Attorney Referral Fees in Washington - A Complete Guide

How to Ethically Share Fees With Other Washington Attorneys

Similar to the ABA Model Rules, Washington allows attorneys to split fees based on work performed or by assuming joint responsibility. Where Washington deviates from the Model Rules is in including lawyer referral services under the division of fees umbrella.

Washington Rule

Washington Rules of Professional Conduct Rule 1.5(e) lists the requirements for a 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) (i) the division is in proportion to the services provided by each lawyer or each lawyer assumes joint responsibility for the representation;
• (ii) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and
• (iii) the total fee is reasonable; or
• (2) the division is between the lawyer and a duly authorized lawyer referral service of either the Washington State Bar Association or of one of the county bar associations of this state.

While the Washington Rule is similar to the ABA Model Rule, the state does add further requirements for a division and includes divisions for lawyer referral service.

Reasonableness of Fees

Any division of fees between attorneys must be reasonable. WRPC Rule 1.5(a) provides direction on how to determine a fee’s reasonableness. It states:

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;
• (8) whether the fee is fixed or contingent; and
• (9) the terms of the fee agreement between the lawyer and the client, including whether the fee agreement or confirming writing demonstrates that the client had received a reasonable and fair disclosure of material elements of the fee agreement and of the lawyer’s billing practices.

Washington adds subsection 9 to the ABA Model Rules. These factors are not exclusive and may or may not be relevant depending on the circumstances. Reasonableness should be a case-by-case determination.

Competency

The Rule 1.5 Comment states that referrals should be made only when a lawyer believes the other attorney is competent to handle the matter. WRPC Rule 1.1 defines competency as:

A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.

Similar to reasonable fees, competency is a case-by-case determination. It can refer to either an attorney’s current skills, knowledge, and experience, or their ability to gain the needed knowledge or skills over the course of representation. Attorneys must be able to maintain competency throughout representation.

The Rule 1.5 Comment references paragraphs 6 and 10 in the Rule 1.1 Comment. Paragraph 6 states that part of a competency determination for a referral includes believing that the other attorney’s representation of the client will be beneficial to the client. The paragraph lists some factors to consider:

• The circumstances of the case
• The other attorney’s education, experience, and reputation
• The expected nature of the other attorney’s services
• Any relevant ethical considerations for the involved jurisdictions

While not mentioned, Paragraph 7 highlights the importance of communication between all involved parties. This includes knowing each attorney’s scope of responsibilities.

Paragraph 10, unique to Washington, states that an attorney may solicit the assistance of a nonfirm Limited License Legal Technician (LLLT) to help provide adequate representation of a client. The caveat is that attorneys cannot enter into any division of fees with a nonfirm LLLT. When referring a client to an LLLT, attorneys must consult with the client and refer the client directly to the LLLT.

Advisory Opinions

The following opinions provide additional guidance on a division of fees.

Opinion 2227

Advisory Opinion 2227, issued in 2012, deals with Rule 1.5(e)(2). This opinion states that attorneys may not share a referral fee with a national non-profit bar association. The Opinion focuses on defining what qualifies as a “duly authorized referral service.” The Committee pointed out that no additional definitions exist to provide context for this phrase.

The opinion goes on to find that the rule requires “some kind of affirmative approval” from either the Washington State Bar Association or one of the state’s county bar associations. Absent that approval, an organization does not qualify for a referral fee under Rule 1.5(e)(2).

Opinion 2201

Advisory Opinion 2201, issued in 2009, answers the question of splitting fees with attorneys barred in foreign jurisdictions, referred to as a foreign law consultant (FLC). This opinion reaffirmed that Washington considers attorneys who are practicing attorneys in other countries as attorneys for the purposes of ethics rules. Washington-barred attorneys can therefore share fees with FLCs as long as they satisfy the requirements of Rule 1.5(e).

The exception to this rule is if the FLC is acting outside of their capacity as a lawyer. If their services are not related to the law or are the equivalent to services a paralegal or assistant would perform, the FLC is not an attorney and does not qualify for a division under Rule 1.5(e). In this situation, attorneys could not divide the fee.

Similarly, all attorneys should ensure the FLC’s actions do not amount to unauthorized practice of law within Washington.

This opinion also builds on Opinion 2114, issued in 2006. The 2006 opinion found that an attorney could share fees with a foreign attorney as long as they meet the Rule 1.5(e) requirements.

Opinion 2189

Opinion 2189, issued in 2008, reaffirms that Washington does not follow a pure referral fee model. All divisions must be based on the assumption of joint responsibility or work performed.

Opinion 2159

Opinion 2159, issued in 2007, discusses under what circumstances a contract attorney may fall under the requirements of Rule 1.5(e). In this situation, a firm contracted an attorney and based compensation on fees recovered. The Committee found that “any compensation that is directly tied to or dependent upon the client’s payment of a gross fee may be considered a division of fees for purposes of RPC 1.5(e)(1).”

Rule 1.5(e) would not be triggered if a firm pays a contract attorney on an hourly basis or for a fixed amount. Similarly, a firm may pay a contract attorney a bonus if the amount is either discretionary or based on firm-wide net profits. Situations in which a contract attorney’s compensation is directed tied to work for a specific client or case invoke Rule 1.5(e).

Conclusion

Washington allows attorneys to divide fees with another attorney based on either services performed or joint responsibility. This includes splitting fees with attorneys based outside of Washington or the United States as long as all ethical rules are followed.