Attorney Advertising — 23 August 2017

Businessman holding out hand for money, close-up

The legal world can be a very complicated area to navigate in and of itself, even for lawyers. The logistics of advising consumers and offering legal counsel can have tremendous consequences across the spectrum, and this may or may not even include the necessity of bringing other lawyers in from the outside as consultants or to assist in the matters at hand. Of course, including others in the process, as you might, it is only natural that these professionals expect to be compensated for the time they dedicate to you.

The ways in which you might find yourself in such a situation are numerous. Sometimes a case or the legal counsel someone seeks may not necessarily be in the realm of your specialty, and it may be prudent of you to look to others to lend their services. And as a result of this, you may be tempted to let the referred lawyer in on the financial part of it as well. However, surprisingly, there are many stipulations that go into determining what referring parties and referred parties are able to offer and, respectively, except for the services they provide. Many of these stipulations are outlined in a structured code of ethics (of sorts) called the ABA Model Rules of Professional Conduct.

Don’t be mistaken. Referrals and the fees that often accompany them do exist, quite prominently, and many might consider them an important part of the entire legal industry in order to build business, when implemented with a certain ethical responsibility. However, there is a certain caveat to go with this practice. Many jurisdictions have different outlooks regarding referral fees and how they are conducted. Some jurisdictions outright forbid fees of this nature while others require a lawyer to work and be involved in a case in order to be justified in receiving fees, while still others stipulate assumption of joint responsibility regarding the outcome of the case, and all matter in between across the spectrum. Suffice it to say, referral fees are a tricky matter in the business of law.

For one, without exception, lawyers are not permitted to give anything of value to a person involved in a referral unless it falls under specific rules that recognize a reasonable cost for advertisement and communication. Many refer to this as “channeling” work from one source to another (while some laymen might call it bribery, which provides an unprofessional bias that could be detrimental to the client’s cause).

Lawyers also cannot act in this way or determine overall cost or a subsequent distribution of fees without the client’s consent as well as a determination that the final cost is reasonable and ethical. In other words, a client has the right to determine the sorts of services he or she is willing to receive (from both referring and referred professionals) as well as the determination of which services he or she is willing to pay a reasonable fee to employ. Depending on the jurisdiction, as stated above, lawyers may also need to assume a working role in the applicable case in order to be eligible to receive fees of any kind. This stipulation is put in place to protect the client and to prevent unethical behavior among lawyers from separate firms.

There are many other stipulations that may or may not apply to your specific situation. But, the short answer to the long question of “should I give referral fees to a referring lawyer” is: maybe. Again, much of it depends upon the jurisdiction in which you and the referring lawyer are operating as well as an agreement that must be reached, not only between professionals with the intent of working together in some capacity, but also with the client whom these professionals intend to represent.

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