Paralegal Advanced Competency Exam (PACE) Practice Exam

What is fee splitting?

1. The collection of fees from clients by attorneys

2. The division of attorney fees between referral lawyers

3. The payment of a fee to the court

4. The sharing of office space by attorneys

The correct answer is: The division of attorney fees between referral lawyers

The correct response identifies fee splitting as the division of attorney fees between referral lawyers. This practice typically occurs when a lawyer refers a client to another attorney for specialized legal services. In this scenario, the original attorney and the referred attorney will agree on how to split the fees generated from the legal services provided to the client. Fee splitting is an important aspect of legal ethics and practice, as it is generally governed by rules established by state bar associations. These rules ensure that clients are fully informed about any financial arrangements involving their case, thereby protecting the client's interests and promoting transparency in the legal process. The arrangement must often comply with ethical guidelines, which might require informed consent from the client regarding the nature and amount of the fees shared between attorneys. The other choices do not accurately define fee splitting. Collecting fees from clients relates to the general operation of legal practice rather than the division of fees between attorneys. Payment of a fee to the court does not involve attorneys' fees being split and is unrelated to the concept of sharing payments for services rendered. Sharing office space by attorneys pertains to a logistical arrangement rather than a financial one involving the division of fees.