Massachusetts Fee Splitting Laws

Canon 34 of the American Bar Association`s Professional Ethics Canons required that the distribution of fees be proportional to the services provided. Thus, the first three cases, one in Kansas, one in Missouri, and one in Washington,[17] all refused to enforce a referral agreement because the lead attorney did nothing but sell the client to another lawyer. Today, most states allow for a simple referral agreement, provided that all lawyers jointly assume responsibility for written representation. However, in the absence of shared responsibility, the traditional requirement of proportionality remains. For example, two recent cases in Louisiana, such as an earlier case in Washington, refused to implement a disproportionate agreement, even though the agreement was more than just a payment agreement; Instead, the courts applied the agreement to the extent that the division was proportionate. [18] On the other hand, assuming that the fee-splitting agreement was more than just a referral agreement and that the division was roughly proportionate, the courts of Colorado, Georgia, New York, Oregon, and Washington suggested that a court should not require the division to be exactly proportionate:[19] «As long as the two lawyers*24 have worked on the matter beyond the client`s signature and dismissal, The courts will not engage in the onerous task of retrospectively assessing the relative contributions of dissenting lawyers. [20] The medical profession has always recognized the ethical prohibition for physicians to pay their peers for referrals. One such measure is the prohibition of fee-splitting. Fee splitting occurs when a physician, in order to generate referrals from other physicians, shares a portion of the fees he earns by treating the referred patient with the attending physician. Fee splitting can result in a variety of damages, including: Given the historical evolution of fee splitting, it is not surprising that American Medical Association Notice No.

6.02 on fee splitting states that «paying by or to a physician solely to refer a patient fee sharing is fee-splitting and unethical. A physician may not accept payments of any kind, in any form, from any source. to prescribe or refer a patient to that source. All recommendations and prescriptions must be based on the competence and quality of the physician to whom the patient has been referred or on the quality and effectiveness of the drug or product prescribed. California and Illinois, which both prohibit fee-splitting agreements unless the client consents in writing, will not enforce an oral fee-splitting agreement for public policy reasons, as such an agreement is not strictly ethical in accordance with professional ethics. [21] Alaska, Minnesota, Missouri, New Hampshire and Texas also concluded that public policy prohibits the application of an imperfect fee-splitting arrangement. [22] While there are understandable concerns about overbilling or overuse of care, fee sharing prohibitions, which largely prohibit legitimate, non-fraudulent relationships, are not the appropriate tool to address these issues. As explained in more detail below, see page 10 below, one of five different jurisdictions New York, Massachusetts, Illinois, Mississippi and South Carolina could provide the applicable law for this case. However, the question of choice of law is not important at the moment, as all five jurisdictions agree on the quantum meruit issue. While the South Carolina defendants are correct that equity should not enforce an illegal contract, the South Carolina defendants do not distinguish between (i) a contract that, if performed, would violate a strong public policy, and (ii) a contract that is simply unenforceable.

A murder contract or, in the case cited by the South Carolina defendants, a man`s promise to support a woman if she divorces her husband, Capazzoli v. Holzwasser, 397 Mass. 158, 160, 490 N.E.2d 420 (1986) cannot be enforced by law or equity, because the execution of the agreement is contrary to public policy. The contract claimed by Daynard, on the other hand, is completely harmless and may well be enforced in court. An fee-splitting agreement*13 is not contrary to public policy per se. Looking ahead, it is unclear whether and how often the FTC will pursue forfeiture as a remedy. In the future, the Commission may consider other remedies, such as forfeiture, to restore competition in an increasingly consolidated healthcare market, particularly where state certification laws are a barrier to divestment – the FTC`s preferred remedy for restoring competition once a transaction has been completed.17 In the absence of clear FTC policy guidance on: when it applies the skimming measure, However, it will be more difficult for companies in the healthcare market to assess the true extent of this risk. The South Carolina defendants echo the Bar Association`s traditional hostility to the allocation of attorneys` fees, arguing that this court should reject the application of the alleged oral fee-splitting agreement on public policy grounds and reject recovery, even on a quantum meruit basis. In summary, with respect to the choice of law analysis, it is clear that Illinois law should not apply because neither party is authorized by Illinois and Illinois has no interest in this case. Daynard is subject to the New York Code of Professional Responsibility and defendants in South Carolina and Mississippi are subject to their respective codes of conduct.

The New York Code of Professional Responsibility, as well as the Massachusetts, Mississippi, and South Carolina Code of Professional Conduct, suggest that this court should not allow defendants to interfere with the fee-splitting rule as a defense to Daynard`s contractual claim. A New York court reprimanded a lawyer for using public order as a «sword for personal gain and not a shield for the public good,» but no court in Massachusetts, Mississippi, or South Carolina has addressed the relationship between contract law and the regulation of fee-splitting agreements. According to Bushkin and Restatement Section 196, the court would likely have to consider Daynard`s claim under South Carolina or Mississippi law, unless that would render the alleged agreement unenforceable, in which case the court should seek to satisfy the legitimate expectations of the parties by applying the law of a state that would enforce the agreement. [16] Four states (Florida, New York, North Carolina and Tennessee) have remarkably extensive prohibitions on cost-sharing. Of these, only New York explicitly states that percentage agreements with billing companies are prohibited. Courts in Florida and Tennessee have raised concerns about percentage agreements with collective societies, but not with companies whose sole function is billing. Courts across the country are divided on the application of a fee-splitting agreement that does not strictly adhere to ethical rules. Years ago, state law societies only allowed fee-splitting agreements commensurate with the services provided; This requirement reflected hostility to intermediary fees. As a result, the first court decisions on the issue of the performance of a fee-splitting agreement *23 reflected the rejection of brokerage fees and refused to enforce an agreement that was not strictly proportional to the services provided.

State bar associations soon learned that banning referral fees was both impractical and reckless: impractical because lead lawyers simply concocted work to «earn» their share of fees, and reckless because many lawyers preferred (i) to risk a fault in exchange for the full fee in order to (ii) refer the client to a competent lawyer in exchange for a portion of the fees. In other words, state bar associations learned that discouraging referrals hurt clients, so state bar associations attempted to develop a fee-splitting rule that would facilitate ethical recommendations. The solution found in the Model Code and the Model Rules is regulatory in nature: fee-splitting agreements are generally ethical if the client agrees (with different state bar associations requiring different levels of consent), and recruitment fees in particular are ethical when all lawyers jointly assume responsibility for the client.