Attorney Referral Fees in Nevada - A Complete Guide

How to Ethically Share Fees With Other Nevada Attorneys

Nevada allows for a division of fees when an attorney refers a case to another lawyer. Attorneys in Nevada can now divide fees regardless of work completed and without assuming joint responsibility.

As a 2009 article in Nevada Lawyer highlights, referral fees acknowledge that few, if any, lawyers are masters of all. By allowing the use of referral fees, the Nevada Bar recognizes that attorneys practice in increasingly specialized areas and should be financially compensated for sending clients to lawyers who have the familiarity, skill and experience to provide a client with the best-possible service.

Nevada Rule

Nevada Rules of Professional Conduct Rule 1.5(e) governs the division of fees. It states:

“(e) A division of a fee between lawyers who are not in the same firm may be made only if:

1. Reserved;
2. The client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and
3. The total fee is reasonable.”

The key provisions of the current law are that a client is informed in writing of any fee division and that the total fee is reasonable.

The current law is a revision from a previous version. In a break from both the Model Rules and the previous SCR 155(5), Nevada no longer requires attorneys to divide fees based on actual work performed or to accept joint responsibility. The newer version also no longer explicitly requires that clients do not object to the lawyers involved.

Reasonableness of Fees

NRPC Rule 1.5(a) provides guidance on what the state bar considers a reasonable fee.

“(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, 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.”

These factors are not exclusive and may not be relevant in every case. As a reminder, Nevada does not require that a division of fees be based on services performed.

Ethics Opinion: Out-of-State Attorney Fees

In 1987, the Standing Committee on Ethics and Professional Responsibility issued an opinion regarding the division of fees. These ethics opinions are not legally binding, and this particular opinion predates the current version of Nevada’s ethics code. Nevertheless, this opinion provides useful information for attorneys.

First, even when a client proposes a fee or a division of fees, attorneys must still abide by the NVPR. This includes ensuring the fee is reasonable and that the client understands and consents to the agreement in writing.

Second, when an attorney divides fees with an attorney for another state, additional factors may come into consideration. The key concern is that neither attorney oversteps and essentially practices in a jurisdiction in which they aren’t licensed. This includes ensuring that they are not assisting another attorney to essentially practice in the first attorney’s state when pro hac vice admission would be required. The committee encourages attorneys to look at the specific facts of each case when determining the proper division of work to ensure neither attorney works in a jurisdiction in which they aren’t barred.

The opinion does not address cases when one attorney is licensed in a state that does not allow referral fees. What this opinion highlights is that, when a Nevada attorney either receives a referral or suggests a referral to an attorney in another jurisdiction, both attorneys should create a clear division that limits both attorneys to practicing law within their respective states.

Advertising

NRPC Rule 7.2(a), which governs advertising, forbids attorneys from giving anything of value to someone who refers a client to their services. One of the exceptions to Rule 7.2(a) is the division of fees between attorneys. To comply with both Rule 1.5(e) and rule 7.2(a), attorneys should make sure they are meeting all of the requirements regarding division of fees.

Conclusion

Attorneys barred in Nevada can make use of referral fees. They must obtain client consent in writing, and the fees must be reasonable. If and when an attorney divide fees with an attorney from another jurisdiction, attorneys should take care to keep the division of responsibilities clear to avoid any suggestion of practicing out of their jurisdiction.