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Vol. 73, No. 6, June 2000 |
Ethics
Referring Attorneys Incur
Enhanced Obligations to Clients
Ethics E-00-02: Sharing Office Space with Unrelated Entities
Professional ethics opinion E-00-01 considers the division of fees between lawyers not in the same firm and defines "[j]oint responsibility for the representation" in SCR 20:1.5(e).
by the State Bar Professional Ethics Committee
When a lawyer forwards a client matter to a lawyer in another
firm and the two lawyers agree to share any fee generated in
the matter other than in proportion to the services provided
by each, what must the forwarding lawyer do to comply with the
requirement of "assuming joint responsibility for the representation"
as defined in SCR
20:1.5(e)?
Opinion
SCR
20:1.5(e) provides as follows:
(e) A division of fees between lawyers who are not in the
same firm may be made only if:
- 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;
- the client is advised of and does not object to the participation
of all lawyers involved and is informed if the fee will increase
as a result of their involvement; and
- the total fee is reasonable (emphasis added).
The only hint at a definition of the phrase "joint responsibility
for the representation" provided by the Rules of Professional
Conduct is a reference in the Comment to SCR
20:1.5 that "[j]oint responsibility for the representation
entails the obligations stated in Rule 5.1 for purposes of the
matter involved."
SCR
20:5.1 addresses the responsibilities of a partner or supervisory
lawyer and identifies that responsibility as making reasonable
efforts to ensure that other lawyers conform to the Rules
of Professional Conduct. This duty may be breached if the supervisory
lawyer has knowledge of conduct that violates the Rules and either
ratifies the conduct or having the opportunity to avoid or mitigate
the consequences of such conduct fails to do so.
ABA Informal Opinion 85-1514 defines responsibility under
DR2-107(A) which is used to similar effect as joint responsibility
is used in MR 1.5(e).
That opinion states that:
- joint responsibility does not require substantial services
to be performed since the assumption of joint responsibility
is an alternative to a division of fees in proportion to the
services performed; and
- joint responsibility does include responsibilities comparable
to that of a partner in a law firm for other partners (as in
MR 5.1) under similar circumstances, including:
- (a) financial responsibility; and
- (b) ethical responsibility such as to assure adequate representation
and adequate client communications.
Referring attorney must maintain contact with the progress
of a matter. The Professional Ethics Committee opines that
when a lawyer refers a matter to a lawyer not in the same law
firm under the fee sharing arrangement permitted by SCR
20:1.5(e), the referring lawyer need not be involved in the
day-to-day substantive handling of the matter including such
activities as making tactical decisions regarding the representation
or providing the legal services necessary to achieve the objective
of the representation.
However, the referring lawyer in assuming joint responsibility
for the representation must maintain contact with the progress
of the matter in the following regards.
First, the referring lawyer must remain sufficiently aware
of the performance of the lawyer to whom the matter was referred
to ascertain if that lawyer's handling of the matter conforms
to the Rules of Professional Conduct. This may be achieved by
periodically reviewing the status of the matter with that lawyer,
the client, or both. It also requires being available to the client
regarding any concerns of the client that the lawyer to whom
the matter has been referred is handling the matter in conformity
with the Rules. This is not to say that the referring lawyer
is the final arbiter of whether the lawyer to whom the matter
is referred is complying with the Rules, such as acting competently.
See SCR
20:1. However, it does involve the informed professional
judgment of the referring lawyer being available to the client
and acting on the client's behalf. It must be remembered
that in such a referral arrangement, the referring lawyer still
maintains an attorney-client relationship with the client. It
is the ongoing protection of the client's interests by the
referring lawyer that justifies the referring lawyer receiving
a fee that is beyond the proportion of the services actually
provided by that lawyer.
Opinions and advice of the Professional Ethics Committee, its members, and assistants are issued
pursuant to State Bar Bylaws, Article IV, Section 5. Opinions and advice are limited to the facts presented, are advisory only, and are not binding on the courts,
the Board of Attorneys Professional Responsibility, or State Bar members.
Attorneys with questions on professional ethics issues may contact the Ethics Hotline at (800) 444-9404, ext. 6168;
or (608) 250-6168 (all day Wednesday); and (608) 629-5721 on Monday, Tuesday, Thursday, and Friday mornings. Send written requests for
Professional Ethics Committee opinions to the Professional Ethics Committee c/o Keith Kaap, State Bar of Wisconsin, P.O. Box 7158, Madison, WI 53707-7158.
Professional Ethics Committee opinions may
be found online. |
Second, the referring lawyer has the supervisory duty to refer
legal matters only to lawyers who are competent to handle the
matter in question. In this regard, a lawyer referring a matter
to another lawyer, especially in circumstances in which the referring
lawyer may have a financial stake in the referral, must select
that lawyer solely for that lawyer's ability to provide
the legal services that the client needs and not because that
lawyer may be willing to enter into a fee sharing arrangement
with the referring lawyer.
Third, the referring lawyer must assume financial responsibility
for the matter though this may be secondary to the financial
responsibility assumed by the lawyer to whom the matter was referred.
Typically, financial responsibility will involve the responsibility
for paying or advancing payment of costs associated with the
handling of the matter (for example, court costs, expert fees,
discovery costs, and so on). Whether this involves advancing
costs or the assumption of responsibility for paying costs by
the responsible lawyers is a matter for agreement with the client
subject to the Rules of Professional Conduct. See SCR
20:1.8 (a), (e), and (j).
The committee also opines that "joint responsibility
for the representation" implies that both the referring
lawyer and the lawyer to whom the matter was referred must reach
a common understanding of their respective joint responsibilities
as well as their individual responsibilities to the client. This
understanding is fundamental to the proper exercise of their
respective obligations to the client. The client should be informed
of that common understanding, preferably in writing. See
SCR
20:1.4.
The question of the legal liability of a referring lawyer
for the manner in which the client's matter is handled to
completion is a question of law. However, the committee notes
that the requirements of joint responsibility imply an active
concern and attention on the part of the referring lawyer for
the competent handling of the matter to completion. The referring
lawyer is still the client's lawyer, even though the lawyer
to whom the matter is referred will usually be the lawyer responsible
on a day-to-day basis for the handling of the matter. The duty
of joint responsibility imports a serious responsibility as a
lawyer and is not a mere hand off of the case to another lawyer
to handle in his or her own unfettered discretion. This opinion
earlier noted the Comments to SCR
20:1.5 that relate the duty of joint responsibility for a
referring lawyer to the responsibility of a partner or a lawyer
having supervisory authority of another lawyer in a law firm.
See SCR
20:5.1. In a law firm, that responsibility is one of vicarious
liability unless that liability is adjusted by the implementation
and operation of limited liability law. See SCR
20:5.7. While the sharing of fees and the imposition of joint
responsibility under SCR
20:1.5(e) does not create a legal partnership, lawyers should
be mindful of these enhanced obligations created when the lawyer
receives more than the value of the services provided as a referral
fee.
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