Attorney M is representing Client N in a personal injury claim arising from a car accident. Client N informs Attorney M that she intends to file for bankruptcy due to overwhelming medical bills. Attorney M is not experienced in bankruptcy law but has a colleague, Attorney O, who is. Attorney M suggests that Client N retain Attorney O for the bankruptcy filing. Attorney M also tells Client N that if she retains Attorney O, Attorney M will reduce her contingency fee in the personal injury case by 5%. Is this arrangement ethical?
- AYes, if Client N gives informed consent to the fee reduction and the referral.
- BNo, unless Attorney M and Attorney O are in the same law firm.
- CYes, because Attorney M is reducing her fee, which benefits Client N.
- DNo, because Attorney M is effectively conditioniong her fee on the client's choice of another lawyer, creating a conflict of interest.
Show answer & explanationAnswer & explanation
Correct answer: D. No, because Attorney M is effectively conditioniong her fee on the client's choice of another lawyer, creating a conflict of interest.
This arrangement creates a conflict of interest for Attorney M. By offering a fee reduction contingent on Client N retaining Attorney O, Attorney M's independent professional judgment regarding the best interests of Client N (e.g., which bankruptcy attorney to choose, or whether to file bankruptcy at all) could be materially limited by Attorney M's own financial interest in securing the referral and the fee reduction. This is a material limitation conflict under Rule 1.7(a)(2) based on the lawyer's own interest, and it's unlikely to be consentable because it unduly influences the client's choice of counsel.
Why the other options are wrong
- A. Even with consent, if the conflict is non-consentable (e.g., if a disinterested lawyer would advise against such an arrangement), it is unethical.
- B. The ethical issue here is the conditioning of the fee, not whether the attorneys are in the same firm. Fee splitting rules would apply if they were sharing fees, but this is about a conflict with the client.
- C. While a fee reduction can be beneficial, the *condition* attached to it creates a conflict.
Lawyer's Own Interest Conflict (Conditional Referral)
A conflict where a lawyer's representation of a client is materially limited by the lawyer's own personal interests, such as a financial incentive tied to a client's decision to hire another specific lawyer. Such conflicts are often non-consentable.
- Arises from the lawyer's personal financial or other interests.
- Can materially limit the lawyer's independent judgment.
- Offering incentives for specific referrals can create this conflict.
- Consent may not be effective if the conflict is non-consentable.
Memory trick: Self-Serving Schemes Seriously Subvert Sound Service.