Attorney Referral Fees in Connecticut - A Complete Guide

How to share fees with other attorneys ethically.

Connecticut is in the minority within the United States because it operates as a pure referral state. This means that attorneys do not need to base referral fees on actual work completed or accept joint responsibility.

Connecticut Rules

Under Rule 1.5(e) in the Rules for Professional Conduct, attorneys may engage in fee division with attorneys from a different law firm only when:

• The client is advised in writing of the compensation sharing agreement and of the participation of all the lawyers involved, and does not object AND
• The total fee is reasonable.

The comment following the rule provides attorneys with additional guidance on what the state considers an allowable fee-sharing agreement.

Competent Referrals

One of the requirements included in the Rule 1.5 Commentary is that the state expects that attorneys only refer matters to lawyers whom they “reasonably believe [are] competent to handle the matter.” This relates back to Rule 1.1, which requires that attorneys provide competent representation to clients.

Prior to referring a matter to another attorney, the attorney making the referral should be confident the other attorney has the skills, experience, or knowledge to meet this competency threshold. As the comment to Rule 1.1 mentions, competency can include “reasonable preparation” such as study of a new legal field.

Written Requirement

Attorneys must provide clients, in writing, with the details of the sharing agreement. This document must list all involved attorneys and law firms.

The Rule 1.5 Commentary suggests that division of fees occurs most often in situations between a referring attorney and trial specialist, although this isn’t a requirement. The rule also states a division is more likely when contingent fees are involved. When there is a contingent fee agreement, the client must also sign the written document, and attorneys should ensure they abide by the rules on contingent fees.

Even when not explicitly required, attorneys should encourage clients to sign the written agreement. Although Connecticut’s Rules of Professional Conduct do not require a signature in all situations, they do require that a client not object to the division of fees. A signature provides evidence that the client was informed of and consented to the fee split.

What is Reasonable?

Rule 1.5(e) also requires that any division of fees be “reasonable.” Rule 1.5(a) offers guidance on what constitutes a reasonable fee. The eight listed factors are not exclusive, and the Rule 1.5 Commentary highlights that reasonableness is determined on a case-by-case basis and the specific circumstances.

These eight factors may or may not be relevant for a division of fees, but they can help determine what constitutes a reasonable splitting of fees. For referral fees, attorneys should be aware of the standard range of referral fees that other firms or attorneys in the regional area or specialization charge. Such information may also be beneficial when informing clients about the referral fee.

Out-of-State Referral Fees

In May 2020, the Connecticut Bar Association’s Standing Committee on Professional Ethics released Informal Opinion 20-02, which addresses what to do regarding referral fees and out-of- state attorneys. The opinion addressed two separate questions regarding referral fees.

When States Allow Referral Fees

The first part of the issue addressed referral fees when the others attorneys are barred in jurisdictions that also follow a pure referral fee system. The Committee reaffirmed earlier decisions that Connecticut attorneys may split fees with these out-of-state attorneys.

The rules are otherwise similar. The Connecticut attorney must believe the second attorney is competent to handle the case in question. The client must still be informed in writing of the referral, and the fee must be reasonable.

When States Do Not Allow Referral Fees

The second part of the informal opinion addressed the topic of a division of fees when the other attorney practices in a state that does not allow referral fees. The question centered on whether a Connecticut attorney may collect a referral fee directly from a client.

In this situation, Rule 1.5 no longer applies. The Connecticut attorney may still charge the client a fee, but under Rule 1.5 (a) and (b) as the attorneys are no longer splitting a single fee.

This means an attorney may negotiate an appropriate fee and take into consideration the legal services the attorney provided in making that referral. The opinion highlights three potential services an attorney may provide ahead of a referral:

• Identifying the client’s legal needs
• Assessing the qualifications of lawyers in the subject jurisdiction and
• Referring the client to a lawyer competent to provide the legal services the client requires Similar to a traditional referral fee, the fee charged must be reasonable, and the attorney and client must still have a written agreement regarding the fee.

Conclusion

Attorneys in Connecticut may split fees with other attorneys, including out-of-state attorneys practicing in other pure referral jurisdictions. Attorneys must provide a written document about the fee splitting to the client, and the fee must be reasonable. Attorneys must also believe the other attorney or law firm is competent to handle the matter at hand. While not required in all cases, attorneys should seek to have the client sign the written agreement. A signature can act as proof that they obtained permission and informed the client of the fee-splitting arrangement.