If An Association Controls The Financing Of A Plan Is A Percentage Of Fees Collected Amount To Violation Of Fee-Splitting Prohibition
In Emmons, Williams, Mires & Leech v. State Bar, 6 Cal. App. 3d 565, 86 Cal. Rptr. 367 (1970), a local bar association referred a medical malpractice claim to attorney Hertzer, a panel member of the association's lawyer referral program.
After the claim was settled, Hertzer claimed his agreement to pay a one-third forwarding fee to the association was void because it was improper fee splitting under the state code.
The code did not contain a rule that resembled Rule 7.2(b) of our RPC.
The court upheld the agreement anyway.
Illegal agreement or not, said the court, it does not offend the public policy underlying the canons:
"The bar association seeks not individual profit but the fulfillment of public and professional objectives.
It has a legitimate, nonprofit interest in making legal services more readily available to the public.
When conducted within the framework conceived for such facilities, its reference service presents no risks of collision with the objectives of the canons on fee-splitting and lay interposition." Emmons, 6 Cal. App. 3d at 574, 86 Cal. Rptr. at 372-73.
Emmons relied, at least in part, on American Bar Association Formal Opinion 291, published August 1, 1956. See ABA Formal Op. 291 (1956).
The committee had been asked:
"May the association require members of the panel to assist in the financing of the lawyer referral service, either by flat fee or by a sliding scale charge based on the fees derived by the panel members from the cases referred to them?" ABA Formal Op. 291.
The answer was:
"The financing of the plan should be under the control of the association setting it up.
Registrants may be required to contribute to the expense of operating it by a reasonable registration charge or by a percentage of fees collected by them.
The latter arrangement would not, in the opinion of the Committee, constitute a violation of Canon 34 the existing fee-splitting prohibition." ABA Formal Op. 291.