A Co-Counsel Must Receive Notice When Shared Fee Is Received

The American Bar Association’s Standing Committee on Ethics and Professionalism issued Formal Opinion 475, which discusses the issue of safeguarding attorneys’ fees that are subject to splitting with co-counsel. According to Model Rule 1.5(e), a lawyer may divide a reasonable fee with another lawyer as long as the lawyers are not in the same firm, the client provided consent to the arrangement, and the fees ar proportionate to each lawyer’s performed services or each of the lawyers assumed joint responsibility in writing.

As per Model Rule 1.15(a), a lawyer needs to separate held property of third persons from the lawyer’s own property. The Committee determined that when one lawyer receives fees on behalf of multiple lawyers providing services in a matter, the additional lawyers count as third persons under the Rule. Therefore, the lawyer needs to keep the funds divided in a separate account—typically a trust account—within the state that the lawyer’s office is located. Additionally, the lawyer needs to keep complete records of the separate account and preserve it for five years after the representation is terminated.

Finally, the lawyer must promptly notify the other lawyers involved in receiving the funds and promptly deliver the funds that the other lawyers are entitled to receive. If there is any dispute about fee division, Model Rule 1.15(e) requires that the lawyer receiving the funds must keep them separate from the lawyer’s property until the resolution of the dispute.

Click here to read the opinion in its entirety.

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