Can a referring lawyer be held liable for the referral lawyer’s malpractice?
This article will discuss whether a lawyer could be potentially liable for another lawyer’s legal malpractice (and potential Bar rule violations) by making a referral. The short answer is yes.
The Rules on Lawyer ReferralOf course, under the Florida Bar lawyer disciplinary rules and most, if not all, jurisdictions, it is certainly ethical for a lawyer to refer a case to another lawyer and receive a referral fee; however, there are certain requirements under the rules and the referring lawyer might be held liable for any malpractice by the referral lawyer.
The CaseIn Noris v. Silver, 701 So. 2d 1238 (Fla. 3rd DCA 1997), which is attached, the plaintiff was injured when a vehicle struck his bicycle in Chicago, Illinois. The plaintiff contacted an appellate attorney in Florida (Silver) who did not handle personal injury cases. The Florida lawyer then referred the matter to another lawyer (Falk) to whom he had previously referred cases and received a referral fee. The fee agreement with the referral lawyer did not disclose a fee arrangement with the referring lawyer, which violated Florida Bar Rule 4-1.5(g). The referral lawyer then failed to file the case before the expiration of the Illinois two-year statute of limitation for personal injury claims and the client sued the Illinois lawyer and the referring Florida lawyer for malpractice. The opinion stated: "In the instant case, there is a genuine issue of material fact as to whether Silver retained a financial interest in plaintiff's personal injury case by entering into an express or implied agreement to divide the legal fee." "This issue of fact is material because pursuant to Rule Regulating The Florida Bar 4-1.5(g), if Falk and Silver agreed to divide the attorney's fee, Silver would be liable for the malpractice committed by Falk." "Attorneys in different firms may divide fees under two circumstances: first, if the 'division is in proportion to the services performed by each lawyer,' R. Regulating Fla. Bar 4-1.5(g)(1); and second, if the client agrees in writing and the agreement discloses "the basis upon which the division of fees will be made,' R. Regulating Fla. Bar. 4-1.5(g)(2). Moreover, when fees are divided pursuant to Rule 4-1.5(g)(2), 'each lawyer assumes joint legal responsibility for the representation....' Therefore, if Silver and Falk agreed to divide the attorney's fee, Silver would be liable for the malpractice committed by Falk." (emphasis added). "It is true that if Falk had recovered attorney's fees, Silver could not have enforced the purported oral agreement against Falk since the agreement did not comply with Rule 4-1.5(g)(2). See Chandris, S.A. v. Yanakakis, 668 So. 2d 180, 185 (Fla. 1995). However, we find that the failure to comply with Rule 4-1.5(g) cannot be used to shield a referring attorney from a legal malpractice claim made by a client. (emphasis added). To hold otherwise would allow attorneys to thwart their responsibility to a client by intentionally disregarding the Rules Regulating The Florida Bar. This cannot be condoned. It would also be unfair to lawyers who comply with Rule 4-1.5 to allow an avenue of escape for those who do not. Accordingly, we hold that if Falk and Silver agreed to divide the attorney's fees, then Silver is legally responsible for the malpractice committed by Falk." (emphasis added). "We point out that in order for the plaintiff to prevail, the plaintiff must prove that there was an express or implied agreement between the referring attorney, Silver, and the working attorney, Falk, to divide the legal fee. The plaintiff can prove this by showing that there was an express agreement for division of the fee. Alternatively, plaintiff can show that there was an implied agreement, for example by showing a past course of dealing whereby it was understood between the two attorneys that a fee would be paid in exchange for referrals. When the summary judgment record is read in the light most favorable to the plaintiff as nonmoving party, the evidence supports the existence of an implied agreement for division of the fee in this case."
Bottom LineThis case involved a lawyer who referred a personal injury matter which occurred in another state to a lawyer who practiced in that state. In Chandris v. Yanakakis, the Florida Supreme Court stated that a contingent fee agreement between a Florida lawyer and an out of state law firm in a Florida case lawyer is void. The opinion stated: "We have determined that the requirements for contingent fee contracts are necessary to protect the public interest. Thus, a contract that fails to adhere to these requirements is against public policy and is not enforceable by the member of The Florida Bar who has violated the rule." (Emphasis added)
More Bottom LineLawyers must be aware that, in Florida (and most, if not all jurisdictions), if a matter is referred to another lawyer and the referring lawyer expects to receive a referral fee, there must be a written fee agreement which discloses "the basis upon which the division of fees will be made" and "each lawyer assumes joint legal responsibility for the representation."