Texas Supreme Court Adopts New Forwarding Fee Rules

For several years, the Justices of the Texas Supreme Court have wanted to change the rules regarding forwarding or pure referral fees in the state.  The Justices believed that Texas, one of the few states permitting forwarding fees, had become a haven for case brokers for personal injury lawsuits.  The Texas Supreme Court first enacted and then suspended a rule of civil procedure to prohibit pure forwarding fees. An uproar from members of the bar led to the formation of a committee to study the issue.  Proposed amendments were put on a referendum to the members of the bar in the fall of 2004, and the proposals passed 54.29% to 45.71%.  A new referral fee rule goes into effect March 1, 2005.  The bar has drafted sample language for inclusion in a fee contract that complies with the new rule.   

Texas Disciplinary Rule 1.04 eliminates pure referral fees and requires either joint responsibility or services performed to the client.  The rule provides that lawyers who fail to comply with its requirements will usually forfeit their referral fee.  Although much of the text is similar to the ABA Model Rule 1.5, the comments to the Texas rule contain significant variations.  Perhaps this signals the end of Texas as the Wild West corral for referral fee battles.  Or maybe lawyers who refer cases will craft their legal work and contracts to meet the requirements of the new rule. 

Comments

[Cartwright]

Did they also limit the amount of referral fees or is it just "joint responsibility"?