Compensation Is Permissible for Experts Who Are Not Local
I have a witness who has in the past testified as an expert, but in this case will be a fact witness. Can I pay him for lost income?
ALM Media
Updated
Referral mills are not allowed.
I am a relatively young lawyer, but I have many contacts and am able to get a number of different types of cases. I, myself, am not interested in trying cases or handling them. What I want to do is advertise and then when the cases come in, I will refer these cases to other competent lawyers and receive referral fees. Can I do that?
Obviously, any lawyer is allowed to refer a client to another lawyer, assuming the client consents. There can be a referral fee if the client consents to fee splitting, though the client doesn't have to know the percentage of the fee split. The referral fee can't be excessive. In Pennsylvania, there is no quantum meruit requirement for a referral fee to be paid (see Rule of Professional Conduct 1.5(e)).
The problem is the nature of the above-described law practice and how it's advertised. For instance, a lawyer cannot mislead. If a lawyer is advertising for cases, the lawyer cannot mislead the client into believing that the lawyer is capable of or handles these cases if the lawyer does not. If a lawyer is not capable or has no intention of ever handling these cases but is advertising for them that could mislead the client.
The advertising rules are very clear on this point. Under Rule of Professional Conduct 7.2(k), a lawyer cannot advertise that they handle cases if the lawyer does not. In fact, the Rule requires that if the lawyer does not handle that particular case the lawyer is advertising for, that must be disclosed in the advertisement.
"A lawyer shall not, directly or indirectly, advertise that the lawyer or his or her law firm will only accept, or has a practice limited to, particular types of cases unless the lawyer or his or her law firm handles, as a principal part of his, her, or its practice, all aspects of the case so advertised from intake through trial. If a lawyer or law firm advertises for a particular type of case that the lawyer or law firm ordinarily does not handle from intake through trial, that fact must be disclosed. A lawyer or law firm shall not advertise as a pretext to refer cases obtained from advertising to other lawyers," as in Rule of Professional Conduct 7.2(k).
The comments to the rule are very clear. Comment 14 notes that the Rule prohibits a lawyer from misleading the public by suggesting a lawyer might handle or specialize in a particular case when they don't. The comment notes that if a lawyer advertises they do personal injury cases or serious personal injury cases, then that must constitute a principal part of the lawyer's law practice. Comment 15 notes that advertising is prohibited if "the primary purpose of obtaining cases that can be referred or brokered to another lawyer." The comment notes it is certainly fine for a lawyer to refer cases to another lawyer and that is encouraged if the lawyer doesn't have the knowledge or skill to handle a case. But, the comment notes: "It is misleading to the public for a lawyer or law firm, with knowledge that the lawyer or law firm will not be handling a majority of the cases attracted by advertising, to nevertheless advertise for these cases only to refer the cases to another lawyer whom the client did not initially contact."
In other words, Rule 7.2 wants to make sure that there's no misleading in an advertisement. If the lawyer has no intention really to handle cases, then the lawyer should not mislead clients to believe they do.
For instance, it would be very misleading if a lawyer had no intention of handling cases to advertise that a lawyer's firm does handle it and to advertise and suggest settlements the lawyer has obtained, particularly when the lawyer didn't obtain them, only the referral lawyer obtained those settlements. It would be an illegal advertisement and could result in rather serious discipline because that would be grossly misleading.
The Rules of Ethics do not allow referral mills. Obviously, if a lawyer gets in different cases and wants to refer some out and the cases keep coming in, that's OK. But, if a lawyer advertises for cases that the lawyer knows they are not going to handle, that is not OK, and could be a serious violation of the Rules of Professional Conduct.
Therefore, to answer the question, the answer is no. A lawyer cannot create a law firm and advertise for specific cases if a lawyer has no intention of handling them on a regular basis and the only intention is to refer them out and accept the referral fee.
A lawyer can only bill clients for legal work.
I am a lawyer who is retained to represent an elderly person. Can I bill for charges such as taking them to the supermarket or picking up food, or other things of that nature?
The answer is no. If a lawyer is representing an estate or if a lawyer is representing a person who is under some sort of incompetency, the lawyer certainly has the right to charge normal fees, but only for legal work.
For instance, a lawyer became involved with rather severe disciplinary problems a few years back when he was representing an elderly lady who was somewhat incompetent and in an assisted living situation. The lawyer spent a lot of time with the person and probably really helped them by going to the store, taking her to the hairdresser, etc. The problem is the lawyer was charging a fee of $300 or $400 an hour with resulting massive bills. The lawyer was spending sometimes 15, 20 or 30 hours a week doing chores and helping the person with resulting very high bills that significantly depleted the estate.
A lawyer cannot do that because many of those matters could be done by someone else at a much lesser rate. For instance, the lawyer could hire someone to come in as an aide or someone to do the shopping every day and that person might bill $15 or $20 an hour, which would be significantly less than the $300 or $400 an hour bill the lawyer might be utilizing. These persons could do just as good of a job as the lawyer.
Although the client certainly appreciates the attention by the lawyer, the estate and if it's an elderly person might not always appreciate the fact that the lawyer is taking advantage of the situation by billing very large hourly rates for work that could be done for far less. The Disciplinary Board finds that kind of conduct unacceptable and lawyers have been disciplined for doing that. This would be very excessive fees and Rule 1.5 would be violated. This also could be a conflict of interest under Rule 1.7 since under those circumstances; the lawyer might be looking out for his own interests and not the client's by just billing regularly at very large rates, which would then in effect deplete the estate.
Every lawyer has to use some common sense when retained to do something. The worse thing a lawyer can do is find a cash cow and bill unrelentingly when there is no reason to do so. Unfortunately, over the years, elderly persons who are lonely will often be taken advantage of by a lawyer who's the only one who is nice to them and spends time with them, but then bills and reduces the estate by a substantial amount. That's just unacceptable.
