Attorney Referral Fees in Maryland - A Complete Guide

How to Ethically Share Fees With Other Maryland Attorneys

Maryland closely follows the ABA Model Rules when it comes to the division of fees between lawyers in separate firms. Attorneys may divide fees either by assuming joint responsibility for the matter, or based upon the proportion of work performed.

Maryland Rule

Maryland Rules of Professional Conduct Rule 1.5(e) lists the requirements for any division of fees. It states:

The accompanying comment mentions that an attorney may only refer a matter to an attorney they believe to be competent to handle the representation.

Reasonable Fees

As stated in Rule 1.5(e)(3), all fees must be reasonable. MRPC Rule 1.5(a) defines reasonable fees as:

An attorney 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 of the attorney;
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 attorney or attorneys performing the services;
   and
8. whether the fee is fixed or contingent.

These factors are not exclusive. Reasonableness is a case-by-case determination.

Competence

MRPC Rule 1.1 governs attorney competence. It states: “An attorney shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”

• Similar to fees, competency is a case-by-case determination. An attorney may be competent to handle one matter but not another. Some factors to consider when determining competency:
• The attorney’s knowledge, skill, and experience, especially regarding the matter or subject at hand.
• Whether the matter requires any specialization and if it does, whether the attorney has the relevant knowledge, skills, or experience.
• If an attorney does not possess needed skills or knowledge, they should possess the ability to gain that skill and/or knowledge over the course of representation.
• The attorney is able to maintain competency throughout representation, including continued study or other education if needed.

Ethics Opinions

Over the years, the Committee on Ethics has issued several opinions related to divisions of fees. Multiple opinions deal with dividing fees with attorneys who are no longer active members of the bar.

Ethics Docket No. 1976-40 states that the requirements for a division of fees do not change when one attorney is resigning and passing along outstanding cases to a second attorney. Attorneys must follow the same guidelines as any other division.

Also issued in 1976 and covering a similar subject, Ethics Docket No. 1976-49 deals with splitting fees with an inactive attorney. In this case, the attorney retired after disciplinary action was brought against him, and a former associate took over his outstanding cases. The inactive attorney stated that they had an agreement to divide fees for the outstanding cases. The second attorney said the agreement was not binding. The committee declined to address the factual dispute between the two attorneys but stated that the inactive attorney’s status or any disciplinary action taken against him would not affect either version of the agreement. The Committee also stated that, regardless of the specific facts and at a bare minimum, an inactive attorney is still entitled to payment for work performed on a quantum meruit basis.

Ethics Docket No. 1990-31 looked at when a suspended attorney may collect fees under Rule 1.5(e). The key factor is timing: If the agreement for the division was made while the attorney was an active member of the bar, they are entitled to a division. If the agreement was made once the attorney was suspended or inactive, that attorney is considered a nonlawyer for the purposes of Rule 1.5(e) and the division is not enforceable. In this situation, the suspended attorney may collect fees from clients for previous work performed but may not enter into any sort of agreement under Rule 1.5(e). This opinion reaffirmed Ethics Dockets No. 84-101 and 88-81. These opinions stated that sharing fees with a suspended attorney is allowed when the agreement was made while both attorneys were active and in good standing. Ethics Docket No. 1990-30 came to a similar conclusion in a situation when an attorney resigns.

Ethics Docket No. 1994-14 considered a similar fact pattern for disbarred attorneys. The Committee reached a similar conclusion: a disbarred attorney is entitled to any fees for work completed or for any agreements entered into under Rule 1.5(e) while an active member of the bar.

Ethics Docket No. 1989-31 reaffirmed the requirements of any division under Rule 1.5(e).

Ethics Docket No. 2005-02 addressed two issues regarding division of fees. The first dealt with splitting fees with attorneys in other jurisdictions. The Committee stated such divisions are allowed when they meet the requirements of Rule 1.5(e) and do not violate any rules regarding the unauthorized practice of law. The second issue involved providing translation and interpretation services to clients of other attorneys in Maryland. While Rule 1.5(e) would control any fees an attorney charges, the question becomes whether the attorney is providing legal services or if they are providing services other interpreters, who are not attorneys, could provide. In the second case, any fees should be in line with what other interpreters charge.

Conclusion

Maryland allows attorneys to divide fees with another attorney when all involved attorneys are competent to handle representation, fees are reasonable, and the agreement is confirmed in writing. The state has also issued several ethics opinions, including several on when and how Rule 1.5(e) applies to attorneys who are not active members of MSBA.