Florida has perhaps the most unique fee splitting rules of any state, so attorneys should be careful review them, particularly if they are out of state since Florida has issued several ethics opinions concerning fee splitting with attorneys not admitted to practice in Florida.
Generally, Florida permits attorneys to divide fees when the attorneys either assume joint responsibility or base the division on the services performed. All fees must be reasonable, although Florida includes restrictions on certain contingency fee matters.
Florida Rules of Professional Conduct Rule 1.5(g) lists the requirements for any division of fees. It states:
Attorneys should note that a division based on joint responsibility includes the following additional requirements:
While attorneys are not required to obtain written agreement when a division is based on work performed, they may wish to include a written agreement anyway. In case of a disagreement, a written document can provide evidence of the previous agreement.
Attorneys can divide fees in any type of case as long as it does not violate other ethics rules. For example, while attorneys may divide fees in criminal or family law cases, the use of contingent fees is generally prohibited in those areas of the law.
Florida has implemented a unique set of rules specific to referrals for certain contingency fee matters. Below is the entirety of this rule followed by a summary and key takeaways.
FRPC Rule 1.5(f)(4)(D) provides:
The key points to this section:
In addition, when there is a recovery, all involved attorneys must sign off on a closing statement. This statement must include itemized expenses and fees as well as the share each attorney is to receive.
The Rule 1.5 Comment states that a secondary attorney who:
The Comment continues with three factors to consider when determining if attorneys may be co-counsels:
Florida has not issued additional guidance on other types of contingency fee cases. Absent explicit instruction, the standard of “reasonable fees” applies.
Florida prohibits attorneys from collecting fees that are “illegal, prohibited, or clearly excessive.” Rule 1.5(g), however, states that, for a division of fees, fees must be reasonable. FRPC Rule 1.5(b)(1) lists the factors for determining a reasonable fee. It provides:
FRPC Rule 1.5(c) states that “the time devoted to the representation and customary rate of fee” should not be the only factors when determining a fee’s reasonableness. Instead, attorneys should consider all listed factors, including any justification for a fee that is either higher or lower than it would be when considering just time and rate.
Over the past sixty years, Florida has issued over twenty ethics opinions related to the division of fees. These opinions are not binding but do provide guidance on navigating Florida’s ethics rules. Florida highlighted four ethics opinions on referral fees in a single packet.
In Opinion 90-8, the Committee offered four hypothethicals to illustrate when and how to divide fees with out-of-state attorneys.
In the first situation, a New York-barred attorney resides in Florida and makes a referral to a Florida attorney. The Committee stated that this example would be unlikely to meet the requirements under FRPC Rule 1.5(g). As the New York-barred attorney did not reside in New York, he would be unlikely to be able to meet the requirements and runs the risk of unauthorized practice of law in Florida. This hypothetical reaffirmed Opinion 62-3, which stated that an attorney licensed in another jurisdiction who resided in Florida would be unlikely to meet either the requirement for services performed or the assumption of joint responsibility.
The second scenario dealt with an individual who consulted with an out-of-state attorney about a criminal matter in Florida. That attorney then referred the matter to a Florida attorney. This example might be allowed if all other ethical rules are met. If any of the fees are contingent, for example, the attorney could not divide the fee as Florida bans the use of contingency fees in criminal matters.
In a similar vein, the third scenario involved a personal injury case in Florida when the injured party resided in another state. A division that satisfied other ethics rules would likely be allowed. As this is a personal injury case, the secondary attorney – here, the out-of-state attorney – must not collect more than 25 percent of the total fee.
The fourth scenario twists the third scenario: Here, the Florida attorney is the secondary attorney who refers a client to an out-of-state attorney. Even with the change in the fact pattern, the secondary attorney, as a member of the Florida bar, cannot collect more than 25 percent of the contingent fee and is unlikely to qualify for any of the exceptions to increase that amount.
In Opinion 17-1, the committee stated when Florida attorneys may share fees with out-of-state attorneys who work for firms that include nonlawyer ownership. A division meets Florida’s ethics rules when:
Next, Opinion 90-3 addressed whether a suspended, disbarred, or inactive attorney was still party to an agreement to divide fees. A 2011 case from the Fourth District Court of Appeal, Santini v. Cleveland Clinic Florida, 65 So.3d 22 (Fla. 4th DCA 2011), somewhat alters the opinion.
The original opinion, issued in 1990, states that when an attorney is suspended, disbarred, resigns, or otherwise becomes an inactive member of the Florida Bar, they are entitled to a portion of the fee on a quantum meruit approach. The 2011 case, however, found that an attorney who withdrew from representation before being suspended was not entitled to a fee.
Finally, Opinion 89-1 looks at the relationship between conflicts of interest and division of fees. In general, if a conflict exists, attorneys may not divide fees.
This specific opinion focuses on a personal injury case and the 25 percent fee for the secondary attorney. This opinion reaffirmed two earlier opinions, both of which stated that an attorney could not collect a fee when there was a conflict of interest. Opinion 89-1 arrived at the same conclusion.
While the ethics rules were revised after those earlier opinions were issued, the Committee found that did not affect the restriction on fee divisions when a conflict of interest exists. The only fees an attorney or law firm would be entitled to collect would be those related to “the reasonable value of services rendered to the client before the conflict emerged.” Put another way, attorneys should be paid for work completed.
While Florida uses the ABA Model Rules as a basis, the state includes additional requirements, especially regarding contingency fees in personal injury cases. When divisions of fees involve either other jurisdictions or potential conflicts of interest, attorneys should consult ethics opinions for guidance to avoid any ethical issues.