Opinion 89-26

This is the Committee's opinion regarding fee splitting with an attorney suspended or disbarred from the practice of law. The specific issue addressed is whether fees may be divided pursuant to a pre-suspension or disbarment referral agreement whereby the suspended or disbarred attorney receives a percentage of the fee for work actually performed prior to suspension.

The facts as presented to the Committee involve a situation where the Inquirer received fees from a matter in which the client had been represented previously by two other attorneys. At the time the case was referred to the Inquirer, a fee-splitting arrangement between the three attorneys was agreed upon whereby the total fee would be divided as follows: 22.2% to the first attorney, 11.1% to the second, referring attorney and the balance to the Inquirer. The Inquirer states that the percentages reflect the relative amount of work done by each attorney. The client consented to the fee-arrangement. Subsequent to the fee arrangement, however, the referring attorney was suspended from the practice of law. The Inquirer ultimately received the total fee and has escrowed the suspended attorney s percentage.

Rule 5.4 of the Rules of Professional Conduct prohibits the sharing of legal fees with a non-lawyer. Moreover, fees may not be divided with a lawyer who is under a legal or ethical impediment to representing the client. See ABA Informal Opinion 1088 (1968); New Jersey Opinion 549 (1984). These ethical considerations are intended to prevent an attorney from continuing to earn legal fees after disbarment or suspension. The rules do not, however, prevent payment of fees earned prior to suspension or disbarment.

This Committee and other authorities have frequently opined that a disbarred or suspended attorney is entitled to a division of fees in proportion to the services rendered prior to disbarment or suspension. See Philadelphia Bar Association Professional Guidance Committee Opinions # 86-3, 84-61, 83-101, 78-95, 75-63; see also Pennsylvania Bar Association Committee on Legal Ethics and Professional Responsibility Informal Opinion, May 16, 1986; South Carolina Bar Opinion 21-78, (Maru, 12727); Maryland State Bar Association Committee on Ethics, Opinion 76-49.

While the foregoing opinions generally approve of fee-splitting with a disbarred or suspended attorney on a quantum meruit basis, percentage referral fees have been approved as well in some jurisdictions including Pennsylvania. See Pennsylvania Bar Association Opinion supra; Reardon v. DeBlasio & Meagher, 1 Law. Man. Prof. Conduct 200 (N.Y. Sup. Ct. 1984) (permitting percentage division of fee regardless of actual contribution by each attorney where there was a previous express contract). As fee splitting under Pennsylvania Rule of Professional Conduct 1.5e does not require work to be done by the referring attorney, the referral fee is earned when the case is referred. As long as the attorney is in good standing when the referral is made, and the requirements of Rule 1.5(e)(1)&(2) are met, no ethical problem exists.

Notwithstanding the foregoing, it should be noted that a disbarred or suspended attorney may be prohibited from receiving any portion of the fees generated from a matter which constituted all or part of the basis for the disciplinary action against the attorney. See South Carolina Bar Opinion, supra; Reardon, supra.

It is therefore the opinion of this Committee that it is ethically permissible for the Inquirer to pay the percentage fee to a suspended attorney provided that the fee did not arise from a matter related to the disciplinary action against the attorney.

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.