An Ethical Guide to Referral Fees in Texas

How to Ethically Accept Referral Fees, Fee Splits, or Co-Counsel Fees

We take attorney referrals as the highest compliment. When you call our firm and entrust a case with one of our attorneys, we know it is critically important for you that the client receive the white glove treatment we have become known for. We also recognize that as a fellow attorney, you have many relationships to choose from, and selecting Varghese Summersett as your trusted partner is not something we take lightly.

As an attorney, there is also an opportunity to be compensated for your involvement in the case you refer. In this article we will discuss how we are able to ethically share attorneys fees, or fee split in Texas, without running afoul of the prohibition of referral fees in the true sense of that phrase. This article aims to provide an overview of the key considerations and best practices for engaging in co-counsel opportunities and referral fee arrangements in Texas personal injury cases in compliance with the Texas Disciplinary Rules of Professional Conduct.

Understanding Referral Fees and Co-Counsel Arrangements

Referral fees in Texas are governed by Rule 1.04(f) of the Texas Disciplinary Rules of Professional Conduct, which allows for the division of fees between lawyers who are not in the same firm under certain conditions. 

To comply with Texas ethics rules, referral fees must be based on either a “proportion of services” basis or a “joint responsibility” basis, ensuring that each lawyer involved plays a significant role in the case beyond just referring it. We make either of these propositions straightforward.

How to Share Joint Responsibility

The comments to Texas Rule of Professional Conduct 1.04 emphasize the importance of ensuring adequate representation and maintaining communication.

Ensuring Adequate Representation: Before referring a case, attorneys must assess the client’s legal needs and be confident that the attorney they are referring the case to is competent to handle it. The team at Varghese Summersett is made up of seasoned trial attorneys. We have recovered millions for our personal injury clients and have handled everything from car accidents to wrongful death cases that garnered nationwide attention.

Maintaining Communication: The comment to Rule 1.04 notes the referring attorney should keep track of the case and ensure that the client is informed about important issues throughout the representation. We make this a very straightforward proposition by giving access to case updates and our case management portal so there’s never a doubt the client is receiving the highest level of communication.

We leverage the power of our case management system to keep you informed about every aspect of the case. When we take on something as a joint responsibility, we understand your obligation to the client as well as ours. Our job is to use our expertise to move the case forward, and we recognize your need and desire to ensure we are doing all the things that you entrusted us to do. As the referring attorney, you have a vested interest in making sure the case is handled correctly and client communication is happening proactively and in a manner you can be proud of.

The comment to Rule 1.04 is clear that attorneys involved in joint representation are not required to attend every meeting, hearing, or deposition, nor do they need to have copies of all documents related to the case. However, they must stay reasonably informed about the case, answer client questions, and assist the handling attorney when necessary. The referral must be made with the client’s best interest in mind.

How to Stay Involved (Proportionate Services)

The second option to accept a fee split is by providing proportionate services. We make this as easy as possible for a referring attorney who has valuable skills and the desire to participate. As a referring attorney at our firm, you will be given attorney access to the file electronically through our case management system. You will be notified of any meetings with the client and upcoming court settings, and you are invited to attend. You will be able to track the progress we are making on the case. You will be able to review drafts of filings and provide your input. Should you choose to provide input on a filing, we will include your name on such filings. If you desire to appear in court with us at hearings, we will welcome you.

We Obtain Consent In Writing

In Texas, attorneys must obtain written consent from the client in advance regarding the basis for the referral and the division of fees. At the outset, we provide the client you referred to us with a letter that outlines the fee split and obtain their written consent. We also explain why we are splitting the fee and how we value our relationship with you – one that allows the referring attorney to stay involved in the case and know that the referred client is receiving nothing short of world-class service. We have found this transparency has been very well-received by clients, and it ensures that all of the attorneys involved comply with the State Bar’s fee-splitting rules. Our co-counsel agreement with the client complies with Rule 1.04 by identifying the attorneys involved, explaining whether fee division will be based on proportionate services or joint responsibility, and laying out how the fee will be divided.

If you are interested in referring a personal injury matter to us or developing a long-term relationship with our firm, call us at (817) 203-2220.

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About the Author

Benson VargheseBenson Varghese is the managing partner of Varghese Summersett. He is a seasoned trial attorney, highly esteemed for his comprehensive knowledge and expertise in the field. He has been to trial throughout state and federal courts in Texas. 

As a former insurance adjuster himself, Benson has insights into how insurance companies evaluate claims – and why without the proper encouragement, they are likely to undervalue a claim. Benson uses these insights combined with his clout in the courtroom to obtain justice for his clients – in and outside of the courtroom.

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