Co-Counsel and Referral Fee Agreement

A co-counsel and referral fee agreement is a contract between two or more law firms governing the division of contingency fees earned from a shared mass tort client or block of clients, typically arising when a referring firm — often one with strong marketing and intake capability but limited MDL litigation experience — sends cases to a lead or trial-capable firm in exchange for a percentage of any resulting fee, or when multiple firms jointly handle a matter and agree in advance how to split the eventual recovery. These agreements must generally comply with state bar ethics rules governing fee division between lawyers not in the same firm, which typically require client consent to the arrangement, a division proportional to services rendered or joint responsibility assumed, and a fee that remains reasonable in the aggregate. In the mass tort context, co-counsel arrangements are central to how large dockets are actually staffed: intake-focused firms generate substantial claim volume through advertising and client acquisition but frequently lack the litigation infrastructure to serve on a PSC or try bellwether cases, while trial-capable firms depend on referral relationships to build the case inventory needed to justify their common benefit investment. Disputes over referral fee entitlement, particularly following late-stage client transfers, are a recurring source of litigation collateral to the underlying mass tort itself.

Referral fee obligations are a fixed, senior claim against a case's eventual recovery that reduces the net proceeds available both to the client and to repay any litigation financing tied to that case, making the referral fee structure a necessary diligence item when financing either the referring or the receiving firm.

Funders financing an intake-focused firm's docket should confirm that referral agreements are properly documented and ethically compliant, since an unenforceable or disputed referral arrangement introduces collection uncertainty into what the funder may be relying on as a predictable fee stream.