Should Personal Injury Firms Refer Out Cases?

Personal injury firms should refer out cases they can’t work to full value, but referring is one of four options, and often not the best one for cases with real merit. A firm can keep the case, refer it to another firm for a share of the fee, bring in co-counsel, or keep the case and outsource the pre-litigation work. 

EvenUp’s PLAAS is a fourth option: the firm keeps the client and the case, and a dedicated team runs pre-litigation to the firm’s own playbook.

The right choice depends on what the firm is trying to protect: its trial capacity, its fee, its relationship with the client, or all three. High-volume firms that screen cases with a written rule make this decision faster and more consistently than firms that decide case by case on instinct.

Key Takeaways

1. Referring out frees capacity, but the firm gives up most of the fee and still answers for the case.
2. A fee division between firms must follow ABA Model Rule 1.5(e) or your state’s version of it.
3. Clients who call a firm expect that firm to handle the case, so every referral starts with a hard conversation.
4. A two-stage screen, at retention and again around 60 days, sorts cases before value is lost.
5. Outsourcing pre-litigation keeps the client and more of the fee, and lets the firm pull a case back to litigate.

Why Do Personal Injury Firms Refer Out Cases?

Firms refer out cases to protect the attention their best cases need. A firm that wants to litigate and try cases can’t give every signed file that level of work, so it keeps the cases with the most value and sends the rest elsewhere.

Three situations drive most referrals:

1. Capacity. The firm signs more cases than its attorneys can work up for trial.
2. Case value. The case’s likely value doesn’t justify the firm’s litigation cost.
3. Fit. The case is outside the firm’s jurisdiction, licensing or practice focus.

Phillips Law Group in Phoenix shows the scale. The firm signs 300 to 500 personal injury cases a month and has referred out two-thirds or more of them, keeping only the cases its rating system says it should litigate, according to Managing Attorney Nasser Abujbarah.

“We pride ourselves on taking cases to trial,” he said. “In order to do that well, we have to be a little bit more selective on the cases we keep versus the cases we refer out.”

How Do Referral Fees Work Between Personal Injury Firms?

A referral fee is a division of the contingency fee between the referring firm and the firm that handles the case. Most states allow it only under conditions modeled on ABA Model Rule 1.5(e), which permits a division between lawyers in different firms only when three things are true:

1. The split matches the work, or responsibility is joint. The division is in proportion to the services each lawyer performs, or each lawyer assumes joint responsibility for the representation.
2. The client agrees in writing. The client agrees to the arrangement, including each lawyer’s share, and the agreement is confirmed in writing.
3. The total fee is reasonable. The split can’t raise the client’s total fee.

Joint responsibility is the part firms underestimate. The ABA’s comment to the rule describes it as financial and ethical responsibility for the representation as a whole, as if the lawyers were partners. A referring firm that takes a share on that basis still answers for how the case is handled.

Paying for a referral outside a fee division is a different matter. ABA Model Rule 7.2(b) bars giving anything of value for a recommendation, with narrow exceptions such as nonexclusive reciprocal referral agreements that clients are told about. States adopt these rules with their own changes, and some cap the referring lawyer’s share or require specific written consent. Check your state’s version before signing any referral agreement.

What Does Referring Out a Case Cost the Firm?

Referring out costs the firm three things: most of the fee, part of its relationship with the client, and the time it still spends watching the case.

1. The fee. The referring firm keeps only its agreed share. Abujbarah described the trade as sending “two thirds of my fee off to somebody else”.
2. The client’s expectation. “When someone’s calling our firm, there is an expectation that we’d be handling the case,” he said. Telling a client their case is going elsewhere is a conversation most firms would rather avoid.
3. The monitoring. “I don’t think the duties to a client stop when you refer out that case,” he said. Phillips Law Group built a referral portal in its case management system so referral partners log in, claim cases and post updates on filings and resolutions.

None of these costs make referring wrong. They make it a trade, and the trade looks different when there’s a way to keep the case without working it in-house.

