Attorney Referral Fees in North Carolina - A Complete Guide
How to Ethically Share Fees With Other North Carolina Attorneys
In North Carolina, attorneys can divide fees with another attorney when they either base the division on work performed or assume joint responsibility. Any referral must be based on the competency of an attorney to handle the matter.
North Carolina Law
Attorneys can find the requirements for a division of fees in North Carolina Rules of Professional Conduct Rule 1.5(e). It states:
A division of a fee between lawyers who are not in the same firm may be made only if:
- the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;
- the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing;
and- the total fee is reasonable.
North Carolina requires that, as part of informing clients of the division, attorneys include the share each attorney will receive. All divisions must be confirmed in writing.
The commentary to Rule 1.5 provides additional information about divisions. It states that attorneys may split fees with out-of-state attorneys as long as they satisfy all of the requirements of Rule 1.5(e). The comment also defines joint responsibility as involving “financial and ethical responsibility for the representation as if the lawyers were associated in a partnership.”
Competency
Attorneys must also limit referrals to attorneys they believe are competent to handle the matter. The Rule 1.5 comment directs attorneys to NCRPC Rule 1.1, which states:
A lawyer shall not handle a legal matter that the lawyer knows or should know he or she is not competent to handle without associating with a lawyer who is competent to handle the matter. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.
Competency can be either that an attorney currently possesses to skills, knowledge, and experience to represent a client or has the ability to gain the needed knowledge over the course of representation. This includes maintaining these skills throughout representation.
When an attorney chooses to refer a case, they should consider the following factors:
- The circumstances
- The other attorney’s education, experience, and reputation
- The expected nature of the services
- Any ethical considerations or rules from the involved jurisdictions
Attorneys and client should ensure there is clear communication between all parties. This includes every party knows the scope of each attorney’s responsibilities.
Reasonable Fees
While Rule 1.5(e) uses the standard of reasonableness for fees, the default rule for fees in North Carolina is excessiveness. When determining what fees an attorney may charge for their services, NCRPC Rule 1.5(A) states:
- A lawyer shall not make an agreement for, charge, or collect an illegal or clearly excessive fee or charge or collect a clearly excessive 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;
- 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. The key phrase is “clearly excessive.”
Ethics Opinions
As of 2023, North Carolina has two ethics opinions that focus on a division of fees. These opinions mostly reaffirm the importance of following Rule 1.5(e) with any division.
Client Consent
In RPC 148, the committee stated the attorneys could not split a fee for two reasons:
- Attorney A had made the referral only and not performed any service or assumed joint responsibility.
- The client did not consent to the fee split and had explicitly rejected it.
This second part is especially important. Even if Attorney A had performed work or assumed joint responsibility, the client’s lack of consent would put the attorneys in violation of Rule 1.5(e). Without client consent, attorneys cannot proceed with a planned division of fees.
Joint Responsibility
In a 2010 ethics opinion, 10 FEO 6, the Committee reaffirmed that attorneys may divide fees when they follow the requirements of Rule 1.5(e). While reaffirming these requirements, the Committee declined to provide additional analysis on what would be considered a reasonable fee for a division.
The opinion also references a 1985 informal opinion from the ABA Committee on Ethics and Professional Responsibility on joint responsibility. This opinion stated that a division does not require that an attorney perform substantial services if they assume joint responsibility. The Ethics Committee points out that joint responsibility includes communication as well as financial and ethical responsibility to provide adequate representation. The opinion compares a division of fees to the representation and communication one partner in a law firm would provide to another partner’s client.
Conclusion
Attorneys in North Carolina can divide fees if they assume joint responsibility or base the division on work performed. Clients must consent to any division in writing.
