Referral Fees and Fee Splitting
Referral fees are permitted between lawyers and paralegals under subrules 2.08(6) and (7) of the Rules of Professional Conduct (the "Rules"), provided that the following conditions are met:
- the referral must be made because of the expertise and ability of the lawyer or paralegal receiving the referral and not because of a conflict interest
- the referral fee must be reasonable
- the referral fee must not increase the total fee charged to the client, and
- the client must be informed about and consent to the referral fee, confirmed in writing
Lawyers are not permitted to pay referral fees or to give any financial or other rewards for the referral of clients by anyone who is not licensed by the Law Society of Upper Canada pursuant to subrule 2.08(8) of the Rules. In other words, lawyers may only pay a referral fee to another lawyer or paralegal in accordance with the Rules.
Although lawyers and paralegals are not prohibited from accepting a referral fee from a non-lawyer or non-paralegal, a lawyer must not accept any fees that are hidden from the client. The fiduciary relationships between lawyers and their clients require full disclosure in all financial dealings between them. Accordingly, before a lawyer can accept any referral fee, reward, commission, or rebate from someone to whom the lawyer has referred a client, the lawyer must first fully disclose to the client the proposed financial arrangements and obtain the client's informed written consent (see commentary to subrule 2.08(2) of the Rules).
Fees for professional services may be divided or split between lawyers and paralegals who are not at the same firm, if the following conditions are met
- the fees are divided in proportion to the work done and the responsibilities assumed,
- the client is informed about and consents to the division of fees, confirmed in writing.
Lawyers are not permitted to divide or split fees with anyone who is not licensed by the Law Society of Upper Canada - the lawyer may only divide or split fees with another lawyer or paralegal in accordance with the Rules.
There are two exceptions outlined in subrule 2.08(9) of the Rules. Lawyers in multi-disciplinary practices may divide fees and may accept from and pay referral fees to non-lawyer partners, provided that the conditions set out in the subrule are satisfied. Lawyers who are members of inter-provincial law firms or in law partnerships with Ontario and non-Canadian lawyers may also divide fees, and may accept from and pay referral fees to their non-Canadian lawyer colleagues, if the conditions set out in the subrule are met. It is important to note that affiliations are not subject to the exceptions for multi-discipline practices and inter-provincial and international law firms.
Financial Management Practice Management Guideline
Convocation approved changes to the CPD Requirement in response to lawyer and paralegal input and following its two-year review of the program.
Changes effective May 30, 2013:
- co-writing and co-editing now eligible activities
- writing and editing for law firm or other in-house publications now eligible activities; and
- Accreditation Criteria for Professionalism Hours expanded.
Changes to be implemented for 2014:
- introduction of a simplified reporting process
- elimination of the separate New Member Requirement
- introduction of an Accredited Provider Framework to streamline the approval of professionalism programming; and
- implementation of a late fee and reinstatement fee.
See the Law Society website for more information.
Stay informed by using AccessCLE to access and download articles from Law Society CPD Programs. Articles older than 18 months are now free of charge and more recent articles cost only $25.00 to $35.00. AccessCLE allows you to conduct a full text search, preview the entire text and select only the articles you want.
Mentoring is an Eligible Activity for the CPD Requirement
By acting as a mentor to another lawyer or paralegal you may complete up to six hours per year of the CPD Requirement. See five tips for a successful mentoring relationship.
June 27 -Convocation
July 2 - Final date to file the 2012 Lawyer Annual Report, Paralegal Annual Report , Class L2 Licence Annual Report or Class L3 Licence Annual Report. Failure to file by this date will result in a $100 late fee and referral for suspension on or about this date.
July 31 -LAWPRO 2013 Second Quarter Real Estate and Civil Litigation Levy Surcharge filings and applicable payments due.
September 15 -LAWPRO Risk Management Credit deadline: Complete the online declaration by this date to receive the credit on your 2014 insurance premium.
September 25 -Convocation
For more information, visit the Manage Your Practice section under For Lawyers or phone 416-947-3315 or 1-800-668-7380 ext 3315.
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