88 N.J.L.J. 779
December 2, 1965
Division of Fees
An inquiry has been made by an attorney who specializes in
matrimonial litigation wherein he alleges that he was retained to
represent a husband in an action instituted against him by his wife
in a County Domestic Relations Court. This client was referred to
him by an attorney in a neighboring community. The inquiring
attorney states that he received a fee from the client and paid the
forwarding attorney the amount to which he was entitled therefrom.
Subsequently, and sometime after the client was originally referred to the inquiring attorney, the forwarding attorney died. After his death, the inquirer received additional fees in connection with the Domestic Relations Court proceeding and, subsequent thereto, the wife instituted an action in the Superior Court of New Jersey and, once again, the inquiring attorney received some fees. He goes on to say that in another related matter, he received additional fees for the preparation of a property settlement agreement. No division of fees or any forwarding fees were ever paid to the forwarding attorney or his estate, except as indicated in this inquiry. Now a request is being made by the representatives of the estate of the forwarding attorney, asking for forwarding fees with respect to the Superior Court suit, and the question that presents itself is whether by virtue of the death of the forwarder and, obviously, his non-participation in the services rendered, his estate is entitled to any part of these fees received by the attorney of record.
Canons of Professional Ethics, Canon 34 provides, "no division of fees for legal services is proper except with another lawyer, based upon a division of service or responsibility." We, therefore, at the outset must bear in mind that if any division of fees would be proper under any circumstances, it obviously must be based upon a division of service or responsibility. We must presume that the payment to the forwarding attorney met this test. Obviously, the representatives of the forwarding attorney's estate could neither have performed services nor shared responsibility.
In New Jersey Advisory Committee on Professional Ethics, Opinion 74, 88 N.J.L.J. 357 (1965), concerning office associates, this Committee held in effect that each attorney upon an occasion will refer work on the usual profit-sharing basis recognized by forwarding attorneys. Presumably, this is based on a division of service and responsibility in accordance with the provisions of Canons of Professional Ethics, Canon 34 (Division of Fees). Thus, on referral work, each attorney in the situation described in this inquiry, is working on the same case and is an "office associate."
In our Opinion 80, 88 N.J.L.J. 460 (1965), we outlined the applicable principle as enunciated in Drinker, Legal Ethics 189 (1953), to the effect that, "a lawyer's clients are not merchandise." We there held that a sale of a law practice was violative of Canon 34.
Drinker, Legal Ethics (1953) states in specific language the general rule with instructions to lawyers as to what the practice should be. It is stated in such basic language that we find it desirable to state it here as it appears at page 186 therein:
Canon 34 further provides that the division of fees for legal services between lawyers must be based exclusively on "a division of service or responsibility.
There was long at the bar a practice or custom whereby, when a lawyer, with authority from his client, forwarded a case to another lawyer for attention in the latter's jurisdiction, or merely recommended one, the forwarding lawyer was allowed one-third of the fee earned by his correspondent. This was in the nature of a Finder's Fee, and was payable irrespective of any real service performed or responsibility assumed by the forwarding lawyer.
It was obviously the purpose of Canon 34 to condemn this, and such purpose should not be frustrated by construing the necessity of "responsibility" as being satisfied by the bare recommendation. The service and responsibility must, to be effective, relate to the handling of the case.
Accordingly, it has been repeatedly held by the Committees that no right to a division arises from the mere recommendation.
At page 187, Drinker goes on to say:
A lawyer who forwarded a claim to another
lawyer has no right whatever to share in the
fee obtained by the forwardee from the client
in another later independent case which the
client sent direct to the forwardee.
There is no "usual" basis for division, nor will the Committee undertake to fix the proportions in which fees should be shared, each case depending on its own peculiar facts.