What Are the Options Besides Referring Out a Case?

A firm has four ways to handle a signed case. Each one answers who does the work, how much of the fee stays with the firm and who the client sees as their lawyer.

Option	Who Works the Case	Fee Kept by the Firm	Client Relationship	Best For
Keep in-house	The firm’s own team	All of it	Fully with the firm	Cases worth litigating and trying
Refer out	Another firm	The agreed referral share	Moves to the receiving firm	Cases outside the firm’s jurisdiction or focus
Co-counsel	Both firms, with defined roles	A negotiated share	Shared	Large cases that need added trial resources
Outsource pre-litigation	An outsourced team under the firm’s attorneys	The fee, less a per-case service cost	Stays with the firm	Cases with merit the firm won’t litigate

The fourth option changes the math for the middle of the caseload: cases too small to litigate but worth working well. For the full scope of that work, see what pre-litigation services cover.

How Do PI Firms Decide Which Cases to Keep?

The firms that decide well use a written rule and apply it twice: once at retention and again once the key facts are in. For example, three questions decide whether a case stays in-house:

1. Was the client not at fault?
2. Is the property damage over $4,000?
3. Did the client get treatment within 24 hours?

Three yes answers keep the case in-house. A no on property damage or early treatment sends it out on day one.

Around 60 days, firms can check again. For example, the Phillips playbook calls for a police report, imaging and policy limits information on every file within 60 days of retention. Cases with no objective injuries, or limits under $50,000, go out at that point, because the firm litigates only cases with six-figure potential.

For more on building the screen itself, see our guide to personal injury case screening [REVIEW: link live on publish].

When Does Outsourcing Pre-Litigation Make Sense?

Outsourcing pre-litigation makes sense when a case has real merit but the firm won’t litigate it. The firm keeps the client and the case, and an outside team does the pre-lit work under the firm’s attorneys.

With PLAAS, EvenUp’s team handles every step of pre-litigation, from claim setup and investigation through care management, record and bill retrieval, demand preparation, settlement negotiation and lien resolution. The team follows the firm’s own policies and procedures and works inside the firm’s case management system, so attorneys see every file. PLAAS recovers 95% of available third-party policy limits.

Phillips Law Group set it up in three ways:

1. Its own playbook. “If you’re going to touch my files, you’re gonna do them the Phillips Law Group way,” Abujbarah said, from welcome calls and letters to medical management, demands and lien resolution.
2. An attorney on every file. One firm attorney supervises the PLAAS caseload. The PLAAS team runs the long welcome call, then he calls each client himself, approves every demand and holds settlement authority.
3. A pull-back threshold. Cases stay with PLAAS below $250,000 in expected value. When objective findings or high limits push a case above that, the firm pulls it back in-house to litigate.

The firm reports that its average fee on PLAAS cases is almost three times its average referral fee, after the PLAAS cost.

How Do You Monitor Cases You Don’t Work Yourself?

Whether a case is referred out or outsourced, the firm’s name and duties stay attached to it. Watch five things on every file:

1. Status in your own system. Updates on filings, offers and resolutions should land where your team already works.
2. Client contact. Clients should know who their lawyer is and hear from that lawyer directly.
3. Deadlines. Statutes of limitations and notice deadlines need an owner on your side.
4. Settlement authority. Decide who approves demands and offers before the first one goes out.
5. Pull-back triggers. Write down what makes a case come back in-house, like a value threshold or a new injury finding.

The last one matters most. A firm that can pull a case back doesn’t lose the large case that started small. For the stages these files move through, see our guide to pre-litigation team stages and processes.

Keep the Client, Choose the Work

Referring out solves a capacity problem by giving away the fee, the client relationship and some control. Keeping every case solves nothing if the team can’t work them all. The firms that grow fastest write a rule for which cases they litigate, then find a way to work the rest without losing the client.

For more on growing that way, see how to grow a personal injury law firm.

Schedule a call to see how PLAAS can work your firm’s pre-litigation cases to your own playbook.

Frequently Asked Questions