February 19, 1992
After discovering a conflict of interest which prevents a lawyer from taking a case, the lawyer may not refer a potential client to another lawyer and accept a referral fee.
References: MRPC 1.5(e), 1.7, 1.9.
A lawyer has been consulted by a client regarding the client's legal problem. During the course of the consultation, it becomes apparent that the lawyer has a conflict of interest and may not represent the client in this matter. May the lawyer refer the client to another law firm and collect a referral fee?
MRPC 1.7 states:
"(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:
"(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
"(2) each client consents after consultation.
"(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
"(1) the lawyer reasonably believes the representation will not be adversely affected; and
"(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved."
If the referring lawyer has a conflict, then any advice might smack of a conflict, even if the advice is to go to a specific lawyer. If the conflict arises because the lawyer has a current client with interests directly adverse to those of the prospective client, MRPC 1.7(a), any advice regarding choice of counsel would be inappropriate, and akin to selecting one's adversary. If the conflict arises because the lawyer's duties to the lawyer's own interests or to a third party would materially limit the representation of the prospective client, MRPC 1.7(b), it is conceivable that the referring lawyer might be tempted to ill-advise the client as to a choice of counsel. Under MRPC 1.9, the propriety of the mere recommendation to the client would depend upon how apparent or how remote the conflict is to the subject matter. See MRPC 1.5(e).
When one couples the above facts with the existence of a proposed referral fee, then the referring lawyer has a residual pecuniary interest in the outcome. See MRPC 1.5(e). The lawyer is "walking on both sides of the street," exacerbating the conflict. If what the lawyer loses from one side the lawyer has the ability to gain from the other side, clearly a conflict is present.
When lawyers split fees, both remain in a fiduciary relationship with the client. A fiduciary relationship and a conflict of interest are inconsistent with each other.