QUESTION
Is it illegal to sell personal injury law suits?
Asked on May 20th, 2014 on Business Law - New York
More details to this question:
A referral fee is a fee which a law firm pays insurers upon agreement that their insured's' contact details will be passed to them where this person is likely due compensation having been involved in an accident whereby they suffered an injury through no fault of their own. In most cases, companies that are known as compensation claim management services will source or procure the contact details of potential claimants that are likely to win their lawsuit. Now this has been happening in Britain for the past twenty years and the compensation claim management industry has become worth millions. As of last year, referrals are banned in an attempt to quell rising insurance premiums due to an exponential increase in compensation claims. I want to better understand the personal injury compensation culture in the U.S and if the legality of this business practice. Thanks in advance.
1 ANSWER
The practice you describe would violate attorney ethics rules. An attorney can't pay a referral fee to a non-attorney, and can only share his fee with an attorney if the referring attorney is either affiliated with the first lawyer in some way (i.e. work for the same firm) or actually does some work on the case. Sadly, that doesn't mean that referral fees are not sometimes paid.
Answered on May 21st, 2014 at 3:46 PM