Attorney Referrals: Any Ethics Issues?

October 6, 2017

Attorneys are often called upon to refer clients or potential clients to other lawyers.  Maybe you do not feel comfortable handling the practice area in question, or maybe you have a conflict of interest.  Under these circumstances are there any ethics issues that arise in making the referral?  Sure. (Aren’t there always ethics issues?)  At least two issues come to mind.

First, any referral you make must be in the client’s interest.  This is true whether you are referring a client to another lawyer or to a third party for other services.  Usually, the client, or potential client, is relying upon your professional judgment in making the referral.  You should consider the client’s needs and determine who might be able to best meet those needs.  You should not merely refer a client to a friend of yours or make a referral simply because you want that other attorney to refer clients to you.  Be honest with the client–if you do not know anyone who can assist, you can at least refer the client to the Bar Association’s lawyer referral service.  If you agree to help them find an attorney, but don’t know anyone offhand, then you may need to undertake some due diligence to find the right candidate.

Second, you can’t accept any sort of referral fee or anything of value in exchange for the referral. See Rule 7.2(b).  Other than a fee, some things “of value” that would be prohibited under Rule 7.2(b) are (1) agreeing to give a referral (quid pro quo) in exchange for a referral, or (2) the agreement by the other attorney to post a testimonial or endorsement for you on LinkedIn in exchange for the referral.

The only way you may accept any fee under the circumstances is if you remain involved in the legal representation of the referred client.  Under those circumstances, you can split the legal fee with the other attorney to whom you referred the client, but only if you comply with Rule 1.5(e).

Rule 1.5(e) provides:

(e) A division of a fee between lawyers who are not in the same firm may be made only if:

(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;

(2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and

(3) the total fee is reasonable.

Joint responsibility for the representation includes both legal responsibility (malpractice) and professional responsibility.  There is no specific guidance in NC on what is adequate involvement or responsibility in a legal matter to permit fee splitting.  It is unclear whether simply saying you are jointly responsible in a client fee agreement is sufficient.  To be safe, we advise that the attorney should be sure he or she is involved in the legal representation in some meaningful way.

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