What Is a Reasonable Fee These Days?

The amount of money a referring attorney receives depends on the type of case, the law firm and his own negotiations, lawyers say.

Referral-fee agreements are generally “an arms length” transaction, according to Steven B. Stein of Boston, chair of the Massachusetts Bar Association’s Fee Arbitration Board.

In general, referral fees tend to predominate within the personal-injury field and most often are used by solo practitioners and those in small and mid-sized firms.

The most common referral fee still tends to be one-third of the successor attorney’s contingency fee leaving a referring attorney with one-third of the one-third contingency fee.

However, plaintiffs’ attorneys note that the third-of-a-third rule is becoming less and less of a rock-solid standard.

“Everyone has their own idea,” a small practitioner who asked that his name be withheld says. “Typically you are taking one-third of a third, but I don’t consider anything atypical anymore.”

Michael K. Gillis of Newton, president-elect of the Massachusetts Academy of Trial Attorneys, says that a number of factors should be considered when determining the referral fee, including: the complexity of the case, the relationship between the lawyers and the work completed.

Some lawyers charge as much as 50 percent as a referral fee, according to another lawyer who requested anonymity.

But, she adds, she will not pay a 50-percent referral fee because it greatly reduces a case’s value to the successor attorney.

Referral fees are less common in other areas of practice.

Thus, Leonard Kopelman of Boston, whose law firm Kopelman and Paige specializes in representing towns throughout the commonwealth, says that “we don’t have any policy other than trying to find the best lawyer for the job. We couldn’t care less about the fee.”

Robert D. Friedman of Boston, managing partner at Perkins, Smith & Cohen, says that his mid-sized firm has historically paid 10 to 15 percent to referring attorneys.

“It has to be a case-by-case analysis as to whether the case is such that we would agree to pay a referral fee,” he notes.

The referral-fee arrangement works best, according to Friedman, in a case where there is a lump sum payment at some point.

“It’s cumbersome in a monthly billing arrangement,” he adds.

In a typical billing arrangement, Friedman says, one skips the referral fee and tends to hope that the relationship with the referring attorney is on a “quid pro quo” basis.

At large law firms, referral fees are generally prohibited.

“It is prohibited at Hale and Dorr to accept or provide referral fees,” plainly states William F. Lee of Boston, the firm’s managing partner.

Although Bingham Dana does “plenty of referrals out” and will take referrals in, the firm will not pay a referral fee or accept a referral fee, says spokesperson Hank Shafran.

Mintz, Levin, Cohn, Ferris, Glovsky & Popeo also encourages reciprocal referrals, but does not accept referral fees, notes Nancy Sterling, spokesperson for the firm.

“We try to maintain and develop relationships,” Sterling states. “The relationships that are developed are much more important than any fees.”

But Richard L. Zisson, a Dedham plaintiffs’ attorney, notes that the large firms’ practice is simply a close cousin of the outright fee system.

“They are big enough that, without admitting it, they pay referral fees [in the form of] giving out cases,” Zisson points out.

For example, he says, should a large firm encounter a conflict of interest on a big tax case, they will refer the lucrative matter out to another firm that perhaps did the same for them earlier.

“They pay in kind,” Zisson says. “Cases are swapped on a quid pro quo basis.”