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Associate Attorney’s Referral May Breach Fiduciary Duty Owed to Law Firm

Michael Talve, CEO

Written by
— Updated on May 18, 2017

attorney’s referralThis case concerns an attorney who recommended that his firm take a personal injury case representing victims of a helicopter crash. One of the victims of the crash was the father of one of the attorney’s friends. A partner at the firm recommended that the case be referred to another firm. The case was later referred to a small personal injury firm where the managing partner was a close friend of the associate. The managing partner of the firm decided to refer the case to another law firm. The law firm that took the case made an agreement to pay the associate’s friend a referral fee. The associate and the managing partner of the small personal injury firm formed a partnership a year later. The associate never told his former firm about the referral and did not receive any compensation as a result of the lawsuit or his new partner’s referral of the case to the other law firm. The associate’s firm sued him on the ground that he breached his fiduciary duty to the firm. The associate’s former firm had a policy that forbade associates from referring cases without getting a referral fee.

Question(s) For Expert Witness

  • 1. Does an associate at a law firm owe a fiduciary duty to the firm and is it a breach of this duty to refer a case to another firm without getting the firm’s permission?

Expert Witness Response

An associate at a law firm generally owes a fiduciary duty to the law firm where they work. This fiduciary duty includes a duty of loyalty to the law firm. This means that an associate at a law firm owes a duty to act on the firm’s behalf rather than for their own benefit in all matters concerning their employment. This rule comes from the Restatement (Third) of Agency §§ 8.02, 8.04. An associate at a law firm also has a fiduciary duty to obey all reasonable instructions of the law firm about how they must do their job. This rule comes from the Restatement (Third) of Agency § 8.09. An associate also has a fiduciary duty not to personally realize any gain or advantage from referring a matter to another law firm or lawyer without the knowledge and agreement of their firm. In this case, the associate’s referral of the case to his close friend’s firm without getting permission from his firm, probably was a breach of his fiduciary duty to his firm. The associate probably should have informed his firm that he had referred the case to a friend’s firm. The important issue, in this case, is whether the associate’s firm should have been told about the referral and should have gotten a referral fee. Since the associate, in this case, did not receive a referral fee or profit from the referral himself, this tends to make the breach of the associate’s fiduciary duty to his firm less severe in this case.

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