Is a referring lawyer liable for another lawyer’s malpractice? Maybe!
Under the Georgia Rules of Professional Conduct, there’s nothing ethically wrong with a lawyer referring a case to another lawyer. It’s common to see referrals by a personal injury lawyer who is too busy to litigate a case that they weren’t able to settle pre-suit to their client’s satisfaction, by a business transaction lawyer who does not engage in litigation, or by a domestic lawyer who doesn’t have the practice area experience to handle a professional liability case. But what happens if the lawyer that they referred the client to commits malpractice? Does the first lawyer have any liability to the client for the referral? The answer is: maybe! Be careful to consider and follow the Rules, especially if you intend to receive a fee from a case you’ve referred out.
Consider the following case from Florida. In Noris v. Silver, 701 So. 2d 1238 (1997), the plaintiff was injured in Chicago, Illinois, when a vehicle struck his bicycle. Plaintiff contacted an appellate attorney acquaintance, Mr. Silver. Mr. Silver said he didn’t handle personal injury cases, and referred the plaintiff to Mr. Falk. Mr. Silver had previously referred other cases to Mr. Falk and had received a share of the fees recovered by Mr. Falk. But Mr. Falk’s fee agreement with the client did not disclose any fee split arrangement with Mr. Silver. This violated Florida Bar Rule 4-1.5(g), and would also be a violation of the corresponding Georgia Rule, Rule 1.5(e). As a result, the court refused to allow Mr. Silver to escape liability for legal malpractice, after Mr. Falk failed to file the case before the expiration of the Illinois two-year statute of limitation for personal injury claims.
The Noris case included the dismissal of a negligent referral claim made by the plaintiff against Mr. Silver, and it seems like Georgia would probably follow that rule; we’re not aware of any cases in Georgia authorizing a claim for negligent referral, although some states have looked at that issue (New York / New Jersey, in particular, see Tormo v. Yormark, 398 F. Supp. 1159 (D.N.J. 1975); for more information on that point, see Legal Malpractice, Mallen & Smith, § 5.9).
The money quote—pun intended—from the Noris case is here, at 1241: “Accordingly, we hold that if Falk and Silver agreed to divide the attorney’s fees, then Silver is legally responsible for the malpractice committed by Falk.” The big takeaway is that the court in Florida refused to allow the lawyer to exculpate himself from liability to the client based on his own failure to comply with the bar rule requiring disclosure and written consent.
So how do you protect yourself here in Georgia? For starters, be careful who you refer potential clients to. If you intend to receive a referral fee—in any amount—then you should disclose your relationship with the other lawyer to the client. Ideally this disclosure should be in the fee contract itself, but the fee division must be spelled out in the contingent fee settlement statement signed by the client. Second, because your fee must be “in proportion to the services performed” under Rule 1.5(e)(1), you need to clearly spell out in the disclosure what you’re going to do and what the other lawyer is going to do. Otherwise, you risk exposing yourself to joint liability for the case, see Rule 1.5(e)(1) (in the absence of a disclosed/agreed upon split, “each lawyer assumes joint responsibility for the representation.”). Bottom line, the intention to split the fee with another lawyer will very likely lead to joint liability for malpractice.
The reality is that cases are referred every day and, where a fee split with another lawyer is intended, the requirements of Rule 1.5(e) regarding things being in writing are not followed. Nine times out of ten, nothing bad happens and everything works out fine to the client’s satisfaction. But don’t let your case become an example to be used in a blog post of what not to do. If you intend to receive a fee from the case you refer out, you should put it in writing to the client, and be willing to stay on the hook should something go wrong. We’re happy to help you structure your fee agreements with clients to conform to the Georgia Rules, please contact Chandler Law for more information.