Attorney Referral Fees in North Dakota - A Complete Guide
How to Ethically Share Fees With Other North Dakota Attorneys
North Dakota-barred attorneys may divide fees with another attorney when they either base the division on work completed or assume joint responsibility for the matter. All fees must be reasonable, and the client must agree to the division in writing.
North Dakota Rule
North Dakota Rules of Professional Conduct Rule 1.5(e) governs a division of fees. It states:
A division of fee between lawyers who are not in the same firm may be made only if:
- the division of fee is in proportion to the services performed by each lawyer or each lawyer, by written agreement, assumes joint responsibility for the representation;
- after consultation, the client consents in writing to the participation of all the lawyers involved;
and- the total fee is reasonable.
The Rule 1.5 Comment states that a division is intended for situations in which neither attorney, on their own, could represent the client as well. Attorneys are not required to disclose to the client the share each attorney is to receive.
While Rule 1.5(e) does not require written agreement in all circumstances, attorneys should consider using a written agreement throughout any division. A written document is one of the easiest ways to show an attorney followed the requirements of Rule 1.5(e) and allows all parties to easily reference and understand the terms of the division.
Reasonable Fees
Any division of fees must be reasonable. NDRPC Rule 1.5(a) defines reasonable fees. It states:
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:
- the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
- the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
- the fee customarily charged in the locality for similar legal services;
- the amount involved and the results obtained;
- the time limitations imposed by the client or by the circumstances;
- the nature and length of the professional relationship with the client;
- the experience, reputation, and ability of the lawyer or lawyers performing the services;
and- whether the fee is fixed or contingent.
Competency
The commentary to Rule 1.5(e) includes the referring attorney’s belief in the other attorney’s competency as a requirement for any division. NDPRC Rule 1.1 defines competency:
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.
Competency can mean that an attorney either already possesses or has the ability to acquire the skills and knowledge needed for representation. For matters involving multiple attorneys, such as referrals, the Rule 1.1 Comment suggests that competency includes communication between all parties, including the client, about the scope of each attorney’s responsibilities.
The Rule 1.1 Comment suggests the following factors when weighing competency regarding to a division of fees:
- The circumstances
- An attorney’s education, experience, and reputation
- What services the attorneys are expected to perform
- Any ethical considerations
As stated in the Rule 1.5(e) Comment, one purpose of a division is to provide a client with better representation than a single attorney could provide.
Ethics Opinions
In 2005, Ethics Opinion No. 05-02 suggested that while North Dakota attorneys may divide fees with attorneys licensed in another jurisdiction, they must ensure that neither attorney’s work rises to a level of unauthorized practice of law. That same opinion stated that Rule 1.5(e) does not apply when referrals are not for legal work, even if the involved individuals are attorneys.
Ethics Opinion No. 04-02 reaffirmed a 1993 opinion that attorneys may divide a fee with a suspended or disbarred attorney for work completed before the suspension or disbarment. The key is timing. An attorney is entitled to a fee for work completed while they were in good standing. Once suspended, disbarred, or otherwise unable to practice law, they could not complete any work and would not be entitled to any fee.
This opinion also mentions that, when a fee split is a percentage based on work completed, the percentage may need to be adjusted when one attorney does not complete the proposed work. Rule 1.5(e) requires a split based on actual work completed.
To provide an example of how this opinion would work in practice: Two attorneys agree that Attorney A will receive one-third of the fee for completing one-third of the work. Attorney A, however, becomes an inactive member of the bar before completing one-third of the work. In this situation, the attorneys would likely need to revise the proposed split to conform with the actual work completed.
Ethics Opinion No. 00-11, issued in 2000, reaffirmed the need for either the assumption of joint responsibility or a division proportional to work performed for a fee division. Absent either of these, a division will not meet the requirements of Rule 1.5(e).
Conclusion
Attorneys in North Dakota may split fees with a non-firm attorney. The attorneys should be competent to handle the matter and base the division on work completed or assumption of joint responsibility.
