Utah State Bar
Ethics Advisory Opinion Committee
Opinion Number 14-03
Issued April 22, 2014
1. Do the Utah Rules of Professional Conduct prohibit referral agreements between two attorneys that require one of the attorneys (the “Referring Attorney”) to refer to the other (the “Receiving Attorney”) all clients that have a certain specified type of products liability claim?
2. The Committee concludes that an agreement between two attorneys which requires the Referring Attorney to refer to the Receiving Attorney all clients that have a certain specified type of claim may likely violate various provisions of the Utah Rules of Professional Conduct (the “Rules”).
3. The Referring Attorney, licensed to practice in the State of Utah, and the Receiving Attorney, licensed to practice elsewhere, enter into an agreement governed by Utah law (the “Agreement”) to jointly pursue certain kinds of products liability claims (the “Claims”) of individuals located in the State of Utah. The Agreement provides in relevant part:
- Referring Attorney will generate the cases by placing advertising and/or arranging for medical testing and diagnosis of prospective clients and would be entitled to reimbursement from the Receiving Attorney for the costs of doing so.
- In return for the Receiving Attorney’s agreement to pay those expenses, the Referring Attorney would be required to exclusively refer to the Receiving Attorney all clients having such Claims who contact the Referring Attorney. The Referring Attorney would not be allowed to represent such clients himself or to refer such clients to any other attorney.
- The Referring Attorney will place advertising, accept incoming calls from potential clients, obtain medical records from potential clients, arrange for medical testing, and perform certain other related tasks, before turning the clients over to Receiving Attorney for further action.
- The Receiving Attorney will decide in his sole discretion the venue, jurisdiction, timing, counts, and content of complaints or petitions, joinder of plaintiffs and/or defendants, and any other strategic issues relating to the Claims.
- The Referring Attorney will ask clients to sign new fee agreements directly with the Receiving Attorney, identifying the Receiving Attorney as the clients’ attorney, will inform the clients of the division of fees between the two attorneys, and will inform the clients of any other matters deemed by either attorney to be required by the Rules of Professional Conduct.
- The Referring Attorney will not be required to perform any services except those specified in the Agreement or required by the Utah Rules or by any other ethical rules governing the Claims or any resulting cases.
- The Receiving Attorney will pay the Referring Attorney specified portions of the fees recovered by the Receiving Attorney for the clients on their Claims.
4. The fee sharing agreement between the two attorneys is governed by Rule 1.5, which provides that there may be a division of fees between lawyers in different firms, but on the following condition:
(e)(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;
(e)(2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and
(e)(3) the total fee is reasonable.