Are Referral Fees Legal in Indiana? Attorney Fee Split Rules

How to Ethically Share Fees With Other Indiana Attorneys

Indiana allows attorneys to divide fees with another attorney when the division is proportional to work performed or all involved attorneys assume responsibility.

Indiana Rule

Indiana Rules of Professional Conduct Rule 1.5(e) provides the requirements for when an attorney may divide fees. It states:

A division of a fee 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 or each lawyer assumes joint responsibility for the representation;
• 2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and
• 3) the total fee is reasonable.

In comparison to other states that follow similar rules, Indiana requires attorneys to inform clients of the share each attorney will receive. Attorneys must inform clients in writing.

Reasonable Fees

Referral fees must be reasonable. IRPC Rule 1.5(a) lists how to determine what defines a reasonable fee. It provides:

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.

The comment to Rule 1.5 states that these factors are not exclusive. Determination should be made on a case-by-case basis.

Competency

The Rule 1.5 comment adds another requirement to a referral: The attorney must be competent to handle the case. IRPC Rule 1.1 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 Rule 1.1 Comment explains that, similar to reasonable fees, competency is determined based on the specifics of each case. The specialization required, the attorney’s current skills and knowledge, and the attorney’s ability to gain needed skills and knowledge all factor into whether they are competent to handle the case.

Competency includes the ability to represent a client when an attorney can gain the needed knowledge through “reasonable preparation.” Put another way, an attorney may refer a case to another attorney when the first attorney believes that, while the second attorney does not currently possess the requisite knowledge, they have the skills to gain that knowledge.

Conclusion

Attorneys barred in Indiana may refer a case to another attorney when they divide fees proportional to services provided or assume joint responsibility. All fees must be reasonable, and referrals must be made to attorneys competent to handle the case.