Entre Nous - December, 2004

By: Claude E. Ducloux

         A VISIT FROM THE REFERRAL FEE POLICE

[Ed. Note: In the very first Entre Nous (April 1992), we witnessed the arrest of our hero, attorney John Whisenheim, a tariff rate specialist, for failing to give divorce advice at the mandatory pro bono clinic. Sadly, Whisenheim finds himself in trouble again.]

Scene:  June 2005: The law offices of John Whisenheim, befuddled Texas attorney.  Enter two serious gentlemen in dark suits and sensible shoes.

Holmes:            John Whisenheim?

Whisenheim:     Yes, can I help you?

Holmes:            I’m Inspector Holmes.  This is Detective Stickler.  We’re with the CID: RFS.

Whisenheim:     CID - - - what?

Stickler:            Criminal Investigation Division: Referral Fee Squad.

Whisenheim:     [confused]  Fine. . . I guess.  How can I help you?

Stickler:            [looking at his notepad] Do you know an attorney named John Corder?

Whisenheim:     Why yes, we were classmates in law school.  He is a Board-Certified personal injury attorney in the Dallas area.  Very bright guy.

Holmes:            What about an Elizabeth Meadows?

Whisenheim:     I don’t think I know an attorney . . .

Holmes:            Don’t play dumb with us, Whisenheim.  We know who she is.

Whisenheim:     Then what are you asking me for?

Stickler:            Didn’t you refer her to your comrad Corder?

Whisenheim:     Hmm...I don’t re-.... Any other clues you can give me?

Holmes:            Don’t you have a client named Emily Hartman who has a daughter named Elizabeth?

Whisenheim:     Yes.  Now I remember.  Emily is the CEO of a software company here, and her daughter was badly injured in an accident in Dallas.  She asked me for a referral and I had her call Mr. Corder, who handled the case.

Holmes:            Hmm!  Why didn’t you handle the case yourself?

Whisenheim:     That’s ridiculous.  I’m a rate analyst.  I’m not qualified to handle a personal injury case.  Corder’s Board Certified.  I understand he did very well in recovering for Ms. Meadows.

Stickler:            [leans down to Whisenheim] Anything else you want to tell us?

Whisenheim:     You’re a little close to my face.  Would you like a breath mint?

Holmes:            Spit it out, Whisenheim.  You got a referral fee, didn’t you?

Whisenheim:     No, but after the case was over, he did send me this nice watch as a token of his appreciation.

Stickler:            Aha!  We knew it.  You little rule-breaker.  Let me see that.

            [Whisenheim takes off the wristwatch who hands it to Holmes who hands it to Stickler]

Stickler:            [using a jeweler’s loupe] Uh, huh.. yup. Just as I thought, a Patek Phillippe “Frontanec” edition.  Whisenheim, you realize this is worth almost $1,500.00?

Whisenheim:     I don’t doubt it.  It’s a very nice watch.

Holmes:            A little too much bling for a rate analyst, wouldn’t you agree?

Whisenheim:     What are you talking about?

Holmes:            So we’re into games, huh? Like you don’t know the new rule changes on division of fees?

Whisenheim:     What rules?

Holmes:            The new Referral Fee Rules.  Don’t play dumb.  Tell me this: Were you identified to the client as a participant in a fee sharing agreement? 

Whisenheim:     What?

Stickler:            [rapid fire] Did you agree to assume joint responsibility?  What portion of services did you provide for that watch?  What was your share of the expenses?

Whisenheim:     Whoa!  Am I in trouble over this watch?

Stickler:            Look, Whisenheim, you need to get in front of this right now.  It might go easier with the Chief Disciplinary Counsel’s office if you write down on this pad exactly what happened. 

Whisenheim:     What did I do wrong?

Holmes:            You did nothing for that watch, and that’s unethical.

Whisenheim:     It was a gift.  I referred the case on to Mr. Corder, he did well, and appreciated the referral. Client’s happy, isn’t she?

Holmes:            That’s not important. We’re talkin’ ethics here.

Whisenheim:     But that is exactly the point. Wait a minute.  If I recall, didn’t the State Bar have a blue ribbon referral fee task force?  And, if I’m not mistaken, didn’t they find that clients actually benefit from having their cases handled by better lawyers?

Holmes:            Well, yes.

Whisenheim:     And, didn’t the task force spend months, only to find that referral fees encourage an inexperienced lawyer to pass on complicated matters at no additional cost to the client?

