Samuel C. Stretton.

If a referral fee agreement was in place, then you have a right to enforce it.

I referred a case to a lawyer in another state and he agreed to pay me a one-third referral fee. He now says he will not pay since his state does not allow paying referral fees, except for quantum meruit. Do I have any remedy?  

The question is an interesting one. Pennsylvania is one of the most liberal states in terms of referral fees. As noted in previous articles, in 1979 the Pennsylvania Supreme Court abolished the quantum meruit requirement for referral fees. The reason the court did that was because there was too much soft corruption going around, i.e., referring cases and then later making up hours to justify getting a substantial referral fee. The court wanted to encourage lawyers to refer cases to lawyers who were perhaps better qualified to handle the case. As a result, the rule changed and the quantum meruit requirement was dropped for referral fees to lawyers.

When the current Rules of Professional Conduct were adopted, the referral rule was found at Rule 1.5(e). Again, there is no quantum meruit in Pennsylvania. A lawyer could send the case over to another lawyer and do no further work and yet still be paid the agreed-upon referral fee. There are two exceptions, though. The fee cannot be extremely excessive and the client cannot object to the participation. Of course, the client's consent should be taken care of at the beginning of the referral fee arrangement so it won't be a problem.

The question is what happens if a lawyer in another state agrees to a referral fee and later when the case is completed refuses to pay except for some quantum meruit basis because of his state's rules? It is an interesting issue. The lawyer in Pennsylvania acted ethically when they referred the case to an out-of-state lawyer. The out-of-state lawyer agreed to take the case and pay the referral fee. The client agreed to the participation. The out-of-state lawyer agreed to the referral fee.

Obviously, it's very important when one enters into a referral fee arrangement that they do it with a fee letter or written agreement. The days of trusting another's word, unfortunately, is honored in the breach. The written letter is essential, particularly since some lawyers have a convenient habit of forgetting about these referral arrangements and never telling the referring lawyer the case has been resolved.

The Pennsylvania lawyer who acted ethically has a right to get the fee and has a valid fee agreement. Of course, the lawyer from the other state could make arguments against public policy, but usually under those circumstances the courts in either state will honor the written agreement between the two lawyers, particularly since the Pennsylvania lawyer acted ethically in referring the case and getting an agreed to referral fee. Courts normally will override a valid referral contract when it's for the benefit of everyone because of an ethical violation. It must be remembered the ethical rules are regulatory in nature and not substantive law.

Of course, in referring a case to a lawyer from another jurisdiction it might be a wise practice to inquire or discover whether that jurisdiction does have any limitations on referral fees. If it does, then the lawyer may well want to get admitted pro hac vice so the other lawyer might not be so hesitant in paying the fees.

But, to answer the question, a Pennsylvania lawyer can refer lawyers from other states and can collect a referral fee under the Pennsylvania Rules of Professional Conduct. There would be nothing unethical for a lawyer doing that. If there is a valid referral agreement, that should be an enforceable agreement.

A national law practice is a bad idea.

I saw the recent article in the American Bar Association Journal that stated there may ultimately be a national bar exam and a national law practice. Realistically, is that ever going to happen?

The answer is a national law practice is not a good idea. Like politics, law is best practiced locally.

The practice of law involves becoming involved in one's community. The practice of law involves getting to know the laws in a particular state. The practice of law involves getting to know the attorneys and district attorneys and judges in the various counties. The practice of law involves personal relationships with individuals.

A national practice precludes that. Obviously lawyers, at times, go to other states and try cases either because they are admitted in another state or they get admitted pro hac vice. Lawyers go to other federal courts and try federal cases in different states, again getting admitted pro hac vice. The individual case is fine. But, if all lawyers could practice in every state at any given time, and one has cases all over the United States, the practice is not going to be effective. The practice of law depends not only on one's skill in advocacy and the knowledge of a particular law, but it also depends on one's knowledge of the players and people who are sitting on the bench and who are opposing counsel and who are serving as assistant U.S. Attorneys or assistant district attorneys or solicitors.

A national law practice perhaps might sound interesting or even a great idea in theory. But, in practice, it would be an extremely bad idea. A national practice would ignore the personal side of law which is so important.

Further, it's hard to imagine having a national practice and being in a different state every other week. It would just make the practice of law miserable and one's life unhappy.

In conclusion, there is and always will be talk of a national law practice and potentially there could be a national law practice. But, it's a bad idea. Those who are pushing it aren't really practicing lawyers and don't understand what it means to be a lawyer and how practicing law is directly connected to one's community, neighborhood and local courts. To remove and end the importance of those local connections will radically change the practice of law in a manner which is not acceptable, at least to older lawyers who value and appreciate friendships, the courtesies and the professionalism of the legal practice.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pennsylvania, 19381.