Dan Lewis

Fee Sharing Agreements

In order to ensure that you fully comply with the SRAs rules regarding third-party referrals and the distribution of royalties, your company should have the following guidelines and procedures: In cases where the client has already entered into a fee contract with co-counsel and our company is called upon to support the case, the allocation of costs is recalled at the beginning of the case based on the nature and complexity of the case and the difficulty and a cost-sharing agreement. In both cases, the allocation of royalties is subject to the requirements of Rule 2-200 of the professional settlement, which excludes the distribution of legal fees between lawyers who are not bound within a partnership or law firm, except”1) the client has agreed in writing, after full disclosure has been made, that a share of royalties and the terms of such distribution be made; and (2) The total tax levied by all lawyers is not increased solely because of the determination of the allocation of royalties and is not unacceptable, since this concept is defined in Rule 4-200.” We help you develop robust policies and procedures to ensure you fully comply with THE rules and regulations of the SRA and others. By writing processes and passing them on to all employees, you can be confident that any royalty-sharing recommendations or agreements you enter into do not result in complaints or allegations of misconduct. If the Supreme Court adopts proposed section 1.5.1, california lawyers will have to comply with the new rule. Those who want to be proactive can take a best practice approach ahead of a Supreme Court action to protect themselves and their clients from surprises and unwanted disagreements about fees. If you have a question about financing a case involving cost-sharing, fee splitting or transfer fees, please contact us for a consultation. To be enforceable, contingency cost agreements and legal fee sharing agreements must contain certain provisions. Failure to comply with these requirements may cancel these agreements at the client`s choice and induce the lawyer to prove and collect a reasonable fee. Given that many of the complainants` lawyers use one or both of these types of agreements in their practices, it is important to stay abreast of the law in this area. If the proposed Rule 1.5.1 is adopted, non-associate lawyers interested in sharing a royalty must negotiate the proposed terms of such a contract and disclose them in writing to the client (s) if they agree on these conditions or shortly thereafter. Lawyers must then obtain in writing the client`s approval for the proposed royalty allocation. Substantial changes to contingency royalty agreements must also be consistent with Section 6147.

(Stroud v. Tunzi (2008) 160 Cal.App.4th 377.) Just as a client has the right to know how legal fees are determined, he or she also has the right to know the extent and basis of the distribution of these fees by lawyers. If the proposed changes to the rules on professional behaviour are implemented by the California Supreme Court, they will have a significant impact on almost every aspect of our practice, and the allocation of royalties is no exception. Currently, Rule 2-200 does not require that royalty-sharing agreements between lawyers be concluded in writing, nor does it require the date a client is to be informed of a royalty-sharing agreement.