Are Referral Fees Legal in South Carolina? Attorney Fee Split Rules

How to Ethically Share Fees With Other South Carolina Attorneys

South Carolina follows the ABA Model rules and allows attorneys to divide fees with another attorney when they either base division on work performed or assume joint responsibility. All fees must be reasonable.

South Carolina Rule

Attorneys can find the requirements for a division of fees in the South 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:

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.

South Carolina requires that attorneys disclose the share they are to receive to the client and that all confirmation be in writing. The Rule 1.5 Comment reaffirms that one reason for a fee division is that it encourages attorneys to refer clients when the attorney alone could not represent the client as well.

Reasonable Fees

Similar to other fees an attorney may charge, a division of fees must be reasonable. SCRPC Rule 1.5(a) provides:

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 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 may or may not be relevant in any situation. Reasonableness should be a case-by-case determination.

Competency

The Rule 1.5 Comment adds another requirement to a division of fees: competency. 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.”

Competency can mean either that an attorney currently possesses the needed skills, knowledge, and experience, or can gain the needed skills and knowledge for representation through reasonable preparation. In some cases, competency may be that an attorney possesses knowledge of a specific field above and beyond that of a general practitioner.

For a division of fees, the first attorney may wish to consider the following factors:

• The circumstances
• The other lawyer’s education, experience, and reputation
• The nature of expected services
• Any relevant ethical rules

Attorneys should communicate with all parties, including the client, about the expected scope of each attorney’s work and responsibilities. The Rule 1.1 Comment highlights the importance of clear communication when attorneys work with attorneys from other firms for the same client.

Ethics Opinions

Ethics Advisory Opinion 05-20 reaffirms that attorneys must have client consent in writing and that a division must be based on either work performed or the assumption of joint responsibility. Absent an agreement under Rule 1.5(e), an attorney may be entitled to some fees under a quantum meruit basis, essentially payment for services performed.

Conclusion

Attorneys may divide fees with another attorney based on either work performed or with the assumption of joint responsibility. All attorneys must be competent to handle representation, and all agreements must be confirmed in writing.