Attorney Referral Fees in Alaska - A Complete Guide

How to Ethically Share Fees With Other Alaska Attorneys

Alaska closely aligns with the ABA Model Rules regarding referral fees. Attorneys must either be compensated based on the work completed or by assuming joint responsibility to share fees.

Alaska Rule

Alaska Rules of Professional Conduct Rule 1.5(e) lists when and how an attorney may use a referral fee. It states:

(e) 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 contribution of each firm or, by written agreement with the client, each firm assumes joint responsibility for the representation;
2. the client agrees to the participation of each firm, including the share each firm will receive, and the participation is confirmed to the client in writing; and
3. the total fee is reasonable.

Although similar to the ABA Model Rules, the Alaska Rules vary in some important respects. When attorneys use joint responsibility as the basis for a division of fees, they must have a client’s written consent. Alaska also puts the focus on the firms, rather than individual attorneys, in a division of fees.

In cases when attorneys or firms use joint responsibility as the basis for a division of fees, the division does not need to be made on the basis of work completed. The fees must meet the requirement of reasonableness. In every division of fees, the client must be aware of the proportion each attorney or law firm is to receive.

Alaska requires written consent from the client. While not required, attorneys may wish to inform the client in writing. This can also serve as evidence that they met all of the disclosure requirements of Rule 1.5(e).

Reasonable Fees

ARPC Rule 1.5(a) defines what constitutes a reasonable fee. It provides:

(a) 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.

The comment to Rule 1.5(a) mentions that this list is not exclusive and a determination of reasonableness should be made on a case-by-case basis. That a fee is reasonable in one case does not mean it will be reasonable in all situations.

Competency

The comment to Rule 1.5(e) requires:

A lawyer should only refer a matter to a lawyer whom the referring lawyer reasonably believes is competent to handle the matter. See Rule 1.1.

ARPC Rule 1.1(a) 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.

When an attorney plans to refer a matter to another attorney, the comment to Rule 1.1 provides factors to consider, although each determination should be made on a case-by-case basis. When referring a matter to another attorney, the first attorney or law firm should consider:

• An attorney’s education, experience and reputation;
• The expected type and scope of services to be provided;
  and
• “The legal protections, professional conduct rules, and ethical environments of the jurisdictions in which the services will be performed, particularly relating to confidential information.

Competency does not mean an attorney has to have the knowledge or skills necessary for a case at the time of the referral. While an attorney may already possess sufficient skills and knowledge, an attorney’s ability to gain the necessary skills and knowledge meets the requirements of Rule 1.1.

The comment also emphasizes the importance of making sure all involved attorneys and clients are aware of each attorney’s responsibilities and how these responsibilities are divided amongst the attorneys. While this allocation does not need to be in writing, attorneys may wish to consider adding it to any written agreement to show all parties were informed.

Conclusion

Attorneys in Alaska may use referral fees when they either divide the fee based on work completed or all involved attorneys or law firms assume joint responsibility. They must obtain a client’s written consent and the referring attorney should verify that the other attorney is competent to handle the matter at hand.