Attorney Referral Fees in Oregon - A Complete Guide

How to Ethically Share Fees With Other Oregon Attorneys

As one of a handful of states that follows the pure referral fee model, Oregon allows attorneys to divide fees. Where the state differs from other pure referral fee states is in the terms and definitions that underlying the division.

Oregon Rule

Oregon Rules of Professional Conduct Rule 1.5(d) lays out the requirements for the division of fees. It provides:

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

1. the client gives informed consent to the fact that there will be a division of fees, and
2. the total fee of the lawyers for all legal services they rendered the client is not clearly excessive.”

Oregon deviates from the Model Rules by using “informed consent” and “clearly excessive” as standards for acceptable conduct under Rule 1.5(d).

Informed Consent

ORPC Rule 1.0 deals with terminology, including how the state defines informed consent. Rule 1.0(g) states that informed consent:

“denotes the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct. When informed consent is required by these Rules to be confirmed in writing or to be given in a writing signed by the client, the lawyer shall give and the writing shall reflect a recommendation that the client seek independent legal advice to determine if consent should be given.”

Rule 1.5(d) does not explicitly require that a client’s informed consent be given in writing. Although not required, providing the client with a written document that outlines the division of fees is one of the easiest ways for an attorney to prove that they obtain a client’s informed consent.

Attorneys may also wish to have the client sign a document giving informed consent as additional evidence that they informed the client and the client agreed to the terms. Again, while Oregon does not require that consent be obtained via writing or with a signature, attorneys may wish to do so to have proof of client consent.

If not in writing, attorneys should have a clear way of informing clients that creates a trail of evidence in case of a later dispute.

Clearly Excessive

ORPC Rule 1.5(b) defines what constitutes a “clearly excessive” fee. It states:

“(b) A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides 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.”

This standard varies from the Model Rules, which require that fees be reasonable. The eight subsections otherwise follow the Model Rules. Where Oregon differs is in how an attorney would determine what constitutes a clearly excessive fee, which the state defines as a step beyond a reasonable fee. Compare with Model Rule 1.5(a):

“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.”

Neither standard has a cut-and-dry meaning of what constitutes a reasonable or clearly excessive fee. Each determination is made on a case-by-case basis. Both may rely on factors beyond those listed. Oregon attorneys should keep in mind that the state’s standard is based on what a prudent attorney would consider clearly excessive and not reasonable.

Ethics Opinion

Revised in 2022, Formal Opinion 2005-25 provides guidance on payment of fees when an attorney is disbarred, suspended, or deceased. The opinion includes a division of fees as part of its discussion. While these opinions are not binding, they can provide useful guidance.

The key factor in any payment of fees is timing, especially when an attorney has been disbarred or suspended. The ORPC treats any suspended or disbarred attorney as a nonlawyer.

A disbarred or suspended attorney may only receive fees for work performed before their disbarment or suspension. As the opinion states, “it would be proper for Lawyer A to seek to collect an ethically appropriate fee for past work.”

When an attorney has already entered into an agreement for a division of fees, and received client consent, that attorney is likely entitled to the fee even if they are later suspended or disbarred.

Once suspended or disbarred, however, the attorney is subject to the same rules as other nonlawyers and would not be able to collect a fee under Rule 1.5(d).

Conclusion

Attorneys in Oregon may collect referral fees when they have a client’s informed consent and the fee is not clearly excessive. While not required, attorneys may wish to obtain client consent via writing and a signature.