If a lawyer is disqualified from a matter by a conflict of interest, can the lawyer still collect a referral fee for sending it to another firm?

Plain-English summary

The committee addressed whether a lawyer who must withdraw from a matter because of a conflict of interest may nonetheless collect a referral fee from the lawyer who takes the case. Before the 1990 amendments, DR 2-107(A) barred a fee merely for "forwarding" a matter and allowed fee division only in proportion to services performed and responsibility assumed. The amended DR 2-107(A) permits a division of fees between lawyers in different firms where the client consents after full disclosure that a division will be made, the division is in proportion to services performed or, by writing, each lawyer assumes joint responsibility, and the total fee is reasonable.

The committee distinguished two situations. Where the conflict is non-consentable, the lawyer is barred from the representation entirely and so cannot assume "joint responsibility" for the matter; without the ability to perform services or assume responsibility, the lawyer cannot satisfy DR 2-107(A) and may not receive a referral fee. Where the conflict is consentable (a DR 5-101(A) personal-interest conflict that a disinterested lawyer would find non-adverse and to which the client consents after full disclosure), the lawyer could have kept the matter; if the lawyer instead chooses to refer it, for example to a more experienced practitioner consistent with DR 6-101(A)(1), the committee saw no reason the lawyer may not receive a referral fee, provided the client's consent is obtained under the same standard that would have allowed the lawyer to keep sole responsibility.

Currency note

This opinion was issued in 2001, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. 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 Treat this page as historical context, not current guidance.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: Could a lawyer disqualified by a non-consentable conflict collect a referral fee?

A: No. The opinion concluded the disqualified lawyer cannot assume the joint responsibility DR 2-107(A) requires, so no referral fee could be paid.

Q: What if the conflict was one the client could consent to?

A: The opinion concluded that, with the client's consent obtained under the same standard that would have let the lawyer keep the matter, the lawyer could refer it and receive a referral fee.

Q: What standard governed the client's consent?

A: The opinion tied it to DR 5-101(A): the conflict had to be one a disinterested lawyer would believe would not adversely affect the representation, with the client consenting after full disclosure of the lawyer's interest.

Background and rules framework

The opinion interpreted New York's former Code of Professional Responsibility: DR 2-107(A) and (D) (division of fees between lawyers in different firms) and DR 6-101 (competence). The closest Model Rule analogues are Rule 1.5(e) (division of a fee between lawyers in different firms) and Rule 1.7 (concurrent conflicts). New York replaced this Code with the Rules of Professional Conduct in 2009; the DR numbers cited here are historical.

Citations and references

Rules of Professional Conduct:

• MR 1.5(e) (division of fees between firms); MR 1.7 (concurrent conflicts)
• NY DR 2-107(A), DR 2-107(D), DR 6-101

Other opinions cited:

• N.Y. State 535 (1981): DR 2-107(A) before the 1990 amendments

See also

• NY State Bar Op. 755: Lawyer-owned ancillary business and cross-referrals
• NY State Bar Op. 779: Paying a marketing organization for referrals

Source

• Landing page: https://nysba.org/opinion-745/