When attorneys refer cases they need to be aware of the risks associated with these referrals. Over the years we have seen malpractice claims reported for all 3 of the following scenarios:
1. The referring attorney refers to the working attorney, where the working attorney does all the legal work while the referring attorney receives no fee. This is the only scenario in which you may avoid liability. This is because the referring attorney makes no assurances that the attorney to whom (s)he referred the client would perform satisfactorily. However, even in this situation, the referring attorney is expected to exercise due care when referring a client to another attorney. In addition, the referring attorney should have a written referral agreement with the referred client that states the referring attorney is receiving no fee, there is no attorney-client relationship for this matter, and has no responsibility the case outcome.
2. The referring attorney does none of the work but still receives a referral fee. It is important that in this case that the referring attorney obtains a written fee agreement that spells out the referral arrangement for the client’s case. Beware that the referring attorney can be held liable for the case outcome.
3. Both the referring attorney and referred attorney work on the case. Again make sure that the referring attorney, at a minimum, has a fee agreement signed by the client obtained during the client intake process.
You may be found liable for attorney malpractice if you had an attorney-client relationship with the client whom you had referred to a negligent attorney. Client engagement and disengagement letters can help avoid malpractice claims or at least mitigate damages. But there may be times when even a non-client may hold an attorney liable for a negligent referral. Again good documentation and good client intake procedures can help avoid or mitigate liability. The intake process should include a non-client letter for prospective clients that you refuse to provide services to.
Any time you refer clients to another attorney you should make sure that the working attorney is competent in the matter being referred and the working attorney has attorney malpractice insurance.
As a final note, if you become aware of any malpractice claim, regardless of a referral or not, report it promptly to your insurer.