What Should You Know About “Referral Fees” Between Lawyers?


A referral fee is the payment by one lawyer of an amount of money to another lawyer for the referral of your legal file. When a lawyer refers a client to another lawyer, the lawyer can receive a fee simply for having referred the client. It is sort of a “thank you” from one lawyer to another.  This “thank you” has some restrictions.

The Law Society of Upper Canada governs lawyers to ensure that the public is served by lawyers who are competent.  The Law Society regulates referral fees. 

If you are represented by a lawyer, here is what you should know about referral fees.

1.         You must be made aware of the arrangement for the payment of the referral fee between the 2 lawyers. In fact, you must sign an agreement that explains why the referral was made and the details of the referral fee payment.

 

2.         The amount of this fee must be fair and reasonable. It is capped at $25,000. It should be calculated based on 15% for the first $50,000 of legal fees and 5% of the balance of the legal fees to an absolute maximum of $25,000.

 

3.         The referral fee is not paid by you or from your share of the settlement. It should not increase the amount of the legal that are being charged to you. The referral fee is paid by your lawyer from the legal fees charged to you.

 

4.         When you receive your lawyer’s account, review it carefully.  It must indicate the amount of the referral fee.

 

5.         The referral fee agreement is between the lawyers. It does not create any obligations on your part. You can change lawyers if you want.

 

Some of those requirements does not apply to referral fees agreements entered into before April 27, 2017.  You can take a look at the Law Society’s website for more information: http://www.lsuc.on.ca/Referral_Fees/

I believe that referral fees are positive for our legal system.  It encourages a lawyer who does not practice in a specific area of the law to send a client to a lawyer who does practice in this area of law. The referring lawyer will get paid and the client will receive competent legal services.

The cap on the amount of the referral fee discourages lawyers to built their business plan around a brokerage system where they get the clients and always refer them out in exchange of a substantial referral fee.

Burn Tucker Lachaîne is committed to providing knowledgeable, experienced and compassionate legal representation to clients who have been seriously injured. We help our clients understand their rights, achieve their recovery goals and receive the fair medical support, benefits and compensation to which they are entitled.

Many of our clients are referred to us by lawyers who do not focus on personal injury work. We have referral fee arrangements with a number of lawyers and are always willing to discuss opportunities for other such arrangements in accordance with the Law Society’s regulations and rules.

By Eliane Lachaîne of Burn Tucker Lachaîne Personal Injury Lawyers on August 11, 2017
Tags: Personal Injury