I heard from a PI lawyer who had referred a case to another lawyer and was supposed to get one-third of the fee. When the case settled, the referring lawyer heard about it not from the lawyer who settled the case but from a friend of the plaintiff.
Not good.
Even worse, the plaintiff had another accident 4 months later. The same firm handled that case, which settled for $200,000, and they never told the referring attorney about it.
When he finally spoke with someone at the firm about the second case, the referring attorney was told that they don’t pay referral fees on “second generation cases/referrals”.
He asked if I think he’s entitled to a referral fee on the second case.
My take? In equity, maybe. In law, probably not. In the world of commerce, where screwing your referral sources is a great way to kill referrals (and your reputation), I think they should take care of you.
But they’re PI attorneys so I won’t hold my breath.
The bigger question is what to do to protect your referral fee in the future.
Two things. First, you need to have a written agreement that specifies what you get, not only on the original referral but on subsequent cases with the same client. Get this signed before you make the referral.
To be enforceable, it probably has to have reasonable limits (like a non-compete agreement), something like subsequent claims within two years of the original injury. (I’d also ask for a fee on any referrals from that client during the same period.) Ask around, find out the standard in your community. And be prepared to negotiate.
Second, your agreement should specify that you have a lien interest in these cases, and you should so notify the insurance carrier and/or opposing counsel on the first case. That way, when the case settles, your name will be on the check and they have to come to you to get your endorsement.
Your agreement can also specify a lien interest (and attorneys fees if not paid) on subsequent cases, but if you don’t know about those, it’s not as easy to protect your referral fee because you have nobody to notify of that interest until after the fact. Still, better than nothing.
And without an agreement, nothing is what you’ve got.
Hey, I’ve been there. I’ve referred cases to other lawyers and was screwed out of a fee when they settled. You live and learn.
My last piece of advice? Stay in touch with the client. Because you want him to tell you when he has another case, or he has a referral.
Be his “personal attorney” for life. His advisor. The conduit of all of his legal matters.
Think “clients, not cases”. And think about the referral as, “bringing in another lawyer,” not “referring out” to another lawyer.
I’d love to hear how other lawyers handle this subject. Please post in the comments.
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