Opinion ID: 1454398
Heading Depth: 1
Heading Rank: 2

Heading: MRPC 1.5(g) Referral Fees Palmer v. Breyfogle, 217 Kan. 128, 535 P.2d 955 (1975)

Text: MRPC 1.5(g) is inexorably tied to the law firm referral fee controversy. We have not been required to comment on the rule in prior opinions. Under the facts presented by this case, we have the responsibility to do so. FW & G asserts that MRPC 1.5(g) allows division of a fee with a referring attorney. FW & G also asserts that the referral fee is permitted without regard to services performed or responsibility assumed (overruling Palmer, 217 Kan. 128, 535 P.2d 955). Amicus, Kansas Trial Lawyers Association (KTLA), endorses the FW & G argument. Wallace, Saunders does not contest this issue. FW & G's interpretation of MRPC 1.5 is substantially correct. Palmer technically was not overruled on March 1, 1988, by the adoption of MRPC 1.5; however, Palmer, on March 1, 1988, became a non-player in the instant referral fee contest. Palmer was superseded by MRPC 1.5. We note that Wallace, Saunders was continuing to advance the vitality of DR 2-107(A) (1990 Kan.Ct.R.Annot. 177), as late as March 7, 1989. In its motion to approve and settle attorney fees filed in the trial court, Wallace, Saunders states: Division of fees under the laws of the State of Kansas is a matter of professional responsibility. DR 2-107 provides: [quoting the disciplinary rule]. The Wallace, Saunders motion prays for an order approving and distributing attorney fees under the Code of Professional Responsibility. DR 2-107(A) of the Code of Professional Responsibility was no longer applicable in this jurisdiction after March 1, 1988, as to any matters arising from that date forward. We now turn to Palmer. Palmer interpreted DR 2-107(A). DR 2-107(A) states: A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of his law firm or law office, unless: (1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made. (2) The division is made in proportion to the services performed and responsibility assumed by each. (3) The total fee of the lawyers does not clearly exceed reasonable compensation for all legal services they rendered the client. (1990 Kan.Ct.R.Annot. 177-78). Palmer held that recommending another lawyer or referring a case to another lawyer without further handling cannot be construed as performing legal services or discharging responsibility in the case as required by DR 2-107(A)(2). Therefore, the division of fees under the Palmer facts was prohibited. The Model Rules of Professional Conduct were adopted by the House of Delegates of the American Bar Association on August 2, 1983. ABA Model Rule 1.5(e) states: A division of a fee between lawyers who are not in the same firm may be made only if: (1) the division in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation; (2) the client is advised of and does not object to the participation of all the lawyers involved; and (3) the total fee is reasonable. The Kansas version of the MRPC was adopted by this court effective March 1, 1988. We modified Rule 1.5. The Kansas rule regarding division of fees is MRPC 1.5(g), which states: A division of fee between lawyers who are not in the same firm may be made if the client is advised of and does not object to the participation of all the lawyers involved, and the total fee is reasonable. (1990 Kan.Ct.R.Annot. 222.) The Kansas Comment to MRPC 1.5 states in part: Division of Fee A division of fee is a single billing to a client covering the fee of two or more lawyers who are not in the same firm. A division of fee facilitates association of more than one lawyer in a matter in which neither alone could serve the client as well, and most often is used when the fee is contingent and the division is between a referring lawyer and a trial specialist, or when a lawyer refers a matter to a lawyer in another jurisdiction. Paragraph (g) permits the lawyers to divide a fee by agreement between the participating lawyers if the client is advised, does not object, and the total fee is reasonable. It does not require disclosure to the client of the share that each lawyer is to receive. (1990 Kan.Ct.R.Annot. 224.) The Code Comparison following the Kansas MRPC 1.5 states: Rule 1.5(g) permits division without regard to the services rendered by each lawyer if the client is advised, does not object, and the total fee is reasonable. (1990 Kan.Ct.R.Annot. 224.) Our adoption of MRPC 1.5(g) as modified eliminates the requirement that the division of fees be made in proportion to the services performed and the responsibility assumed for the representation. The relevant portion of Palmer has been superseded by MRPC 1.5(g). Our publication, Rules Relating to Discipline of Attorneys dated March 1, 1988, was mailed in February 1988 to all attorneys registered to practice law in this state. The preface states in part: The Supreme Court and the Kansas Bar Association in 1984 appointed a special ad hoc committee to study, modify, and supplement the Model Rules of Professional Conduct to conform to the needs and experiences of the legal profession and the citizens of Kansas. After many months of publicizing the Model Rules, hearing testimony, and deliberating, the Kansas Committee submitted its final report, with comments, to the Court in 1985. During the last two years the Court has reviewed the work of the Kansas Committee, reevaluated and modified the existing procedural rules dealing with discipline, and has now adopted the Model Rules and disciplinary rules as modified. . . . . For the benefit of the bar, this 1988 printing of the rules is annotated and contains both the ABA Commission's comments and the Kansas Committee's comments to the new Model Rules of Professional Conduct. Subsequent reprints of the rules will not contain the comments. A copy of these rules is being mailed to each active and inactive registered Kansas attorney. The rules contained herein are current through March 1, 1988, while the annotations are current through January 31, 1988. . . . . David Prager Chief Justice March 1, 1988 The March 1988 issue of the Journal of the Kansas Bar Association featured an article entitled: Major Changes in Code Concerning Fees & Advertising  Professional Conduct Rules Adopted. 57 J.K. B.A. 9 (March 1988). The trial court entered summary judgment for Wallace, Saunders on the Wallace, Saunders motion to settle and approve attorney fees. The court observed that the fact FW & G did not have a contract with Ryder was uncontroverted. The trial court found, as a matter of law, that absent a contract with Ryder, FW & G had no client to refer and, consequently, could not have a contract with Wallace, Saunders for a referral fee. MRPC 1.5(g) lists two requirements for a division of a fee between lawyers: (1) the client is advised and does not object; and (2) the total fee is reasonable. The word client could refer either to the status of a litigant with regard to the referring attorney or with regard to the attorney to whom the matter is referred. If it refers to the relationship with regard to the referring attorney, the rule mandates an attorney-client relationship with the referring attorney. It is clear that the litigant would be a client of the attorney to whom the matter is referred. We adopt what we believe to be the logical interpretation, that client refers to the status of the litigant with the attorney to whom the matter is referred. Under this construction of the rule and the facts of this case, although it would be preferable, MRPC 1.5(g) does not require that the referring attorney have an attorney-client relationship with the person referred. Of course, the attorney accepting the referral may impose such a requirement before agreeing to pay a referral fee. This referral relationship between counsel is a matter of contract between attorneys. Our primary concern is for the client. The ultimate objective is to assure the finest representation possible for a client. During oral argument, counsel for FW & G stated that no question has ever been raised as to the quality of professional representation extended to Ryder by Wallace, Saunders. A review of the record affirms that fact and reflects that Ryder received thorough and competent representation.