Fee-sharing among lawyers can be mutually beneficial. It’s a long-standing tradition in the legal profession—one lawyer refers a client, another lawyer does the heavy lifting, and they split the resulting fee. Sounds fair, right? But in California, without a proper written agreement, that arrangement can become an ethics violation—or worse, lead to disciplinary action or fee forfeiture.
Let’s unpack this.
Under Rule 1.5.1 of the California Rules of Professional Conduct, a lawyer may not divide a fee with a lawyer who is not in the same firm unless:
- The client agrees in writing to the division and the terms;
- The total fee charged is not increased solely due to the division; and
- The fee division complies with the overall requirement that all fees be fair and reasonable.
Here’s the mistake I see far too often: a lawyer refers a matter to a colleague, agrees (often verbally or via text) to a fee split, and then disappears from the file. When the case resolves and the check arrives, the receiving lawyer decides to either dispute the percentage or “forgets” to pay anything at all. The referring lawyer is left trying to enforce an agreement with no written client consent, and suddenly a malpractice lawsuit—or worse, a State bar Investigation—is looming.
Let me say it plainly: if you share a fee without written client consent, you may not be entitled to any of that fee. And if the client disputes the arrangement, you could find yourself having to disgorge the entire amount—even if the division was fair and customary.
Also, don’t think you’re immune because you didn’t work on the case. California doesn’t require both lawyers to contribute to the legal work, as long as there’s disclosure and client consent. But the client has a right to know who’s getting paid, how much, and why.
For firms, this rule also applies when of-counsel or contract attorneys are involved. If you’re bringing in outside help and paying them out of a contingency fee, you must either treat them as Attorney staff (with a flat or hourly rate built into the retainer agreement) or get written client consent for the fee division.
I’ve helped law firms draft effective, enforceable fee-sharing agreements that hold up to scrutiny. In the absence of one, even a handshake deal between respected colleagues can lead to ethics complaints, strained relationships, and thousands of dollars in lost revenue.
Fee-sharing isn’t unethical—bad fee-sharing is.