Acknowledgement vs. Consent

Reeve v. Meleyco, No. C085867 (D3 Mar. 24, 2020)

California is in the minority of jurisdictions that permit lawyers to pay referral fees to other lawyers who do not continue to work on a case. Under the Rules of Professional Conduct—old RPC 2-200 and new RPC 1.5.1—the referral fee can’t increase the client’s total bill—it needs to come out of the referred attorney’s take. The attorney also needs to disclose the key facts to the client in writing and the client needs to give written consent. 

Here, after being provided with the information, in writing, the client signed an “acknowledgement.” But it did not expressly say the client “consented” to the arrangement. Even though the client later testified that he had, in fact, agreed to the arrangement, the acknowledgement wasn’t enough to satisfy the rule’s requirement of written consent. That rendered the referral contract invalid as a matter of law.

Reversed.