Are Referral Fees Legal in Vermont? Attorney Fee Split Rules

How to Ethically Share Fees With Other Vermont Attorneys

Vermont allows attorneys to divide fees with another attorney when the split is based on work performed or the referring attorney maintains joint responsibility for the matter. All fees must be reasonable, and attorneys must be competent to handle the matter.

Vermont Rule

Vermont Rules of Professional Conduct Rule 1.5(e) lists the requirements for any division of fees. 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.

For Rule 1.5(e), Vermont uses the exact text of the ABA Model Rules. The goal of any division is that, combined, two attorneys or firms can represent a client better than either could alone.

The Rule 1.5 Comment also defines what joint responsibility entails. It states:

“Joint responsibility for the representation entails financial and ethical responsibility for the representation as if the lawyers were associated in a partnership.”

Reasonable Fee

VRPC Rule 1.5(a) provides guidance on determining what constitutes a reasonable fee. It 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, 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 eight factors are not exclusive. All or none may be relevant when determining reasonableness, which should be decided on a case-by-case basis.

Competency

The Rule 1.5 Comment suggests that referrals should be limited to attorneys who are competent to handle the matter. VRPC Rule 1.1 governs competency. It 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 refer to either an attorney’s current skills, knowledge, and experience or their ability to gain the needed knowledge for representation. This includes maintaining competency throughout representation, including maintaining or building on knowledge or skill as required.

Before making a referral, lawyers should consider the complexity of a case and any special knowledge or training that may be required.

Conclusion

For divisions of fees, Vermont hews closely to the ABA Model Rules. Attorneys must base the division on either services performed or joint responsibility. All agreements must be confirmed in writing, and all fees must be reasonable.