Attorney Referral Fees in Massachusetts - A Complete Guide
How to Ethically Share Fees With Other Massachusetts Attorneys
Massachusetts operates as a pure referral fee state. Attorneys can refer clients to other attorneys regardless of work completed and without assuming joint responsibility.
Massachusetts Rule
Massachusetts Rules of Professional Conduct Rule 1.5 governs fees. Rule 1.5(e) covers the division of fees:
“A division of a fee (including a referral fee) between lawyers who are not in the same firm may be made only if the client is notified before or at the time the client enters into a fee agreement for the matter that a division of fees will be made and consents to the joint participation in writing and the total fee is reasonable. This limitation does not prohibit payment to a former partner or associate pursuant to a separation or retirement agreement.”
Key to note is that attorneys must obtain written consent and the fees must be reasonable. Massachusetts provides little guidance on what written consent entails, but the information included on the document should be sufficient for the client to understand and consent to the attorney’s splitting the fee.
Reasonable Fees
Rule 1.5(a) governs fees and what the state defines as a reasonable fee. The rule states:
“A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee or collect an unreasonable amount for expenses. The factors to be considered in determining whether a fee is clearly excessive include the following:
- 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;
- the fee customarily charged in the locality for similar legal services;
- the amount involved and the results obtained;
- the time limitations imposed by the client or by the circumstances;
- the nature and length of the professional relationship with the client;
- the experience, reputation, and ability of the lawyer or lawyers performing the services; and
- whether the fee is fixed or contingent.”
These factors are not exclusive, and reasonableness may be determined on a case-by-case basis.
Massachusetts deviates from the Model Rules in requiring that a fee be “illegal or clearly excessive” to violate Rule 1.5(a). The Comment to 1.5(a) states that this standard does not minimize the requirement of reasonableness and that “fees must be reasonable to be enforceable against the client.”
Competency
The Comments to Rule 1.5 provide an additional requirement when referring a client to another attorney. The referring attorney must believe the other attorney is competent to handle the representation.
MRPC Rule 1.1 governs competency:
“A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.”
When referring a case to another attorney, the first attorney should believe the attorney either currently has the experience or has the skill needed to gain the knowledge needed to represent the client.
Rule 1.1 Comment also references attorney referral:
“The reasonableness of the decision to retain or contract with other lawyers outside the lawyer’s own firm will depend upon the circumstances, including the education, experience and reputation of the nonfirm lawyers; the nature of the services assigned to the nonfirm lawyers; and the legal protections, professional conduct rules, and ethical environments of the jurisdictions in which the services will be performed, particularly relating to confidential information.”
Attorneys should be able to explain to a client why they are making the referral and why they believe the attorney in question is a good choice for the client’s case.
Differences from Model Rules
In a break with the Model Rules, the 1.5 Comment notes that Massachusetts does not require a division of fees relate to the actual services each attorney performed. The state also does not require that the referring attorney assume joint responsibility.
Referral Organizations
In January 2008, the Massachusetts Bar issued Ethics Opinion 08-01. The opinion focuses on Rule 7.3(f), which governs solicitation of clients. The facts of this case referred to membership of a private business referral organization, which included non-attorneys. The organization in question did not meet the standards of a legal organization, but the opinion’s comments on referrals are worth attention.
This opinion may be relevant to attorneys for division of fees because it states that attorneys should not use any referral organization that mandates referrals between organization members. The Ethics Opinion explicitly forbids quid-pro-quo referrals. Where referrals can be beneficial to both attorneys and clients is when referrals are optional and do not involve “valuable” quid pro quo referrals. Requiring that referrals be made at an attorney’s discretion relates to the competency requirement.
Conclusion
Massachusetts allows attorneys to collect a fee when they refer a client to another attorney or firm. To meet the state’s rules, attorneys must believe the other attorney is competent to handle the matter, notify the client in writing of the division of fees, and ensure the fees are reasonable.
