State Bar Association
Committee on Professional Ethics
Opinion 979 (8/8/13)
group; payment for referrals
Digest: A group
of lawyer-mediators, though not associated in a firm, may place joint
advertisements and maintain a website that lists the varied experience and
biographies of its members, allowing those seeking mediation services to
contact a particular member of the group by visiting a website maintained by
the group or calling a telephone number listed for the group as a whole.
inquirer is a lawyer who, with another lawyer, has been organizing a group of
lawyer-mediators with varied areas of experience. The group has a name, and a website that
lists the names, areas of experience, and detailed biographies of each
member. The group plans to place
advertisements. Members of the group
will pay its operating costs, including the price of the advertisements.
legal assistant employed by the inquirer will answer calls to a telephone
number listed on the website, but will not recommend specific members of the
group to the caller. Instead, those
seeking mediation services from the group will be expected to pick the
appropriate lawyer-mediator based on the information about each member
contained on the website. The inquirer
has asked whether this arrangement would constitute a referral arrangement
prohibited under the authority of N.Y. State 678 (1996).
a group of lawyer-mediators, though not associated in a firm, place joint
advertisements, maintain a website that lists the varied experience and
biographies of its members, and maintain a phone line available to callers
seeking a particular lawyer-mediator?
New York Rules of Professional Conduct generally do not allow lawyers to pay
for referrals of clients. Subject only
to certain exceptions not relevant to this inquiry, “A lawyer shall not compensate
or give anything of value to a person or organization to recommend or obtain
employment by a client, or as a reward for having made a recommendation
resulting in employment by a client.”
Rule 7.2(a). However, this
prohibition is not meant to keep “a lawyer
from paying for advertising and communications
permitted by the Rules, including the costs of print directory listings,
online directory listings, newspaper ads, television and radio airtime, … and
group advertising.” Rule 7.2, Cmt. .
consider two threshold questions as to the applicability of Rule 7.2. The first asks which of the Rules apply (and
in particular whether Rule 7.2 applies) to the kind of mediation services
contemplated by this inquiry. One that
would clearly apply is the Rule specific to service as a third-party neutral. Some other Rules apply to lawyers at all
times, irrespective of whether they are providing legal services.
applicability of other Rules, including Rule 7.2, presents a more complicated
question that requires consideration of whether mediation services constitute
legal services. A service that can
lawfully be performed only by lawyers is clearly a legal service, but
nonlawyers can lawfully serve as mediators.
We nonetheless concluded in N.Y. State 678 (1996) that “lawyers who
serve as mediators should be presumed to be rendering a legal service,” and
thus, at least presumptively, “are engaged in the practice of law.” If that conclusion is correct today, then
mediation services by a lawyer are presumptively governed by the Rules. See Rule 5.7, Cmt.  (lawyer or law
firm rendering legal services “is always subject to these Rules”).
is, however, controversy on this point.
Some authorities have concluded that mediation services by a lawyer do
not constitute the practice of law and are not subject to the full range of
legal ethics rules. Other authorities have endorsed the approach
of N.Y. State 678. And some have taken a middle position in
which a lawyer-mediator may or may not be practicing law, and may or may not be
generally subject to the rules of legal ethics, depending on the circumstances. In any event, the current inquiry does not
require, and we do not now undertake, a reconsideration of N.Y. State 678.
other threshold question has to do with the status of the group of
lawyer-mediators. If they were to
constitute a law firm, then its members would merely be making financial
contributions toward advertising for that very firm. In that case the inquiry would implicate general
restrictions on advertising but not the prohibition on paying others for
referrals. See Rule 7.2, Cmt. 
(stating that lawyers are not permitted “to pay others” for channeling
professional work). On the facts as
presented in the inquiry, however, the group of lawyer-mediators does not
constitute a law firm as defined by Rule 1.0(h). Rule 7.2 is thus applicable (subject to
considerations in the previous paragraph).
We also note that joint advertisements must not misstate the
relationship among members of the group.
See Rule 7.1(c)(2) (advertisements shall not “imply that lawyers
are associated in a law firm if that is not the case”).
turn to the application of Rule 7.2(a).
