. A resident of another state consults an attorney out of state regarding a criminal matter in Florida. The out-of-state attorney decides that a Florida attorney must be associated on the matter.
3. A resident of another state is injured in Florida while on vacation. The injured person consults with an attorney in the person's home state. That attorney refers the case to a Florida attorney who charges a contingent fee.
4. A Florida attorney refers a case to a non-Florida law firm to be prosecuted in a foreign jurisdiction. That jurisdiction has a rule which permits a 50% “referral fee.”
(In this opinion, the term “Florida attorney” is used to mean a Florida Bar member who resides in Florida.)
Rule 4-1.5 of the Rules Regulating The Florida Bar, (hereinafter “the Rule”), governs attorney's fees. Specifically, paragraph (G) sets forth the requirements governing the division of fee in any type of case:
Subject to the provisions of paragraph (F)(4)(d), 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.
Paragraph (G)(1) of the Rule permits a division of fee on a quantum meruit basis, and does not require a written agreement with the client. The comment to the Rule, however, states that the division of fee must be disclosed to the client. Paragraph (G)(2) of the Rule permits attorneys who are not in the same firm to divide a fee provided that the client agrees to the division in writing and further provided that each attorney agrees in writing to assume joint legal responsibility and to be available for consultation with the client.
The division of a fee in a contingent fee case is subject both to the provisions of paragraph (G) and to additional restrictions found in paragraph (F) of the Rule. Unlike the division of fees governed solely by paragraph (G), the division of any contingent fee between lawyers who are not in the same firm must be pursuant to a written agreement with the client in which the attorneys agree to assume joint legal responsibility. Rule 4-1.5(F)(1) and (2). This requirement applies to a division of a contingent fee in any matter. Thus, paragraph (G)(1), which does not require a written agreement, is superseded by paragraph (F) in any contingent fee case.
In certain types of contingent fee cases, paragraph (F)(4)(d) of Rule 4-1.5 sets forth further restrictions on any division of fee between attorneys who are not in the same firm. Specifically, paragraph (F)(4)(d) of the Rule applies to:
[a]ny fee in an action or claim for personal injury or for property damages or for death or loss of services resulting from personal injuries based upon tortious conduct of another, including products liability claims, whereby the compensation is to be dependent or contingent in whole or in part upon the successful prosecution or settlement thereof[.]
Regarding the division of a fee in these contingent fee personal injury-type cases, paragraph (F)(4)(d) provides in pertinent part:
As to lawyers not in the same firm, a division of any fee within paragraph (F)(4) shall be on the following basis:
1. To the lawyer assuming primary responsibility for the legal services on behalf of the client, a minimum of 75% of the total fee.
2. To the lawyer assuming secondary responsibility for the legal services on behalf of the client, a maximum of 25% of the total fee. Any fee in excess of 25% shall be presumed to be clearly excessive.
3. The 25% limitation shall not apply to those cases in which two (2) or more lawyers or firms accept substantially equal active participation in the providing of legal services. In such circumstances counsel shall apply for circuit court authorization of the fee division in excess of 25%, based upon a sworn petition signed by all counsel which shall disclose in detail those services to be performed. The application for authorization of such a contract may be filed as a separate proceeding before suit or simultaneously with the filing of a complaint. Proceedings thereon may occur before service of process on any party and this aspect of the file may be sealed. Authorization of such contract shall not bar subsequent inquiry as to whether the fee actually claimed or charged is clearly excessive. An application under this section shall contain a certificate showing service on the client and The Florida Bar. Counsel may proceed with representation of the client pending approval.
Only in a case governed by paragraph (G)(1) (i.e., in a case in which the fee is not a contingent fee and both attorneys actually work on the case), may attorneys divide a fee without entering into a written agreement with the client which discloses how the fee will be divided and states that the attorneys agree to assume joint responsibility.
In any other type of fee division, (i.e., a fee division to which paragraph (G)(1) is not applicable) each attorney who shares in the fee must agree in writing to assume legal responsibility for the representation and to be available to consult with the client. Therefore, in such cases, it would be unethical to divide a fee with an attorney who does not at a minimum agree in writing to accept legal responsibility for the representation and to be available for consultation with the client.
