Guidance issued for splitting fees in contingency cases when a lawyer is replaced

On Tuesday, the American Bar Association Standing Committee on Ethics and Professional Responsibility released Formal Opinion 487 that addresses fee splitting arrangements when a lawyer in a separate firm replaces the first counsel rather than works together on a contingency-fee case.

The opinion emphasizes that a previous attorney, whose services are terminated without cause, may be entitled to a fee for services performed prior to discharge and that any proposed agreement between the initial attorney and a successor should be fully disclosed and discussed with the client.

It also notes that the successor attorney and prior attorney are not bound by the fee-division guidance set forth in Model Rule 1.5(e) because such procedures are designed to address situations where two lawyers from different firms handle a case concurrently. The model rule notes that the division of any proceeds from a case should be in proportion to the services performed by each lawyer, be reasonable in its totality and be agreed to by the client in writing, and states that Rule 1.5(e) is not applicable.

Formal Opinion 487 explains “Rule 1.5(a), however, alone supports the conclusion that client consent is required to divide the fee at the end of the case.”

The ABA Standing Committee on Ethics and Professional Responsibility periodically issues ethics opinions to guide lawyers, courts and the public in interpreting and applying ABA model ethics rules to specific issues of legal practice, client-lawyer relationships and judicial behavior. Recent ABA ethics opinions are available on the ABA Center for Professional Responsibility website, www.americanbar.org/groups/professional_responsibility.

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