Attorney Referral Fees in Minnesota - A Complete Guide

How to Ethically Share Fees With Other Minnesota Attorneys

Minnesota-barred attorneys may divide fees when they either assume joint responsibility or base the division on work completed. Clients must consent to all agreements in writing.

Minnesota Rule

Minnesota Rules of Professional Conduct Rule 1.5(e) lists the requirements for a division of 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.

While the commentary provides additional guidance, the Minnesota Supreme Court, in August 2022, reaffirmed that “comments are included with the rules for convenience and do not reflect court approval or adoption.” Put another way, the comments, which provide significant context for referral fees, are not binding.

Competency

The MRPC Rule 1.5(e) Comment states that the referring attorney should believe the other attorney is competent to handle the case. Even if not binding, referring attorneys would benefit from following this guidance.

MRPC 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 commentary explains that this means that either an attorney has or can obtain the necessary skills and knowledge to represent the client. It goes on to add that, for referral fees, part of the competency determination is that the referring attorney must believe the second attorney will “contribute to the competent and ethical representation of the client.

Some of the considerations for competency when referring a case to another attorney:

• The other attorney’s education, experience, and reputation
• The expected services the other attorney will provide
• The ethical rules and legal protections of the jurisdiction in which the other attorney will perform the expected work

Attorneys should also consult with the client about each attorney’s scope of representation. MRPC Rule 1.2 states:

“A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.”

When more than one attorney provides services, they are by definition limiting the scope of their representation compared to being a client’s sole legal representative. As part of an agreement with a client, attorneys need to make sure the client agrees with and understands the extent of each attorney’s expected services.

Reasonable Fees

MRPC Rule 1.5(a) lists the factors involved in determining whether a fee is reasonable. 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.

The Rule 1.4(a) Comment states that these factors are not exclusive.

Conclusion

Minnesota attorneys may divide fees when the fees are reasonable, the agreement is confirmed in writing, and the division is based on either services performed or joint responsibility. Although not required, attorneys should believe that all involved attorneys are competent to handle the matter at hand.