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What To Know About Splitting Attorney Fees
Splitting attorney referral fees in Texas is permissible, but only if ethical guidelines governing the process are followed.
Core Principles
- Texas Disciplinary Rules of Professional Conduct (TDRPC): These rules, specifically TDRPC 1.04(f), dictate the framework for fee-sharing between attorneys.
- Proportionality or Joint Responsibility: The fee division must be based on either the services performed by each lawyer (proportionality) or on assuming joint responsibility for the case.
- Client Consent: The client must be informed of the referral arrangement, including the identities of all involved attorneys, the method of fee division (proportionality or joint responsibility) and the specific fee percentages. This informed consent must be documented in writing before the referral occurs.
- Reasonable Fees: The total legal fees charged to the client must remain reasonable, considering the complexity of the case, the lawyer’s experience, and the customary fees in the area.
Proportionality Method
- Fee division should be based on the value and complexity of the legal services each attorney contributes to the case.
- Factors to consider include: time spent, legal expertise required, and the customary fees for similar services in the area.
- The referring attorney’s role should be justified by the services they provide, such as initial client consultation, case evaluation, or potential co-counseling duties.
Joint Responsibility Method
- In this method, both attorneys share responsibility for the entire case and its outcome.
- This typically applies when the referring attorney actively participates in litigation strategy, discovery, or trial preparation.
- Both attorneys must be prepared to fulfill their ethical obligations to the client throughout the case.
Additional Considerations
- Transparency and Communication: Maintain open communication with the client regarding the referral arrangement, fees, and any changes throughout the case.
- Written Agreements: Formalize the fee-sharing agreement with the referring attorney in writing, outlining the responsibilities, division method, and percentage for each party. At Callahan & King, PLLC, we have already written all the contracts needed for this arrangement.
- Client’s Best Interests: The primary focus should always be on achieving the best possible outcome for the client. Fee-splitting shouldn’t compromise the quality of legal representation.
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