Attorney Referral Fees in New Hampshire - A Complete Guide

How to Ethically Share Fees With Other New Hampshire Attorneys

New Hampshire is a pure referral fee state, meaning attorneys can divide fees when passing along a client to another attorney. For those already familiar with referral fees in pure referral jurisdictions, New Hampshire deserves some additional attention due to some unique twists on its rules.

New Hampshire Rule

New Hampshire Rules of Professional Conduct Rule 1.5(f) governs the division of fees. It states:

“(f) A division of fee between lawyers who are not in the same firm may be made only if:

1. the division is made either:
   • (a) in reasonable proportion to the services performed or responsibility or risks assumed by each, or
   • (b) based on an agreement with the referring lawyer;
2. in either case above, the client agrees in a writing signed by the client to the division of fees;
3. in either case, the total fee charged by all lawyers is not increased by the division of fees and is reasonable.”

In comparison to other pure referral fee states, New Hampshire provides more guidance regarding the circumstances in which attorneys can use referral fees. Depending on the case and the agreement between attorneys, the fee may or may not be divided due to work completed and attorneys may or may not assume joint responsibility.

All referral fees must be reasonable and include written consent from the client and cannot increase the fees charged to the client. The comment to Rule 1.5(f) provides two additional requirements. One, the referring attorney must believe the other attorney competent to handle the matter. Two, as part of obtaining a client’s written consent, attorneys must inform the client of the share each attorney is to receive, and the client must agree with that split.

Reasonable Fees

New Hampshire is unique in that, like California, it prohibits the division of fees from increasing the overall fee charged to the client. Consequently, the total fee must be reasonable, in addition to not being increased as a result of the division.

Unlike the Model Rules, New Hampshire does not use the standard of “clearly excessive legal fees” but instead reasonableness. The Ethics Comment to Rule 1.5(a) explains that using reasonableness as a standard “defines a lawyer's obligation to the client with respect to other aspects of their relationship governed by the Rules of Professional Conduct.” In other words, this approach views the fee as one of several factors that determine an attorney’s treatment and relationship with a client.

NHRPC Rule 1.5(a) deals with determining whether the fee charged to a client is reasonable. It states:

(a) A lawyer shall not enter into an agreement for, charge, or collect an illegal or unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee or expenses 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.

These factors are not exclusive and the reasonableness of any fee may be determined on the particulars of each case.

Competence

In Rule 1.1, New Hampshire expands significantly on the Model Rules. This includes a more thorough explanation for what constitutes competent performance of an attorney’s role.

Two subsections of Rule 1.1, (b)(3) and (c)(4), highlight why a division of fees is beneficial for attorneys and clients. These two sections require attorneys to know their own strengths and limitations, including when a client and case would be better served by a referral to another attorney.

The competency requirement also serves as a reminder that one reason for allowing referral fees is that attorneys can use their own knowledge and expertise to recommend a specific attorney to a client. Rather than rely on lists or reviews, clients can receive a specific recommendation that serves their best interests.

The Comment to Rule 1.5(f) provides one additional requirement for a division of fees. Any referral must meet the competency standards of Rule 1.1:

1. A lawyer shall provide competent representation to a client.
2. Legal competence requires at a minimum:
   1. specific knowledge about the fields of law in which the lawyer practices;
   2. performance of the techniques of practice with skill;
   3. identification of areas beyond the lawyer’s competence and bringing those areas to the client’s attention;
   4. proper preparation; and
   5. attention to details and schedules necessary to assure that the matter undertaken is completed with no avoidable harm to the client’s interest.
3. In the performance of client service, a lawyer shall at a minimum:
   1. gather sufficient facts regarding the client’s problem from the client, and from other relevant sources;
   2. formulate the material issues raised, determine applicable law and identify alternative legal responses;
   3. develop a strategy, in consultation with the client, for solving the legal problems of the client; and
   4. undertake actions on the client’s behalf in a timely and effective manner including, where appropriate, associating with another lawyer who possesses the skill and knowledge required to assure competent representation.

Ethics Opinions: Inactive Attorneys and Referral Fees

Ethics Committee Opinion #2021-22/01 considers whether inactive attorneys may charge a referral fee. The opinion builds on Opinion 2016-17/01, which considered under what conditions a former or retired attorney could collect fees from their former law firm.

The Ethics Committee found that, regarding inactive attorneys, the question was one of timing. If an attorney made the referral when they were still an active member of the bar, they could collect the fee. Once an attorney is inactive, they are no longer able to practice the law and, as such, cannot collect a referral fee.

The Ethics Committee based their decision on three concerns:

1. That a referral to another attorney necessitates some level of substantive discussion between an attorney and client, which amounts to practicing law.
2. That the client may be misled as to the nonactive attorney’s status.
3. That a referral may raise issues of confidentiality and privilege.

Finally, the Ethics Committee found that allowing inactive attorneys to collect referral fees did not fall under the reasons the state allows referral fees.

To summarize: An inactive attorney may collect a referral fee only if the referral was made while they were still an active member of the New Hampshire Bar.

Conclusion

Lawyers in New Hampshire have multiple options on how to structure referral fees. All fees must be reasonable, and clients must consent in writing to the division.