Attorney Fee Splitting Agreement
This question was recently asked in one of Lawyers Mutual`s CLE programs. The issue arising out of litigation in which the client obtained the portion of the transaction to which he was entitled, but his lawyers Abraham, Martin and John are arguing over how the attorneys` fees will be allocated. The question is where lawyers should keep the fees while they settle their dispute. It is agreed that the lawyer will share the legal fees in this case with ______ Associated Lawyer has agreed to assume co-responsibility for this matter. Associated Lawyer receives 50% of the attorney`s fees. The total fee for the customer is not increased. In addition, it can help you represent your client competently and achieve a better result for you and your client. At Lawyers Mutual, we process claims for processing errors that could have been avoided if our policyholders were willing to hire a more experienced lawyer and be willing to share the fees. Every day, we advise lawyers: “Don`t tubble!” If you are not competent to deal with an issue, you have an ethical obligation to become competent.
One way to do this is to partner with a more experienced lawyer and spread the costs. The expertise that lawyers conduct in the application of certain parts of the existing ABA 1.5 model rule points out that a former lawyer whose services are terminated without cause may be entitled to a fee for services provided prior to termination of employment and that any proposed agreement between the original counsel and a successor should be fully disclosed and discussed with the client. The American Bar Association`s Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 487 to clarify the situation. The notice published on June 18 focuses on royalty-sharing agreements for success fee cases and provides guidance to both the original and successor lawyers. It also notes that the successor lawyer and the previous lawyer are not bound by the royalty allocation guidelines set out in Rule 1.5(e) of the Model, as they deal with situations in which two lawyers from different firms deal with a case at the same time. Abraham, Martin, and John complied with Rule 1.5(e). Abraham filed the dispute in his trust account. The three former amigos are now arguing over the distribution of all legal fees.
Royalty splitting is permitted in North Carolina, subject to certain restrictions. 2. The client agrees with the agreement, including the share that each lawyer receives, and the agreement is confirmed in writing; and “The successor lawyer must discuss with the client whether the client is likely to pay twice: a possible tax to the previous lawyer and another to the successor lawyer,” formal notice 487 states. . . .