The Client-Lawyer Relationship · 10-16% of the exam
5.1.4Who may share a fee, and who may be paid for a referral, side by side
Three rules police the same money from three directions: Rule 1.5(e) for a split between lawyers, Rule 5.4(a) for a share going to a nonlawyer, and Rule 7.2(b) for anything of value paid for a recommendation. The exam picks one recipient and asks whether the payment is allowed. Side by side:
Who gets the money, and whether the Rules allow it
| Who gets the money | Allowed? | Conditions | Source |
|---|---|---|---|
| A lawyer in the same firm | Yes, freely | Rule 1.5(e) governs only a division "between lawyers who are not in the same firm" | Rule 1.5(e) |
| A lawyer in another firm | Yes, if all three conditions are met | The division is in proportion to the services each lawyer performed, or each lawyer assumes joint responsibility for the representation; the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; the total fee is reasonable | Rule 1.5(e)(1) to (3); Comment [7] |
| A lawyer who only referred the case, did no work and takes no responsibility | No | Fails Rule 1.5(e)(1): no services, no joint responsibility. Paying for the recommendation itself runs into Rule 7.2(b) | Rule 1.5(e); Rule 7.2(b) |
| A lawyer who has left the firm, for work done while there | Yes | Rule 1.5(e) does not prohibit or regulate dividing fees received later for work done while the lawyers were in the same firm | Rule 1.5(e) and its comment |
| Another lawyer or a nonlawyer professional under a reciprocal referral agreement | No money changes hands; only a swap of referrals | It must not be exclusive, and the client must be informed of its existence and nature. Comment [8]: except as provided in Rule 1.5(e), the lawyer must not pay anything solely for the referral, and the agreement must not interfere with the lawyer's professional judgment in making referrals or providing substantive legal services | Rule 7.2(b)(4); Comment [8] |
| A nonlawyer, in general | No | A lawyer or law firm shall not share legal fees with a nonlawyer, except as Rule 5.4(a)(1) to (4) allow | Rule 5.4(a) |
| The estate of a lawyer who has died | Yes | Under an agreement with the lawyer's firm, partner or associate, money may be paid over a reasonable period after the lawyer's death to the estate or to one or more specified persons | Rule 5.4(a)(1) |
| The estate or representative of a lawyer who has died, become disabled or disappeared, for the practice | Yes | The agreed purchase price of the practice, under Rule 1.17 | Rule 5.4(a)(2); Rule 1.17 |
| Nonlawyer employees | Yes | Through a compensation or retirement plan, even one based in whole or in part on a profit-sharing arrangement | Rule 5.4(a)(3) |
| A nonprofit organization that employed, retained or recommended the lawyer | Yes | Court-awarded legal fees only | Rule 5.4(a)(4) |
| Anyone, for recommending the lawyer's services | No, with five exceptions | The reasonable costs of advertisements or communications; the usual charges of a legal service plan or a not-for-profit or qualified lawyer referral service; the purchase price of a law practice under Rule 1.17; a non-exclusive reciprocal referral agreement the client is told about; nominal gifts given as thanks that are neither intended nor reasonably expected to be compensation for recommending the lawyer's services | Rule 7.2(b)(1) to (5); Comment [2] for the ban, Comments [3] to [8] for the exceptions |
| A nonlawyer, as a partner in a law practice | No | A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law | Rule 5.4(b) |