Holmes:            Well, yes, but that’s not the point.

Whisenheim:     Well, it should be. If it’s not, what is the point?

Holmes:            Don’t you realize that there were slimy lawyers out there advertising and their sole purpose was simply to get cases in the door to refer to good attorneys?

Whisenheim:     So what?  Welcome to world of banking, mortgages, real estate, travel agents and a thousand other consumer services. 

Stickler:            But it demeans the profession.

Whisenheim:     How?

Stickler:            Well, lawyers were getting money for doing very little work by simply placing cases with better lawyers.

Whisenheim:     Is the consumer harmed by that?

Holmes:            No.

Whisenheim:     Are either of the lawyers involved harmed by that?

Stickler:            No.

Whisenheim:     Well, who is harmed by that?

Stickler:            The defendants who have to pay more money because the case is being handled competently.

Whisenheim:     And that’s bad how?

Holmes:            Enough with the sophistry.  We simply can’t suffer a profession which tolerates fees for very little effort.

Whisenheim:     Oh, you mean like insurance agent who receives commissions for decades for having sold one life insurance policy 20 years ago, or actors who continue to get residuals for years after having appeared in a 30-second commercial or a soap opera?

Stickler:            That’s totally different.  Don’t confuse the issue.

Whisenheim:     How’s that different? 

Stickler:            Those commissions are just matters of contract and people have the right to make contracts in this country.

Whisenheim:     Not according to you.  Do I get my watch back?

Holmes:            You’re lucky if we don’t cuff you right on the spot, you non-disclosing cheat.

Whisenheim:     But doesn’t referral of clients to competent lawyers benefit the administration of justice?

Stickler:            Only when we say it does. And we don’t like who’s doing it.

Holmes:            And it encourages frivolous lawsuits.

Whisenheim:     What?  That’s absurd... Are you guys on crack?

Holmes:            Look, perp, don’t you start lecturing us.  You’re probably one of those guys who thinks its okay for lawyers to have runners drummin’ up work for them.

Whisenheim:     No, I would never do that, but apparently, the public doesn’t think its so bad.

Stickler:            What are you talkin’ about?

Whisenheim:     Look, we live in a modern society.  People get advertising every day, on T.V., on radio, mail, spam… Why does it shock the State Bar that lawyers want to advertise?

Holmes:            But, surely you agree we need to protect the public from unsavory solicitations?

Whisenheim:     I sure do, but remember what happened when the State Bar prosecuted John O’Quinn for using runners 5 or 6 years ago?  If a client is referred to a top-notch attorney who actually wins handily for them, the client couldn’t care less who handed him the lawyer’s card, or where.   That’s at least what the jury believed.  They were scratching their heads going “Who’s hurt?”

Stickler:            You are never getting this watch back, you law breaker.

Holmes:            Hey, and don’t forget, we didn’t make these rules, you did.

Whisenheim:     Yeah, if I recall, we drafted it under threat that if it failed, the Supreme Court might enact its draconian proposed Rule of Civil Procedure 8A, which brings me back to the ultimate irony.

Stickler:            We do you mean?

Whisenheim:     Having been just showered by commercials decrying “activist” judges, that Rule leaves me shaking my head in disbelief.  Disguised as a Rule of Civil Procedure, it’s about as much civil procedure as flamenco dancing.  It’s pure legislation. Save your breath about activist judges.

Holmes:            What’s your problem, Whisenheim?

Whisenheim:     [angry now] Look, no one has ever articulated ANY valid reason for any new referral fee rule. The limp mantra of “protecting the public” rings as hollow as dinner bell in a mortuary.  The receiving lawyers who hate paying these fees should just stop paying them, rather than sanctimoniously and surreptitiously asking the court for help. The only other parties who benefit from the restrictions are the defense interests who risk higher losses when competent lawyers represent clients.  The client’s interest?  Somewhere down in steerage.

Holmes:            Rules are rules, Whisenheim.

Whisenheim:     So, when do I get my watch back?

Stickler:            You’ll be hearing from our successors next week.

Whisenheim:     Where are you guys going?

Holmes:            Promoted.

Stickler:            Yup.  Moving up to the “Sex with Clients” Victims Unit.

Holmes:            We get to wear jeans.

Whisenheim:     Here, you’ll need these breath mints. And don’t wear my watch.