U.S. Code » Title 11 » Chapter CHAPTER 5— CREDITORS, THE DEBTOR, AND THE ESTATE › Subchapter SUBCHAPTER I— CREDITORS AND CLAIMS

11 U.S.C. § 504

Sharing of compensation

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(a) Except as provided in subsection (b) of this section, a person receiving compensation or reimbursement under section 503(b)(2) or 503(b)(4) of this title may not share or agree to share—(1) any such compensation or reimbursement with another person; or(2) any compensation or reimbursement received by another person under such sections.(b)(1) A member, partner, or regular associate in a professional association, corporation, or partnership may share compensation or reimbursement received under section 503(b)(2) or 503(b)(4) of this title with another member, partner, or regular associate in such association, corporation, or partnership, and may share in any compensation or reimbursement received under such sections by another member, partner, or regular associate in such association, corporation, or partnership.(2) An attorney for a creditor that files a petition under section 303 of this title may share compensation and reimbursement received under section 503(b)(4) of this title with any other attorney contributing to the services rendered or expenses incurred by such creditor’s attorney.(c) This section shall not apply with respect to sharing, or agreeing to share, compensation with a bona fide public service attorney referral program that operates in accordance with non-Federal law regulating attorney referral services and with rules of professional responsibility applicable to attorney acceptance of referrals.(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2582; Pub. L. 109–8, title III, § 326, Apr. 20, 2005, 119 Stat. 99.)Historical and Revision Notessenate report no. 95–989

Section 504 prohibits the sharing of compensation, or fee splitting, among attorneys, other professionals, or trustees. The section provides only two exceptions: partners or associates in the same professional association, partnership, or corporation may share compensation inter se; and attorneys for petitioning creditors that join in a petition commencing an involuntary case may share compensation.

Editorial NotesAmendments

2005—Subsec. (c). Pub. L. 109–8 added subsec. (c).

Statutory Notes and Related SubsidiariesEffective Date of 2005 Amendment

Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title.

Notes of Decisions
Cited in 68 cases (7 in the last 5 years), 1981–2025 · leading case: In re Harris-Nutall, 572 B.R. 184 (Bankr. N.D. Tex. 2017).
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In re Harris-Nutall, 572 B.R. 184 (Bankr. N.D. Tex. 2017). · cites it 8× “Although the Court will not set aside the order authorizing KB’s employment as special counsel, it concludes that the co-counsel agreement between KB and the Allmand Law Firm, PLLC (“Allmand”) is an improper fee sharing agreement prohibited by 11 U.S.C. § 504 , and that the…”
Matter of Liberal Mkt., Inc., 24 B.R. 653 (Bankr. S.D. Ohio 1982). · cites it 3× “Note 11 U.S.C. § 504 (b)(1). In this regard, the Court requires, however, all firms to disclose the rates of individual firm members and associates so that the Court may properly examine the reasonableness and accuracy of the firm’s calculation of its aggregate fee.”
In Re Greer, 271 B.R. 426 (Bankr. D. Mass. 2002). · cites it 6× “Before the Court for determination is a Motion to Determine Reasonableness of Compensation and Fee Arrangement filed by the United States Trustee (the “UST”) seeking a finding from this Court that the fee sharing arrangement between the Debtors’ attorney and another attorney is…”
In re Haynes, 577 B.R. 711 (Bankr. E.D. Tenn. 2017). · cites it 4× “lving UpRight (or any other name by which Law Solutions Chicago LLC does business in any jurisdiction, or any related entity), regarding the practices, procedures, model, or other issue [sic ] similar to those raised in this matter, including but not limited to methods of…”
Goldberg v. Vilt (In Re Smith), 397 B.R. 810 (Bankr. E.D. Tex. 2008). · cites it 4× “00 paid to Vilt on various grounds: (1) that the fee was an illegal sharing of compensation contrary to 11 U.S.C. § 504 ; (2) that the fee is barred by § 327(e); (3) that the fee was not disclosed to the Court as required by § 329(a) and Fed.”
Straus v. DVC Worldwide, Inc., 484 F. Supp. 2d 620 (S.D. Tex. 2007). · cites it 2× “Straus argues that under 11 U.S.C. § 504 (b), because he sought to recover the defendants’ profits as damages for the infringing use of his copyrighted photographs, the defendants had the burden of showing their “deductible expenses and the elements of profit attributable to…”
In re Bradley, 495 B.R. 747 (Bankr. S.D. Tex. 2013). · cites it 2× “The use of Carter as an undisclosed appearance attorney not only violates Bankruptcy Rule 2016(b), but also violates the prohibition on fee sharing contained in 11 U.S.C. § 504 (a). The prohibition against compensation sharing does not apply to: (1) partners or associates in the…”
In the Matter of Triangle Chemicals, Inc., Debtor. Darryl Fanelli v. Nelson T. Hensley, Tr., 697 F.2d 1280 (5th Cir. 1983). “The new Code, section 504, 11 U.S.C. § 504 , prohibits an attorney from agreeing to share compensation allowed him for his services to the debtor’s estate.”
In Re Soulisak, 227 B.R. 77 (Bankr. E.D. Va. 1998). · cites it 3× “6 § 2 (1997); see also 11 U.S.C. § 504 . In light of Dubow’s track record, Owen should have taken steps to ensure that he was not meeting alone with debtors and not advising them on legal issues.”
Louisiana World Exposition v. Fed. Ins. Co., 858 F.2d 233 (5th Cir. 1988). “, 11 U.S.C. §§ 504 , 507, 1129. In addition, we must disagree with the appellees’ intimation that any recovery will flow directly to the Committee.”
In Re Sheehan Mem'l Hosp., 380 B.R. 299 (Bankr. W.D.N.Y. 2007). · cites it 4× “The outcome requires the consideration of three issues: whether any portion of the allowance would violate the prohibition against fee splitting as stated in 11 U.S.C. § 504 (a); whether counsel may receive compensation despite a failure to secure specific permission to appear…”
D. Brent Lemon D/B/A Law Off. of D. Brent Lemon v. Daniel Hagood, 545 S.W.3d 105 (Tex. App. 2017). · cites it 2× “” Id; 11 U.S.C. § 504 (b)(2)(2016). Thus, for instance, an attorney properly employed by the trustee cannot pay a referral fee to another lawyer outside of his or her firm without the bankruptcy court’s approval.”
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