You have presented a hypothetical situation in which Law Firm A proposes to advise any referring
attorney or firm that any new matters referred to Law Firm A will result in a division of any fees
received by Law Firm A from the client referred to Law Firm A. The division of fees paid to the
referring attorney or firm will be a percentage of the total fee received by Law Firm A, and Law Firm
A will divide a percentage of fees received from the client with the referring attorney or firm on a
monthly basis. As required by Rule 1.5(e), the client will be advised in writing in advance of the
participation of all lawyers involved, client's consent to the participation of all lawyers involved will
be sought after full disclosure to the client, and the fee will be reasonable. It will be disclosed to the
client in writing and in advance that the referring attorney or firm will not be assuming any
participation in or responsibility for the matter in which Law Firm A will be engaged.
Under the facts you have presented, you have asked the committee to opine as to whether it is
ethically permissible under Rule 1.5(e) for Law Firm A to divide a fee received for representing a
client referred to Law Firm A by a referring attorney or firm, when the referring attorney or firm
assumes no responsibility to the client and will provide no services to the client.
The appropriate and controlling rule applicable to your inquiry is Rule 1.5 (e) which states:
A division of a fee between lawyers who are not in the same firm may be made only if:
Also pertinent to your inquiry is the Committee Commentary which follows Rule 1.5 of the Rules of
Professional Conduct which states in pertinent part:
Paragraph (e) eliminates the requirement in the Virginia Code [of Professional Responsibility] that each lawyer involved in a fee-splitting arrangement assume full responsibility to the client, regardless of the degree of the lawyer's continuing participation. The requirement in the Virginia Code [of Professional Responsibility] was deleted to encourage referrals under appropriate circumstances by not requiring the lawyer making the referral to automatically assume ethical responsibility for all of the activities of the other lawyers involved in the arrangement. However, such an arrangement is acceptable only if the client consents after full disclosure, which must include a delineation of each lawyer's responsibilities to the client.
Applying former DR 2-105 (D)(1) of the Code of Professional Responsibility, the committee has
previously opined that it is improper for an attorney to share legal fees with or pay an attorney merely
for referring a client, where the referring attorney has no further responsibility to the client after the
referral is made. Legal Ethics Opinion 1488 (1992). See also Legal Ethics Opinions 1111, 1160,
1232, 1380, 1459 and 1572. The committee believes that these opinions are overruled, in part, by
Rule 1.5 (e) to the extent that they require the referring attorney to assume responsibility to the client,
after referring a client to another lawyer, as a condition to sharing fees with the other lawyer. The
committee believes that the drafters of the Rules of Professional Conduct intended to permit a lawyer
to receive a share of the legal fees generated by another attorney or law firm to whom a client was
referred, provided that the client consents to such an arrangement and the fee is reasonable. Unlike
former DR 2-105 (D), Rule 1.5 (e) does not require the referring attorney to assume responsibility
to the client. The new rule, in the committee's view, encourages a lawyer to fulfill other ethical
obligations to a client by referring the client to another attorney if he or she believes they lack the
required competence or if there is a conflict.
The committee warns, however, that Law Firm A's marketing efforts, which include promises to
compensate or reward any lawyer or law firm for a referral of clients to Law Firm A, could be viewed
as an attempt(2) to engage in improper solicitation under Rule 7.3 (d)(3)
or "running and capping" in
violation of Chapter 39, Article 7 of Title 54.1 of the Code of Virginia. The committee recommends
that Law Firm A publicize its availability for referrals without reference to compensation for the
referral being made.
In the facts you present, the committee concludes that it is not improper under Rule 1.5(e) for Law
Firm A to divide a fee with a referring attorney as a result of representing a client referred to Law
Firm A by a referring attorney or firm, when the referring attorney or firm assumes no responsibility
to the client and will provide no further services to the client. When involving another attorney in
the client's matter, the referring attorney should take reasonable steps to ensure that competent
representation can be provided through the association of a lawyer of established competence in the
field in question. Comment , Rule 1.1. Thus, a fee division under Rule 1.5 (e) is not proper if the
referring attorney simply makes a referral without assessing the client's legal matter and without
determining whether a referral is appropriate or necessary.
1. Former DR 2-105 (D) of the Code of Professional Responsibility stated:
A division of fees between lawyers who are not in the same firm may be made only if:
(1) The client consents to the employment of additional counsel;
(2) Both attorneys expressly assume responsibility to the client; and
(3) The terms of the division of the fee are disclosed to the client and the client consents thereto.
2. Under the Virginia Rules of Professional Conduct, it is professional misconduct to attempt to violate the Rules. Rule 8.4 (a).
3. Rule 7.3(d) - A lawyer shall not compensate or give anything of value to a person or organization to
recommend or secure employment by a client, or as a reward for having made a recommendation resulting in employment
by a client, except that the lawyer may pay for public communications permitted by Rule 7.1 and the usual and reasonable
fees or dues charged by a lawyer referral service and any qualified legal services plan or contract of legal services
insurance as authorized by law, provided that such communications of the service or plan are in accordance with the
standards of this Rule or Rule 7.1, as appropriate.