NOTE: Various references in this ethics opinion to portions of the Michigan Code of Judicial Conduct are no longer accurate due to amendments effective August 1, 2013. Click here to review language added to (which is underlined) and language stricken from (which is indicated by strikethrough) Canons 2, 4, 5, and 7.
JI-45
December 20, 1991
SYLLABUS
A full-time referee may not accept a referral fee for referring clients to a lawyer.
References: MCJC 5F; MRPC 1.5(e); MCR 6.003(4), 9.201(2); JI-10, JI-19, JI-29; RI-1; CI-893.
TEXT
A Friend of the Court referee referred a potential personal injury litigant to a practicing lawyer who does not practice domestic law in the county which employs the referee. The referee referred the prospective client without performing any additional services for the prospective client. The referee asks whether the referee may accept a referral fee.
Prior to the adoption of the Michigan Rules of Professional Conduct in October, 1988, it was improper for any lawyer to receive a referral fee where the lawyer merely performed a referral function, rendering no other services to the client and assuming no responsibility in the matter. MCPR DR 2-107(A); CI-893.
However, MRPC 1.5(e) states:
"A division of a fee between lawyers who are not in the same firm may be made only if:
"(1) The client is advised of and does not object to the participation of all the lawyers involved; and
"(2) The total fee is reasonable."
Conspicuously missing from MRPC 1.5(e) is the former requirement that the division of fees be made only in proportion to the services performed and responsibility assumed by each lawyer. Therefore, for example, a 1/3 fee split between the referring lawyer and the receiving lawyer is not prohibited by MRPC 1.5(e).
However, if a referee is considered a "judge" subject to the Michigan Code of Judicial Conduct, a referee is prohibited from practicing law for compensation pursuant to MCJC 5F. MCR 6.003(4) defines the terms "court" and "judicial officer" to include a "judge, a magistrate, or a district court magistrate authorized in accordance with law to perform the functions of magistrate." This is consistent with MCR 9.201(2), which defines "judge" to include "a magistrate or referee of a court, appointed or elected under the laws of this state." Thus, it is apparent that appointed Friend of the Court referees are subject to the provisions of the Michigan Code of Judicial Conduct. In accord, JI-10, JI-19, JI-29; RI-1.
Is the receipt of a referral fee "practicing law for compensation" within MCJC 5F? The answer is yes. Only a lawyer in good standing may divide a fee with someone who is not in the same firm, MRPC 1.5(e). The prospective client looks to the referring lawyer for the expertise and knowledge necessary to make an appropriate referral, and the referring lawyer uses legal expertise and skill in making that selection. The activity is "practicing law" and accepting the referral fee would constitute performance of the service "for compensation." Therefore, a full-time referee may not accept a referral fee.
This opinion does not prohibit a part-time referee who maintains a part-time private law practice from accepting fees under MRPC 1.5(e) for referrals made from the referee's law practice, nor does it prevent a referee from accepting referral fees for cases referred prior to taking office as referee.