NYSBA June 10, 1981

Can a lawyer who made a fee-sharing referral agreement that violates the Code keep the whole fee and refuse to pay the forwarding lawyer?

Short answer: The opinion concluded that a lawyer may not keep the entire fee by reneging on a fee-sharing agreement in the name of the Code; the matter should go to a bar association panel to set what fee may be charged and how it should be shared.

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This page answers the general question as of 1981. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.

Disclaimer: Advisory only. Not binding precedent.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The committee was asked whether a lawyer who entered a referral agreement that violated the Code may retain the entire fee and refuse to honor that agreement. It first restated the fee-sharing rule of DR 2-107(A): a lawyer may divide a fee with a lawyer who is not a partner or office associate only where the client consents after full disclosure, the division is in proportion to services performed and responsibility assumed, and the total fee is not clearly excessive (citing EC 2-22 and N.Y. State 414 (1975)).

The committee noted that it cannot decide questions of law or contract enforceability, and acknowledged that a lawyer who performs an illegal agreement is usually also acting unethically. But it found the situation presented different: where a lawyer enters an agreement with another lawyer, benefits from it, and the claimed violation is not unlawful apart from the Code, a later refusal to honor the agreement cannot be defended in the name of professional ethics. It drew on ABA Inf. 6, which held that a lawyer who agreed to divide a fee in violation of the Canons did so "at his own peril."

The committee grounded the result in the value the Code places on a lawyer's integrity (Canon 1, EC 8-7, EC 9-1), quoting Sharswood and Drinker on the importance of keeping faith with professional colleagues, and tied reneging on a lawful-as-between-lawyers agreement to the prohibition on dishonesty, fraud, deceit, or misrepresentation in DR 1-102(A)(4). Permitting the lawyer to keep the whole fee would let him escape his own commitment while rewarding an unethical act. To protect the client against excessive fees and uphold the Code's standards, the committee said the matter should be submitted to an appropriate bar association panel to review what fee may properly be charged to the client and whether and to what extent it should be shared with the forwarding lawyer. The question was answered in the negative.

Currency note

This opinion was issued in 1981, before New York replaced the Code of Professional Responsibility with the Rules of Professional Conduct in 2009 (division of fees among lawyers now appears at Rule 1.5(g) and the bar on dishonesty at Rule 8.4(c)). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer keep the whole fee by saying the fee-split deal broke the Code?

A: No. The committee held a lawyer may not avoid a fee-sharing agreement, and pocket the entire fee, by invoking the Code, where the agreement was not otherwise unlawful.

Q: How should the fee then be divided?

A: The committee said the matter should go to an appropriate bar association panel, which would determine the proper fee to the client and how, if at all, it should be shared with the forwarding lawyer.

Q: Why is reneging treated as unethical?

A: The opinion tied it to DR 1-102(A)(4)'s bar on dishonesty and to the integrity the Code places at the foundation of the profession; reneging in the name of ethics is inconsistent with honesty and fair dealing.

Background and rules framework

The opinion applied DR 2-107(A) (division of fees with another lawyer) and DR 1-102(A)(3) and (4) (illegal conduct and dishonesty), under Canon 1 and EC 1-5, 2-22, 8-7, and 9-1, to a lawyer seeking to disavow a fee-sharing agreement. The closest current Model Rule analogues are Rule 1.5 (fees, including division among lawyers) and Rule 8.4 (misconduct, including dishonesty).

Citations and references

Rules of Professional Conduct:

MR 1.5 (fees; division of fees among lawyers)
MR 8.4 (misconduct; dishonesty)
NY DR 2-107(A), DR 1-102(A)(3), DR 1-102(A)(4), Canon 1, EC 1-5, EC 2-22, EC 8-7, EC 9-1

Other opinions cited:

N.Y. State 414 (1975): fee-division requirements
N.Y. State 415 (1975): performing an illegal agreement as unethical
ABA Inf. 6: dividing a fee in violation of the Canons "at his own peril"

Source

Landing page: https://nysba.org/opinion-535/

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