Some of our prior opinions shed light on the boundary between referrals
and group advertising. In one opinion
applying the former Code of Professional Responsibility, the Committee
a program in which an advertising agent runs generic ads for
legal services and distributes prospective clients to participating lawyers who
have been assigned the exclusive right to cases arising in particular
geographical areas is more in the nature of a lawyer referral service than
advertising by an individual lawyer.
When a prospective client answers the advertisement, the purpose is to
be given the name of a lawyer, rather than to contact a particular lawyer.
N.Y. State 597 (1989). The Committee found such an arrangement to
violate certain provisions, then part of the Code, limiting lawyer referral
Committee reached a different conclusion, however, as to an advertisement which
“presents in a meaningful fashion” the names and other information of the
lawyers or firms participating in the group advertisement “so that the
potential client knows the identity of the lawyer to whom his call will be
referred and there is no discretion in referrals on the part of the advertising
agent.” The Committee found such a
listing permissible if otherwise compliant with the Code and court rules, and
we noted that “such joint advertising may be the only way it is economically
feasible for a practitioner with a small practice to afford certain forms of
advertising.” N.Y. State 597.
followed the reasoning of N.Y. State 597 in the context of a divorce mediation
service that proposed running ads with an “800” number. Callers would be referred to a participating
mediator based on the caller’s geographic location. The Committee reiterated that this type of
arrangement – in which a potential client calls to get the name of a provider
of services rather than to contact a specified individual – would constitute a
lawyer referral service. N.Y. State 678
believe that the lines drawn by these precedents with respect to certain
provisions in the former Code apply equally to the prohibition of payments for
referrals that is in the current Rules of Professional Conduct. The proposed conduct does not, like the
arrangements that our prior opinions found to be referral services, contemplate
that prospective clients will call a number and be given the name of a
lawyer. Rather, the members of the
inquirer’s group will be listed on a website and perhaps other advertisements
by name and areas of experience. The
website will include a detailed member biography. This format is reasonably
designed to encourage the consumer to select the member with the expertise
appropriate to the consumer’s needs, rather than to trigger a consumer to call
for a referral. We rely also on the
inquirer’s assurance that a caller seeking a referral will not be supplied with
the name of a lawyer-mediator, but rather will be directed back to the website
to choose a member with appropriate qualifications. Accordingly, in the model proposed, the
members of the group would be paying for joint advertising but would not be
making payments for referrals as prohibited by Rule 7.2.
note that the inquirer may need to consider various matters of legal ethics
beyond Rule 7.2. For example, the
inquirer may need to consider ethical constraints on advertising, claims of
specialization, trade names and payment arrangements. However, the inquiry neither focuses on these
matters nor fully describes the facts surrounding them, and we do not opine as
to the permissibility of the proposed conduct in these respects.
group of lawyer-mediators, though not associated in a firm, may place joint
advertisements and maintain a website identifying the group’s members and
listing their varied experience, practice areas and biographies, so as to allow
a party seeking mediation services to call a single telephone number or visit a
single website to contact the lawyer-mediator of that party’s choice. The members of the group may pay the group’s
operating costs as long as the advertising and payment arrangements comply with
Rule 2.4 (“Lawyer Serving as Third-Party Neutral”) applies to lawyers serving
as mediators and in other neutral capacities.
Moreover, a lawyer who serves as a third-party neutral “may be subject
to court rules or other law that applies either to third-party neutrals
generally or to lawyers serving as third-party neutrals,” as well as various
codes of ethics. Rule 2.4, Cmt.
. We express no opinion on the
applicability or import of any such constraints outside the Rules of
Professional Conduct. See, e.g., N.Y.
State 900 ¶19 (2011).
Rule 5.7 determines when the Rules are generally applicable to lawyers who are
providing “nonlegal services,” but a comment to the rule explains that some
Rules apply in all circumstances: “Although a lawyer may be exempt from the
application of these Rules with respect to nonlegal services on the face of
[Rule 5.7(a)], the scope of the exemption is not absolute. A lawyer who
provides or who is involved in the provision of nonlegal services may be
excused from compliance with only those Rules that are dependent upon the
existence of a representation or client-lawyer relationship. Other Rules, such
as those prohibiting lawyers from misusing the confidences or secrets of a
former client (see Rule 1.9), requiring lawyers to report certain lawyer
misconduct (see Rule 8.3), and prohibiting lawyers from engaging in illegal,
dishonest, fraudulent or deceptive conduct (see Rule 8.4), apply to a lawyer
irrespective of the existence of a representation, and thus govern a lawyer not
covered by [Rule 5.7(a)].” Rule 5.7,
 We reasoned in part: “Whether or not one conceives of the lawyer
as ‘representing’ the participants in divorce mediation, the lawyer's role as a
neutral mediator may include rendering advice about legal questions or
preparing a separation agreement – services that would ordinarily seem to
entail the practice of law when performed by lawyers.” We did not treat this as a per se rule: “Presumably a lawyer who serves as a mediator
outside of the law office, gives no legal advice or opinions, and does not draw
up an agreement is not acting in any legal capacity and is not then governed by
the lawyer's code. This would, however, be a rare case. More often the lawyer would offer impartial
legal advice or explain the law to the participants.” N.Y. State 678 (1996).
