Attorney Referral Fees in Hawaii - A Complete Guide

Overture Staff

15 min read

How to Ethically Share Fees With Other Hawaii Attorneys

Hawai’i allows attorneys to divide fees when the division is proportional to work performed and they assume joint responsibility. This differs from many other states following the ABA rule where only one of these two requirements is necessary. The referring attorney must also believe the other attorney is competent to handle the matter at hand.

Hawai’i Rule

Hawai’i Rules of Professional Conduct Rule 1.5(f) lays out the requirements for referral fees. It states:

A division of fees between lawyers who are not in the same firm may be made only if:

(1) the division is in proportion to the services performed by each lawyer and, by written agreement with the client, each lawyer assumes joint responsibility for the representation;

(2) the client is advised of and does not object to the participation of all the lawyers involved; and

(3) the total fee is reasonable.

Hawai’i stands out from jurisdictions with similar rules because it requires both a fee division proportional to work completed and the assumption of joint responsibility. While attorneys are not required to disclose each attorney’s share, in some contingency fee matters, they may need to disclose that information.

Reasonable Fees

A division of fees falls under the same requirements as any other fee. HRPC Rule 1.5(a) provides context on what meets the standards of a reasonable fee. It states:

A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent, and in contingency fee cases the risk of no recovery and the conscionability of the fee in light of the net recovery to the client.

The rule’s comment explains that this is not an exclusive list. These factors may or may not be relevant in any given case. Instead attorneys should consider what is “reasonable under the circumstances.”

Competency

The Rule 1.5 Comment adds a competency requirement to a division of fees agreement. The referring attorney should believe that the other attorney is competent to handle the matter under HRPC Rule 1.1. The rule states:

A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.

The comment to Rule 1.1 provides more context to what defines competency. An attorney either has the knowledge or skill at the time of the referral or would be able to obtain the necessary knowledge or skill during the course of representation. The competency requirement relates to the assumption of joint responsibility, especially for the referring attorney.

Joint Responsibility

Hawai’i considers joint responsibility to include both financial and ethical considerations. The comment to Rule 1.5 compares joint responsibility under a referral fee agreement to being in a partnership. The comment directly references HRPC Rule 5.1, which lays out the responsibilities in a partnership between lawyers. HRPC Rule 5.1 states:

(a) “A partner in a law firm, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm, shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct.

(b) A lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct.

(c) A lawyer shall be responsible for another lawyer’s violation of the Rules of Professional Conduct if:

(1) the lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved; or

(2) the lawyer is a partner or has comparable managerial authority in the law firm in which the other lawyer practices, or has direct supervisory authority over the other lawyer, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.”

With the assumption of joint responsibility, attorneys need to ensure all involved lawyers abide by the Hawai’i Rules of Professional Conduct. An attorney may be considered to have failed in their responsibility when they condone a violation of the rules or fail to mitigate a violation of the rules once they become aware of the potential misconduct.

The assumption of joint responsibility highlights why a referring attorney should have reason to believe the other attorney is competent to handle the matter at hand. Both attorneys should ensure that everyone involved, including the client, knows the scope of each attorney’s work and how the various parties will communicate to prevent any confusion.

Conclusion

Hawai’i allows attorneys to refer a case to another attorney when both attorneys assume joint responsibility and divide the fee proportional to services provided. The referring attorney should believe the other attorney is competent to handle the matter. Both attorneys should clearly communicate to the client and all involved parties the scope of each attorney’s responsibilities and duties.

Join the Platform