Lawyer Referral Fee

Sirote & Permutt, P.C. v. Caldwell, [Ms. 1200092, Sept. 24, 2021] __ So. 3d __ (Ala. 2021). The Court (Mitchell, J.; Parker, C.J., and Bolin, Shaw, Wise, Bryan, Sellers, and Mendheim, JJ., concur) affirms the Mobile Circuit Court’s bench verdict awarding attorney Randall Caldwell a disputed referral fee from the Woerner entities’ BP oil spill claim handled by Cunningham Bounds. Sirote & Permutt, P.C. (Sirote) contended that it rather than Caldwell was entitled to the fee.

In affirming, the Court rejects Sirote’s argument that a client must give informed consent to a referral fee and holds “by its express terms, Rule 1.5(e) [Rules of professional Conduct] does not require informed consent” but only requires that “the client is advised of and does not object to the participation of all the lawyers involved.” Ms. *21.

The Court also rejects Sirote’s argument that the client replaced Caldwell with Sirote as the referring lawyer and holds

Even though there is a “virtually absolute” right to terminate the attorney-client relationship in Alabama, National Filtronics, [Inc. v. Sherwood Land, Ltd., 428 So. 2d 11, 15 (Ala. 1983)], that right does not allow the client to escape its obligation to pay an attorney for services rendered. The Woerner entities consented to Caldwell’s referral of their BP claims to Cunningham Bounds. And, as explained above, there was sufficient evidence for the trial court to find that Caldwell fulfilled his duties under the referral agreement. See Bassett Lumber Co. v. Hunter-Benn & Co., 238 Ala. 671, 675, 193 So. 175, 178 (1939) (“It is elementary law that a contract may be executed as to one of the parties and executory as to the other, and where one of the parties to a contract has performed everything necessary to be done by him, according to the terms of the contract, the contract, in so far as that party is concerned, is executed ....”). Allowing the Woerner entities to alter the referral agreement at this stage would undermine freedom of contract, do nothing to protect a client’s right to terminate the attorney-client relationship ….

Ms. **27-28.

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