South Dakota Attorney Fee Splitting: Referral Fee Rules & Guide

How to Ethically Share Fees With Other South Dakota Attorneys

South Dakota follows the ABA Model Rules and allows attorneys to divide fees with another attorney when they either assume joint responsibility or base the division on services provided. All fees must be reasonable.

South Dakota Rule

South Dakota Rule of Professional Conduct Rule 1.5(e) covers the division of fees. The rule 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.

For all referrals, attorneys must have a written agreement with a client. They must also disclose their expected share of the fee. In addition to the above requirements, attorneys should follow SDRPC Rule 1.2, which requires that attorneys make sure a client knows the scope of their responsibilities.

South Dakota follows the ABA Model Rule for the division of fees. As the Ethics Committee recommends that attorneys use resources such as ABA to resolve ethical questions, the comments to the ABA Model Rules may be useful for South Dakota attorneys. For example, the ABA likens joint responsibility to a partnership and states that it involves both financial and ethical responsibility.

Reasonable Fees

Any division of fees must be reasonable under SDRPC Rule 1.5(a). It provides:

A lawyer shall not make an agreement for, charge, or collect an unreasonable amount for fees or 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 Comment to the ABA Model Rules states that these factors are neither exclusive nor mandatory when determining whether a fee is reasonable. Whether a fee is reasonable is a case-by-case determination, and different factors may be relevant

Competency

The ABA suggests that attorneys should limit referrals to attorneys they believe are competent to handle representation. Rule 1.1 defines competency. It provides:

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 ABA again provides context. Competency can either mean an attorney currently possesses the skills and knowledge needed for representation or can gain the needed knowledge. Similar to reasonable fees, determining competency depends on the factors and circumstances. Some cases may require that an attorney have specialized training or knowledge.

When referring a client to another attorney, the ABA suggests that attorneys consider the following factors:

• The other attorney’s education, experience, and reputation
• The expected services
• Any relevant professional conduct or ethical rules

Comments to both Rule 1.5 and Rule 1.1 suggest that attorneys should consider how a client would benefit from the inclusion of a second attorney for representation.

Conclusion

Attorneys in South Dakota can divide fees when they base the division on work performed or assume joint responsibility. All attorneys should be competent to handle representation.