The top 3 secrets to making money on personal injury cases for lawyers who do not practice personal injury law in Kingston, New York
Two years later, you run into the client at the grocery store and he thanks you profusely for your recommendation of the personal injury lawyer. The client stuns you with his story about how he recovered a six figure settlement in his injury case. You exchange pleasantries with the client, see him on his way and you secretly seethe at the discovery that you did not see a single dime from the personal injury settlement.
Once you get over your disgust, you are tempted to call the personal injury lawyer to find out why you did not receive a referral fee. After you calm down a bit, you realize that you have no one to blame but yourself. You never memorialized the referral of the client in writing with the personal injury lawyer and in the absence of a written agreement specifying the division of the legal fee, you have no right to any part of the legal fee.
Here are the top 3 secrets to avoid the mistakes that are commonly made by non-personal injury lawyers when referring new injury cases to personal injury lawyers.
Mistake #1: Failing to memorialize the referral and the division of the legal fee in writing
The biggest mistake of non-personal injury lawyers is failing to memorialize the referral in writing on full disclosure to the client. It's really simple: the referral of the client must be memorialized in the retainer agreement (or another document), or you are not entitled to a referral fee. You must insist that the personal injury lawyer include your name in the retainer agreement that is signed by your client.
You should also insist that the referring attorney have a separate agreement with you that specifies the division of the legal fee, i.e., the percentage of the legal fee that you will receive at the end of the case. The division of the legal fee between the two law firms must be disclosed to the client, under New York's ethical rules.
If your name is not listed on the retainer agreement and you do not have a separate agreement with the personal injury lawyer regarding the division of the legal fee, it is unlikely that you will ever recover a penny of the legal fee. You must protect your rights as the referring lawyer.
You should NEVER agree to a verbal agreement with the personal injury lawyer--such an agreement is completely unenforceable. If you come to court seeking to enforce a verbal agreement regarding a referral fee, you will be laughed out of court. Don't do this!
Practice tip: Get your name on the retainer agreement and the memo dividing the fee at the very beginning--when the client first comes to you. Otherwise, you may forget and the personal injury lawyer may hope that you don't remember.
Mistake #2: Failing to insist on a referral fee from the personal injury lawyer
Many non-personal injury lawyers do not consider making money from personal injury cases. For those practicing matrimonial or construction law, they are often happy to make a referral of a case without any expectation of a referral fee. WHY?
Consider this: the personal injury lawyer makes a living by getting referrals of clients from people just like you. the personal injury lawyer can't survive without you and you are ethically permitted to share in the legal fee under New York law. So why are you continuing to refer cases without asking for a referral fee?
If you don't ask for a referrral fee, the personal injury lawyer will not bring it up. You can't expect most personal injury lawyers to protect your rights to a referral fee--this is your job! You must be proactive in protecting your rights to a referral fee.
Practice tip: When you place the first phone call to a personal injury lawyer, you must start the conversation by saying: "I am referring this client to you on a referral basis. If you accept the referral, my name must be listed on the retainer agreement as the referring attorney, and we must sign a separate agreement specifying the division of the legal fee." Once that is confirmed, you should also state the percentage of the legal fee that you will accept: "My referral fee will be one-third of the total fee. If that is not acceptable, I will find another lawyer who will take this case." Don't be a wimp!
Mistake #3: Failing to negotiate the division of the legal fee
95% of non-personal injury lawyers agree to the division of the legal fee that is proposed by the personal injury lawyer. In some cases, the fee split is non-negotiable, but you can negotiate for a better fee split in many cases.
Let's say you refer a slam-dunk construction accident case involving a fall from a roof. The construction worker is severely injured and there is great liability. You contact the personal injury lawyer, who informs you that your referral fee will be one-third of the total fee. You respond by saying "thank you" and you thank your lucky stars for one-third of the legal fee. Why?
Will it hurt to propose that you receive a higher percentage of the legal fee? Of course not! The worst that happens is the personal injury lawyer says "no". Realize this: everything is negotiable, including the percentage of your referral fee.
Practice tip: In great cases with substantial injuries and strong liability, you should ask for more than the standard one-third referral fee. I've had cases where I've paid 50% and even 75% of the legal fee to the referring attorney and I was very grateful for the work. You can say to the personal injury lawyer, "I'm willing to accept a 50/50 division of the legal fee. If that is not acceptable I will speak with other personal injury lawyers who I am sure will find this acceptable."
If you have questions, here's what you can do
If you have any questions or just want to speak, I welcome your phone call on my toll-free cell at 866-889-6882. I have a ton of valuable advice for non-personal injury lawyers about injury litigation at my website at www.protectingpatientrights.com.