State Bar Association
Committee on Professional Ethics
Opinion 981 (10/2/13)
to lawyer of referral fee for clients who sign up for a security system.
Digest: A lawyer
may receive a referral fee under certain circumstances.
inquirer, whose legal practice is predominantly residential real estate, has
been approached by a company which provides home security services. The company
has offered to pay a referral fee of $150.00 for each person who procures
security services using a code on flyers placed in the lawyer’s office. It is
assumed that the attorney is not recommending these services and that the
services are not substantially related to the legal services being provided by
the attorney to the person who procures the services.
the attorney accept a referral fee from the home security company?
are a number of opinions which discuss whether it is appropriate for a lawyer
to receive a referral fee for referring a client to a service particular
each of these opinions the service provider was related in some way to the
legal services being provided by the lawyer to the client.
4. Here, in
contrast, the nature of the service provider (home security services) is not
related to the legal services to be provided by the lawyer. These flyers would
be available to anyone who passed through the lawyer’s waiting room, including
clients, delivery persons and individuals who might accompany clients to the
lawyer’s office. The lawyer is expressing no opinion regarding the quality or
suitability of the services. He is merely providing space for the flyers for
collection by anyone who might have an interest in a security system. Nothing
in the Rules of Professional Conduct prohibits a lawyer from being compensated
for providing passive space for advertisement by third parties.
should the lawyer recommend the services, or should the non-legal services be
related to the legal services provided by the lawyer, the opinions in footnote
1 should be carefully considered before proceeding.
6. A lawyer may
receive a referral fee from a home security firm which places flyers in the
See for example: N.Y. State 667 (1994) where it was opined that a lawyer could
receive an referral fee from a mortgage broker provided certain conditions were
met; Nassau County 2001-10 where a real estate lawyer could receive a referral
fee from a termite treatment company; N.Y. State 461 (2007) which permitted a
lawyer to receive a portion of a commission from a fire adjuster; N.Y. State
845 (2010) which permitted a real estate broker to share her commission with
lawyers who refer buyers or sellers to her; D.C. Opinion 361 (2011) permitted a
referral fee; Arizona Opinions 95-10 (1995) and 06-02 (2006) both of which
prohibited referral fees. All of the opinions turned on an analysis of Rule 1.7
(or its predecessor) to determine whether such a referral fee created a
conflict of interest between the lawyer receiving compensation and the obligation of the lawyer to make a referral which was
in the client’s best interest.