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ABA issues new guidance on fee-splitting between lawyers

If a client in a civil contingency-fee case replaces her attorney with a lawyer from a different firm and ultimately prevails in the case, the legal fee for any proceeds can present sticky financial and ethical issues.

The American Bar Association Standing Committee on Ethics and Professional Responsibility issued  Formal Opinion 487 to help clarify the situation. Released on June 18, the opinion addresses fee-splitting arrangements for contingency-fee cases and provides guidance to both the initial attorney and the successor.

The opinion, which guides lawyers on how to apply parts of existing ABA Model Rule 1.5, emphasizes that a previous attorney, whose services are terminated without cause, may be entitled to a fee for services performed prior to discharge and that any proposed agreement between the initial attorney and a successor should be fully disclosed and discussed with the client.

It also notes that the successor attorney and prior attorney are not bound by the fee-division guidance set forth in Model Rule 1.5(e) because it addresses situations where two lawyers from different firms handle a case concurrently.

“Successor counsel must address with the client whether the client risks paying twice: one contingent fee to the predecessor counsel and another to the successor counsel,” Formal Opinion 487 said. “A client cannot be exposed to more than one contingent fee when switching attorneys, given that … each counsel did not perform all of the services required to achieve the result.”

The ABA Standing Committee on Ethics and Professional Responsibility periodically issues ethics opinions to guide lawyers, courts and the public in interpreting and applying ABA model ethics rules to specific issues of legal practice, client-lawyer relationships and judicial behavior. 

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