Fee-splittingthe term alone sounds ominous. Or perhaps that is simply because the legal profession has very strict prohibitions against splitting fees with non-lawyers. Yet, fee-splitting is not only prohibited for the legal profession, as the prohibition applies to other professions as well. Regardless of the context, it is not permitted, and agreements calling for such a prohibited fee-split are illegal. It is hornbook law that illegal agreements are unenforceable. So what happens when a client seeks to recover damages arising from a breach of such an agreement? Must the client be advised that the courts say “a plague on both your houses” and sent on their way? The answer is no, or, at least, not necessarily.
While a fee-splitting agreement or issue in a case is unquestionably a serious obstacle with potentially serious ramifications, under certain circumstances such arrangements can be enforced. Careful consideration, however, must be given initially as to what is at stake, the risks involved and the equities at hand. The equitable issue of who, if anyone, is wearing the proverbial “white hat” and who is wearing the “black hat” is particularly determinative of whether a court will enforce such an arrangement or leave the parties where it found them.
