Attorney Referral Fees in Wisconsin - A Complete Guide

How to Ethically Share Fees With Other Wisconsin Attorneys

Wisconsin allows attorneys to divide fees when they base the split on services performed or assume joint responsibility. Although similar to the ABA Model Rules, Wisconsin has made small changes that can affect the requirements of a division.

Wisconsin Rule

Wisconsin Rules of Professional Conduct Rule 1.5(e) governs divisions of fees. It states:

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

• (1) the division is based on the services performed by each lawyer, and the client is advised of and does not object to the participation of all the lawyers involved and is informed if the fee will increase as a result of their involvement; or
• (2) the lawyers formerly practiced together and the payment to one lawyer is pursuant to a separation or retirement agreement between them; or
• (3) pursuant to the referral of a matter between the lawyers, each lawyer assumes the same ethical responsibility for the representation as if the lawyers were partners in the same firm, the client is informed of the terms of the referral arrangement, including the share each lawyer will receive and whether the overall fee will increase, and the client consents in a writing signed by the client.

Although the requirements are similar to the ABA Model Rules, Wisconsin has its own format and order for the rule. The state also allows attorneys to increase fees if they inform the client and the client agrees.

The state also uses different wording than the ABA. In regards to services performed, the division must be “based on” rather than “proportionate to.” In other words, a division need not be based on a percentage.

Wisconsin did adopt the ABA Comment for Rule 1.5, including the requirement of competency.

Reasonable Fees

A division between attorneys maintains the requirement of reasonable fees. WRPC 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, 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.

Adopted from the ABA Model Rules, these factors are not exclusive. Reasonableness depends on the circumstances of each case.

Competency

Attorneys should only refer a matter to an attorney they believe is competent to handle the representation. WRPC Rule 1.1 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.”

No single factor determines competency. The matter at hand, an attorney’s experience, skill, and knowledge, and whether a case requires specialized knowledge are some of the factors to consider.

Competency must be maintained throughout representation. An attorney who does not possess the skills or knowledge but can gain that skill and knowledge may be considered competent. Inversely, an attorney who had the necessary skills and knowledge at the start of representation but does not maintain it during representation may not be considered able to provide competent representation.

When referring a matter to another attorney, the first attorney should consider the following factors:

• The other attorney’s education, experience, and reputation
• The other attorney’s expected services
• Any relevant ethical considerations

Open communication, especially when multiple attorneys or law firms are involved, is also an important consideration for competency. All parties, including the client, should be informed of and aware of each attorney’s expected scope of responsibility.

Ethics Opinions

Two opinions are worth reviewing to better understand how divisions work in Wisconsin.

Memorandum Ethics Opinion EM-17-03, issued in 2017, deals with two attorneys potentially splitting a fee in a worker’s compensation case. The proposed division would be 50/50, which is based on each attorney’s expected work. The opinion stated the division would satisfy the requirements of Rule 1.5(e) and reaffirmed that the state does not require proportional divisions.

Joint Responsibility

Formal Ethics Opinion E-00-01 provides additional information on what joint responsibility entails. The opinion references the ABA Comment that defines joint responsibility as involving “financial and ethical responsibility for the representation as if the lawyers were associated in a partnership.” The Committee mentioned WRPC Rule 5.1(a), which states:

“A partner in a law firm, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm, shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct.”

The opinion highlights the phrase “reasonable efforts.” A breach in this responsibility would occur when the referring attorney has knowledge of the violation of the RPC and either endorses the conduct or fails to mitigate or avoid the consequences of that conduct.

Staying in regular contact is also part of assuming joint responsibility. While the referring attorney does not need to be in daily communication, they should be in regular communication and track the process of the case. This includes all involved attorneys knowing each attorney’s responsibilities to the client.

The Committee puts forward the following considerations for joint responsibility:

• The referring attorney should be “sufficiently aware” of the other attorney’s performance to verify they are conforming to the Rules of Professional Conduct
• The referring attorney has a duty to only refer matters to attorneys who are competent to handle the representation
• The referring attorney must assume financial responsibility

Finally, joint responsibility means the referring attorney still has an attorney-client relationship with the client, even if they are not involved in day-to-day matters.

Conclusion

Wisconsin attorneys may split fees with another attorney when they base the split on services performed or assume joint responsibility. All fees must be reasonable, and all attorneys must be competent to handle the representation.