Opinion #145. Taking Fee for Referral When Conflict Bars Representation

Issued by the Professional Ethics Commission

Date Issued: September 27, 1994

Facts

Bar counsel has submitted the following request for an opinion.

Attorney A is approached by Company X which wishes to engage Attorney A to bring litigation against Company Z. A represented Z in a past real estate matter, and determines that she is prevented from taking X’s case because of a conflict of interest from her former representation of Z. A will, instead, refer X to Attorney B in another firm. A will also share in B’s fee provided X, after full disclosure, consents to employment of B, to the terms for the division of the fee and the total fee does not exceed reasonable compensation for all the legal services rendered the client. May A refer X to B and share in B’s fee as outlined above?

Opinion

The Commission concludes that such a division of B’s fee for legal services would be inconsistent with A’s determination that she is precluded from participating in the litigation because of her former representation of Company Z.

Bar Rule 3.3(d) Fee Division provides as follows, in pertinent part:
“A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of the lawyer’s law firm or office; unless: (1) the client, after full disclosure, consents to employment of the other lawyer and to the terms for the division of the fees; and (2) the total fee of the lawyers does not exceed reasonable compensation for all legal services they rendered to the client.”

Implicit in the terms of this rule is the concept that the referring lawyer, “the other lawyer” in the rule, has undertaken representation of the client. Subparagraph 1 describes the requirement for client consent “to employment of the other lawyer”. Subparagraph 2 refers to compensation for all legal services “they rendered to the client”. The conclusion is inescapable that the Rule contemplates both lawyers being employed in some sense by the client, even if the referring lawyer does not expect to spend time proportional to her fee, or any time for that matter, or expect to be consulted about the litigation after her referral.

A further reason for the Commission’s conclusion, and support for its reading of Rule 3.3(d), is that a compensated referral to a particular lawyer is in and of itself representation of Company X in the matter on which it proposes to commence litigation. Attorney A’s determination that a conflict exists precludes her undertaking any representation of Company X in the matter without Z’s consent. Exercising a judgment about the lawyer most capable of handling the litigated matter in question is such representation. It requires at least a minimal analysis of the appropriate litigation theory, strategy and tactics, followed by a judgment that the lawyer to be recommended has the experience and professional skills required to pursue the indicated course of action. The question implies that Attorney A has not merely provided Company X with a list of lawyers and firms more or less equally qualified to undertake the litigation. The recommendation of a particular lawyer with the expectation of compensation would necessarily be tainted by the conflict that Attorney A has determined to exist.


Enduring Ethics Opinion

Enduring Ethics Opinion #145 [October 2013]