Opinion 97-4
(May 1997)
 
You have presented the following inquiry to the Professional Guidance Committee: An attorney whom you knew for many years recently passed away. This attorney was a sole practitioner whose practice emphasized the representation of worker's compensation claimants and personal injury plaintiffs. You have been engaging in discussions with the attorney who represents the administratrix of the estate for the transfer of custody of the files to your office for further administration. It is your intention to review each of the files and determine which of them you are willing to accept and to then contact the client to discuss whether or not the client wishes to have your office assume their further representation or to make other arrangements.
 
The question has arisen regarding the right of the estate to receive a referral fee from your office payable as a percentage of the net fee which you receive to compensate for work performed by the deceased attorney. You understand that the client would have to give consent to any such arrangement, and you are asking for guidance concerning the propriety of entering into an agreement between your office and the estate of the deceased attorney under which some fee sharing would take place. You also advise that you believe there is no problem with reimbursing the estate for litigation expenses actually incurred by the deceased attorney out of the proceeds of successful litigation.
 
Although not touched upon in your inquiry, Rule 1.6 (attorney/client confidentiality) is germane to your inquiry, which also implicates Pa. Rules of Professional Conduct 1.5e (fee splitting) and 5.4(a)(2) (compensation to a deceased attorney's estate for services rendered by a deceased lawyer).
 
Rule 1.6 provides that information regarding a client is confidential. It is not appropriate for your office to receive and review client files without first obtaining client consent to review those files. Obtaining such consent is a duty that is incumbent upon the administratrix of the estate. Clients whose files she would like to transfer to you should be contacted and advised of the death of the attorney as well as the intent to transfer the file. Permission to transfer should also be obtained from the client. Although it would be more conservative practice to require an affirmative waiver of confidentiality (i.e. signature on a form, bottom of letter, etc.), as a practical matter the notice to the client can include that if no affirmative response is received within a certain period of time, a waiver of confidentiality to allow transfer of the files to your office will be assumed. This rationale has been previously approved by the Committee in its formal Opinion 96-1. It should also be made clear in the initial communication requesting the transfer, review and/or waiver that your firm will be reviewing the file to see if your firm wishes to represent the client, and that the transfer does not automatically mean that you will be taking on a case. The clients should also be advised that it is their right to deny consent and pick any attorney of their own choosing to handle their matter. The unfettered right of a client to pick his or her own counsel is recognized throughout the Rules of Professional Conduct, and must be respected in all circumstances, unless a court of law orders differently. Should you decide not to take on the client you should notify the client promptly in order to avoid prejudice to that client's case.
 
After you come to an agreement with the client as to continuing representation, if applicable, the right of the estate to a fee should then be addressed with the client. The Committee emphasizes that such payment is not a referral fee and thus does not fall within the ambit of Rule 1.5e. This does not however mean that the client should not be advised of whatever fee is paid to the estate. This should be disclosed on a settlement sheet or other appropriate document once the case is concluded. Finally, reimbursement of advanced expenses to the estate is permissible under the Rule. You are correct in noting that payment of referral fees in Pennsylvania requires disclosure to the client of the intent to pay the fee and lack of objection to that by the client (Rule 1.5e). However, it is Rule 5.4(a)(2) which addresses the issue of paying fees to the estate of a deceased attorney, not Rule 1.5e. The language of the rule is clear:
 
A lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer.

There is no per se rule that prohibits quantification of the amount under the rule as a percentage of the total fee. Indeed, in this Committee's Opinion 89-26 such an arrangement was considered acceptable as the basis for issuing an opinion regarding fee sharing with disbarred attorneys. However, in the present situation, a common sense approach must be used. For instance, a client who met with the deceased attorney on Day 1 for a one hour consultation, whose matter is taken up by your firm clearly should not receive anything more than reasonable compensation for the one hour's work. A $5,000 or $10,000 payment from the final proceeds of the litigation would be inappropriate and would violate the rule. Likewise, in a case where discovery has been completed and all that remains is the trial itself, a 50% fee payment (or more) to the estate would be permissible as it clearly is a fair representation of the value of the work done.

   

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.