Karon Law Blog

If An Attorney Refers a Personal Injury Case Do They Get a Referral Fee?

Posted September 24, 2024

By Jonathan A. Karon

In Massachusetts the answer is yes, but other states have different rules. An attorney who refers a case to a Massachusetts personal injury attorney customarily receives a percentage of the legal fee earned as a “referral fee” for having referred the case to the personal injury attorney. Usually, but not always, the referral fee is one third of the total legal fee earned. For example if the personal injury attorney receives a contingency fee of $33,000 they might pay $11,000 to the referring attorney. The Massachusetts Supreme Judicial Court’s Rules of Professional Conduct specifically allow this, even if the referring attorney does not work on the case. The official comment to Rule 1.5 (e) on division of legal fees states that it, “does not require that the division of fees be in proportion to the services performed by each lawyer or require the lawyer to assume joint responsibility for the representation in order to be entitled to a share of the fee.” https://www.mass.gov/supreme-judicial-court-rules/rules-of-professional-conduct-rule-15-fees This is different from the rule in some states or in the American Bar Association Model Rules of Professional Conduct which require that any division of legal fees between separate firms be in proportion to the work performed.

There are some important additional requirements. Most importantly, the client may not be charged an additional amount because a referral fee is being paid. In other words, if you retain me as your lawyer, you’ll be charged the same contingency fee whether or not your case has been referred to me by another attorney. The lawyer receiving the referral is also required to disclose in the written fee agreement that a referral fee is being paid and, if a client asks, they are entitled to know the amount of the referral fee that will be paid.

So why is this allowed? The idea is that it makes sense to discourage lawyers from being tempted to take a case that they may not be qualified to handle. The Official Comment to the rule notes that this “most often is used when the fee is contingent and the division is between a referring lawyer and a trial specialist.” If you have a personal injury case, it’s important that your lawyer be ready, willing and able to try your case. That’s the only way you’ll get a fair shake. But not all lawyers are comfortable trying cases. So it’s a good idea to encourage referral of personal injury cases to lawyers who try cases. This is also a win for the referring lawyer, as they get a percentage of the legal fee and have an incentive to refer the case to a skilled trial lawyer who can maximize the client’s recovery.

It is very important to note that only an attorney can be paid a referral fee for referring a client. The Rules of Professional Conduct expressly prohibit lawyers from paying a non lawyer for recommending their services.

I’m always honored when another attorney trusts me to represent one of their clients. I keep referring attorneys up to date on the progress of the case and do my best to reward that trust by keeping their clients happy. My practice relies on word of mouth and a large part of that is repeated referrals from other attorneys.