E.g., Indiana Opinion 5 (1992)
(because nonlawyers may act as mediators and nature of mediation is
substantially different from practice of law, lawyer-mediator was not generally
bound by legal ethics rules on trade names and solicitation); Kentucky Opinion
KBA E-377 (1995) (corporation formed by attorney to provide mediation services
not subject to legal ethics rule on trade names, though advertisement of
mediation services which identifies any participant as a lawyer must comply
with ethics rules on advertising). The
case that such services are not the practice of law was arguably bolstered by
New York’s adoption of the Rule specifically governing a lawyer’s service as a
mediator. In relevant part the Rule
provides: “A lawyer serves as a
‘third-party neutral’ when the lawyer assists two or more persons who are not
clients of the lawyer to reach a resolution of a dispute or other matter that
has arisen between them.” Rule 2.4(a).
E.g., Iowa Opinion 96-30 (1997)
(alternative dispute resolution done by nonlawyers “has not been held to be the
practice of law … [b]ut when done by a lawyer it becomes the practice of law”
and lawyer working as a mediator would be bound by Iowa legal ethics code);
Mississippi Opinion 241 (issued 1997, amended 2013) (mediation is a “law
related” service which when provided by a lawyer becomes the practice of law
and is subject to rules of legal ethics); New Jersey Opinion 711 (2007) (when
mediation center advertised that lawyer-mediators would help parties understand
legal rights and procedures, attorneys who accept referrals to mediate “are
practicing law” by “accepting clients in a form of limited representation … for
the sole purpose of serving as a third-party neutral, as contemplated by [New
Jersey Rule 2.4],” and their conduct is governed by New Jersey legal ethics
E.g., Oregon Opinion 2005-101
(identifying certain rules of legal ethics that would apply if the mediation
service “would involve the practice of law, such as by drafting settlement
agreements”); Pennsylvania Opinion 96-167 (mediation appears to be among
“nonlegal services” such that Rule 5.7 will determine applicability of other
Rules, but “if an attorney-mediator advertises
his/her services, he/she must comply with the advertising and solicitation
If – contrary to N.Y. State 678 – mediation services by a lawyer do not
constitute legal services subject to the full range of legal ethics rules, then
Rule 7.2 would not apply, and the conduct proposed in the inquiry would not be
prohibited by the Rules. The other
possibility – following N.Y. State 678 – is that mediation services by a lawyer
constitute legal services (either always or in particular cases), and Rule 7.2
applies. Even in that case, based on the
analysis in the rest of this opinion, the proposed conduct would be
permissible. In other words, the outcome
would be the same either way and would not turn on whether we would reach the
same conclusion if we were deciding N.Y. State 678 today.
Limits on advertising, claims of specialization, and trade names are set forth
in Rule 7.1, Rule 7.4, and Rule 7.5(b) respectively. As to payment by the lawyer-mediators for
advertisements and other operating costs of the group, some arrangements could
be problematic and require further analysis.
For example, the inquiry mentions that that the amount of each lawyer’s
payments may be determined as a percentage of fees earned by that lawyer on
work brought in through the group’s marketing. See Rule 1.5(g) (generally prohibiting division of legal fees with
a lawyer not associated in same firm); Rule 5.4(a) (generally prohibiting
sharing legal fees with a nonlawyer). If
we had occasion to reach such issues, the threshold question would be the
applicability to the proposed conduct of the Rules cited in this footnote, and
that would require consideration of N.Y. State 678 in light of Rule 2.4. See
paragraphs 6-7 supra.