June 2017Volume 105Number 6Page 22

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Attorney Fees

From the Newsletters - Referring cases the right way

Referring cases can be good for clients and the referring attorney - just make sure you know what your obligations are.

"How to ethically and profitably refer personal injury clients"
By Dan Breen
The Bottom Line - May 2017

You get a call from a client who was in a car crash a few days ago and his back still hurts. Should he talk to a lawyer, he wonders? He notes that the driver who hit him doesn't have insurance.

You don't do personal injury work, so you wonder 1) is this case worth referring and, if so, 2) how do you make sure you handle the referral right? Handling it right means following the applicable ethics rules, understanding your malpractice risk, and making sure you get your referral fee.

Plaintiffs' lawyer Dan Breen acknowledges that "many of the cases that look like this do not turn into much." Then again, sometimes these clients "have injuries that progress to the point of surgery" and have uninsured motorist coverage. The combination "of a significant injury plus a viable insurance policy means that a referral to a trusted personal injury attorney could result in a handsome…fee once the case is resolved," he writes. "When in doubt, it's usually better to refer it to someone…."

Breen offers the following additional advice to would-be referring attorneys.

Find a firm you like to work with. Remember that trial lawyers value relationships with referring lawyers. "[O]ur referral sources are our bread and butter, so we take great care to ensure they are kept in the loop and contacted about cases and brought into client communication when appropriate," Breen writes. "Our office happily assumes that we will be paying one-third of our fee on any personal injury case that comes in from another lawyer." Breen recommends spelling out "how referral fees are to be handled (to the lawyer or to the firm) up front, so that there are no surprises or arguments when money comes in."

Understand the ethics rules governing fee splitting. Breen points to Rule 1.5(e) of the Illinois Rules of Professional Conduct, which requires among other things that "[t]he client agree[] to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing," as well as that "[t]he total fee is reasonable." He also recommends that referring lawyers review "[R]ule 1.5(c) as to other requirements of contingent fee agreements and 1.5 itself generally as to fees."

Understand your malpractice exposure. "If you send a case to a lawyer who misses the statute of limitations, fails to make a timely disclosure, misses a discovery deadline, or does anything else that could get a lawyer sued - you will be on the hook for those damages as well," Breen cautions. He recommends making "any necessary disclosures to your malpractice carrier" and "[c]alendar[ing] the statute of limitations independently of the referring attorney. If nothing else, it will help you sleep better at night."

Beware of conflicts of interest. "This one comes up most often with large firm transactional or civil defense lawyers who have business to refer to their plaintiff litigation peers," Breen writes. The commentary to Rule 1.5(e) says that "joint financial responsibility for the representation entails financial responsibility for the representation as if the lawyers were associated in a general partnership."

Breen cautions that large firm lawyers who refer cases must consider whether they could become entangled in a conflict if "one of the firm's national corporate clients needs to be named as a defendant. Even if the large-firm lawyer does not have a current conflict of interest, the risk of a potential future conflict…might not be worth the benefit of a modest referral fee on a personal injury case," he writes.

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