Are referral fees allowed under the attorney ethics rules?
Note I recently taught a CLE on ethics, available here, in which I (briefly) addressed this question. The anti-climatic answer is that it varies by jurisdiction.
The relevant ABA Model Rule of Professional Conduct is Rule 1.5(e), which reads as follows:
(e) A division of a fee between lawyers who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;
(2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and
(3) the total fee is reasonable.
You can see the ABA rule adds a caveat that a referral fee is acceptable when each lawyer—including a lawyer doing no work on the matter—assumes joint responsibility for the representation, meaning that the referring attorney cannot wash his or her hands of the representation as happens in the typical referral situation. Both New York and Georgia add the requirement that the lawyers provide the client with a written document stating both lawyers will remain responsible for the representation (which can presumably be added to the document referred to in 1.5(e)(2)). The District of Columbia follows Rule 1.5(e)(1) verbatim, so though each lawyer assumes joint responsibility for the representation, no written document verifying this fact has to be provided to the client.
California, on the other hand, does away with any mention of joint responsibility, but keeps the requirement that the client be fully informed as to how the lawyers are dividing the fee, and adds that the fee cannot be increased solely because the lawyers will be dividing the fee. Thus in California a lawyer can collect a referral fee even if he does no work on a matter, and he does not have to maintain responsibility for the representation.