With that background in mind, the above four scenarios will now be discussed. The first hypothetical scenario may be resolved by application of prior Professional Ethics Committee opinions and the preceding summary of Rule 4-1.5. Opinions 60-18 and 62-3 are relevant to the first scenario. In these opinions the Committee concluded that it would be improper for a Florida attorney to divide a fee with a non-Florida attorney who resides in Florida and refers a case to the Florida lawyer. The Committee stated that it may constitute aiding the unauthorized practice of law to accept cases referred by the non-Florida attorney. Additionally, the Committee stated that the restriction on dividing a fee with a non-lawyer prohibits a Florida attorney from sharing a fee with an inactive non-Florida lawyer residing in Florida. Opinion 60-18. See also Rule 4-5.4(a) (prohibiting an attorney from sharing fees with a non-lawyer).
In Opinion 62-3 the Committee determined that it would be unethical for a Florida Bar member to divide a fee with an out-of-state attorney residing in Florida because there could not
legitimately be a division of services or responsibility in the matter.
As noted above, the fee division provisions of Rule 4-1.5 require an attorney to either work on a matter or assume joint legal responsibility in order to receive a portion of a fee (depending upon whether the fee is on a contingent or non-contingent basis). Therefore, in hypothetical scenario one the Florida attorney could not divide a fee with the resident
non-Florida attorney who refers a case because, as discussed in Opinions 60-18 and 62-3, the non-Florida attorney cannot practice law in Florida or agree to assume joint responsibility as is required by the rules. A division of fee in such a case would constitute improper fee-sharing with a non-attorney and could constitute aiding in the unlicensed practice of law.
Regarding the second and third hypothetical scenarios, in which a Florida attorney accepts a referral from an out-of-state attorney, the Florida attorney may divide a fee with the referring attorney provided the division is in compliance with Rule 4-1.5. Any case referred to a resident Florida Bar member practicing Florida law presumably will be related to Florida or Florida law. A member of The Florida Bar is obligated to comply with the Rules Regulating The Florida Bar, including the fee division rules. Therefore, it would be unethical for a Florida attorney to pay a referral fee to an out-of-state attorney absent compliance with the applicable fee division rules, regardless of whether the referring attorney is a member of The Florida Bar.
In the second scenario the fee division is specifically governed by paragraph (G) of the Rule. Paragraph (F) is inapplicable because a fee in a criminal case cannot be contingent. See Rule 4-1.5(F)(3)(b). Thus, the Florida attorney ethically may share a fee with the out-of-state attorney in this case either based on work done or by written agreement with the client in accordance with the requirements of paragraph (G). Unlike the non-Florida attorney who resides in Florida, a practicing out-of-state attorney would be able to legitimately provide some legal services to the out-of-state client, thereby avoiding the problems cited in Opinions 60-18 and
The third scenario triggers the application of paragraphs (F)(1), (F)(2) and F(4)(d) of Rule 4-1.5 because a contingent fee is involved. Accordingly, the attorney who assumes primary responsibility must receive a minimum of 75% of the total fee and the attorney assuming secondary responsibility may receive a maximum of 25% of the total fee. The fee division agreement must be reduced to writing and the client must consent in writing to the agreement. As in the second scenario, presumably the out-of-state attorney can provide services to the
out-of-state client thus avoiding the problems noted in the cited ethics opinions.
If, as in scenario four, a Florida attorney refers a case to an out-of-state attorney and participates in the fee, the referring attorney must comply with paragraph (G) of the Rule. In contingent fee cases paragraphs (F)(1) and (2) also apply. Furthermore, paragraph (F)(4)(d) is applicable in personal injury-type contingent fee cases. If the applicable fee division rules are followed, it will be ethical for the Florida attorney to divide a fee with the out-of-state attorney. In adopting the fee division limitations set forth in Rule 4-1.5(F)(4)(d), the Supreme Court of Florida stated that those limitations “will not apply to nonresident bar members unless those nonresidents practice in matters of Florida law.” 519 So.2d 971, 972. That is the only exception to the 25% limitation allowed by the court (aside from the exception contained in the rule itself
for true co-counsel who obtain circuit court authorization for a different fee-division arrangement). Nothing in the Supreme Court's order, the rule, or the comment to the Rule suggests that the 25% limitation is inapplicable when a Florida Bar member refers a case to an attorney in another state.
Nevertheless, in cases where the referring Florida Bar member participates in the trial of the out-of-state case, choice of law principles should determine whether the Florida contingent fee rule applies. See Opinion 88-10. In example number 7 of Opinion 88-10, the Committee considered a situation in which an out-of-state attorney with an out-of-state client and an
out-of-state lawsuit sought to have a Florida attorney (who was either licensed in the other state or admitted there pro hac vice) participate in the trial of the case. The Committee opined that the other state had a more significant relationship to the client and the cause of action than did Florida; therefore, the Committee concluded that the other state's contingent fee rules were applicable.