Legal Ethics

PI Lawyers Argue Admin Payments Were Bonuses, Not Referral Fees

Two partners in a now-defunct personal-injury law firm argue in a petition filed with the New Jersey Supreme Court that their payments to an office administrator were bonuses rather than illegal referral fees.

The state’s Disciplinary Review Board had ruled the Cherry Hill law firm—Tomar, Simonoff, Adourian, O’Brien, Kaplan, Jacoby & Graziano—should not have based the administrator’s compensation on firm revenues, the New Jersey Law Journal reports. A 1990 contract called for the administrator to be paid $60,000 a year in salary and 25 percent of office revenue above $240,000. The deal paid him an extra $807,020 above his base salary over a five-year period.

Former managing partner Ronald Graziano and ex-litigator Michael Kaplan argue it should not make a difference that the bonuses were pegged to gross revenues rather than net profits. An ABA ethics opinion at the time had said bonuses to nonlawyers are ethical if “the compensation relates to the net profits and business performance of the firm and not to the receipt of particular fees.”

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