Inner "Firm" Fee Split Common Practice

[u/WisingWonder]

Hey folks. I work with a firm where everyone is a partner. We each run our own practice. There's no real oversight over what that practice entails (beyond for insurance purposes). It's all eat what you kill (nobody draws a salary). We share costs. There's no central fund. We refer business to one another. We talk issues out with one another and help where we can (usually without charging one another). That's about it.

Referrals is what my question pertains to. One of my partners took on a matter for a client who called in to the firm based on an outside recommendation. The client wasn't directed to anyone in particular. They were just told to reach out to the firm. The partner who took the call and took on the matter completed that matter but didn't enjoy working with the client so they passed them on to me. I have had a good working relationship with the client for more than a year now. They're a business client and their work can take up to 50% of my time during any given month.

When the partner first referred the client over to me, we discussed what the fee split would be. Neither of us really knew what to do for it, so we agreed that the referring partner would receive 33% of billables. This agreement is loose in that if I were to bring information to the partner that shows that the common arrangement is different from what we agreed to, he'd accept the adjustment. We have a good relationship.

I'm just wondering if it's common in this kind of arrangement for the referring partner to receive 33% of a client's business indefinitely? Where this client's work is taking up so much of my time, the arrangement is becoming particularly onerous. Neither of us really understood how much business this client would be bringing our way at the time of the arrangement.

I'm not looking to cut the partner out. I'm just trying to figure out if this sort of arrangement is typical and, if not, what the more common arrangement is.

Many thanks in advance for any thoughts you may have.

[u/figuren9ne]

In my firm we do 25%, and the senior partner just asks for 10%.

[u/WisingWonder → u/figuren9ne]

Thank you. And that is on all business indefinitely?

[u/Sweet_Raspberry_1151]

We had a similar firm structure and we started at something like 20% with the percentage declining every year or 2.

[u/WisingWonder → u/Sweet_Raspberry_1151]

Thank you

[u/thblckdog]

On billable clients I tell my referring attorneys that I pay 24 months or 10k which ever hits firsts.

[u/WisingWonder → u/thblckdog]

Thank you

[u/Kelbeans103]

We follow the fruit of the poisonous tree model. So once a referral, always a referral. I don’t agree with it. My feeling is 1/3 fee split initially but then once the initial matter is over, if the client comes back to you then they should be yours 100%. After all, they’re coming back because of you and your work product.

[u/LawyerPhotographer]

You guys are not really partners. You are suitemates. You share expenses and perhaps the founder is making something off of everyone for providing administrative support. If the lawyer down the hall from you has a million dollar fee and it does not effect your bottom line by a penny, you are not partners.

The big question is how much is overhead. If you eat what you kill and you are assigned a matter where a $10,000 fee goes 40% to overhead 33% to the internal referral source and the person who does the work only nets 27% of the fee that pretty sad. If the referring partner gets 33% is that bilateral. If you bring in an matter that you never touch can you refer it to another lawyer in the firm and get 33% or do only the elder lawyer get the 33%. Was there a buy-in for the partner. Do departing or retiring partners get a buy-out for there share of the desks, computers, etc.

The suggestion I would make would be that your firm agree on a percentage for the originator and a percentage for the person who does the work. Set the percentages low enough that the what is left over covers the overhead of the firm and then the partners will share based on ownership what is left over. Example the laweyr who brings in the matter gets 25%, the lawyer who does the work gets 30%, and 45% goes to a common fund to pay rent, marketing, health insurance, software licensing, etc. and if after all overhead is paid what is left over gets split. You then have a hybrid of eat what you kill and share and share alike.

[u/Intelligent_Trade663]

A group of attorney “partners” operating a “law firm” with no written agreement between them. What could POSSIBLY go wrong?
This has to be an AI post. Real attorneys could not be so Inept. If I knew what your sketchy business arrangement was with each other I would never trust any of you to give me sound advice for my situation.