Attorney Referral Fees in New Jersey - A Complete Guide

How to Ethically Share Fees With Other New Jersey Attorneys

Attorneys in New Jersey may divide fees when they base the division on services performed or when they assume joint responsibility. In all cases, fees must be reasonable.

New Jersey Rule

New Jersey Rules of Professional Conduct 1.5(e) provides the requirements for a division of fees. It states:

Except as otherwise provided by the Court Rules, a division of fees between lawyers who are not in the same firm may be made only if:

• (1) the division is in proportion to the services performed by each lawyer, or, by written agreement with the client, each lawyer assumes joint responsibility for the representation; and
• (2) the client is notified of the fee division; and
• (3) the client consents to the participation of all the lawyers involved; and
• (4) the total fee is reasonable.

Attorneys must always inform a client of the proposed division and obtain client consent for the participating attorneys.

Although the rule requires written agreement only for joint responsibility, attorneys should consider making it a habit to obtain written client consent for all divisions of fees. Given the requirements for notification and consent, a written document is one of the easiest ways to show that an attorney followed Rule 1.5(e).

Exceptions for State Certified Specialists

New Jersey waives the requirement that a fee division be based on the proportion of services rendered or maintaining joint responsibility when the referral is made to a Certified Attorney. New Jersey State Judiciary Rule 1:39-6(d) provides:

(d) Division of Fees. A certified attorney who receives a case referral from a lawyer who is not a partner in or associate of that attorney's law firm or law office may divide a fee for legal services with the referring attorney or the referring attorney's estate. The fee division may be made without regard to services performed or responsibility assumed by the referring attorney, provided that the total fee charged the client relates only to the matter referred and does not exceed reasonable compensation for the legal services rendered therein. The provisions of this paragraph shall not apply to matrimonial law matters that are referred to certified attorneys.

New Jersey certifies attorneys in civil, criminal, matrimonial, worker’s compensation, and municipal court, however, this exception is not application to referrals to matrimonial specialists.

New Jersey Supreme Court Advisory Committee on Professional Ethics, Opinion 694 emphasizes however that this rule only relaxes the requirement that a fee split be premised on the proportion of services rendered or joint responsibility, but maintains the requirements that the client consent to the fee split and that the total fee be reasonable.

Reasonable Fees

Any fees divided under Rule 1.5(e) must follow the same requirements as other fees. NJRPC 1.5(a) provides guidance on what defines a reasonable fee and states:

“A lawyer’s fee shall be reasonable. 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;
• (8) whether the fee is fixed or contingent.”

These factors are not exclusive. The ABA Model Rules, on which this rule is based, state that reasonableness should be determined on a case-by-case basis.

Ethics Opinions

Rutgers University maintains a database of the opinions of the New Jersey Supreme Court’s Ethics Committee. Two of these opinions relate to Rule 1.5(e) and how attorneys may divide fees. 

New Jersey Rules of Court Rule 1:19A-3 states that public ethics opinions are binding on all attorneys licensed to practice in New Jersey. The exact language can be found at the end of subsection (c):

“Published opinions shall constitute constructive notice to, and shall be binding on, all members of the bar and in connection with any ethics proceedings.”

1984 Opinion

This opinion centered on a potential conflict of interest. Although there was no actual impropriety, the opinion stated that attorneys should consider the appearance of impropriety when deciding whether to divide a fee. In other words, even if technically ethical, if the appearance of a fee division would suggest unethical actions or reflect poorly on the legal profession, attorneys should decline to divide fees.

1990 Opinion

In this opinion, the Committee stated that attorneys could form partnerships and associations with attorneys from other jurisdictions. The caveat is that they should not be done in a way that would violate ethics rules, including Rule 1.5(e). Attorneys must have a legitimate partnership and not merely state they have a partnership. Attorneys should not claim a partnership or association merely to avoid having to meet the requirements of Rule 1.5(e).

Conclusion

In New Jersey, attorneys can use referral fees when a client agrees and when an attorney either assumes joint responsibility or bases the division on work completed. All fees must be reasonable.