Could an Arizona lawyer give a small gift after a client referral under Opinion 02-01?

Plain-English summary

A lawyer proposed thank-you notes and restaurant certificates or entertainment tickets worth less than $100 for lawyers and nonlawyers who had already referred clients. The committee concludes that these gifts would not violate ER 7.1(j) on the stated facts.

The opinion interprets the rule's ban on giving value for recommendations as aimed at payments for referrals. It distinguishes a modest gift given after a referral as gratitude, without a quid pro quo, from compensation intended to induce the recommendation. Its conclusion also depends on the gift not affecting the lawyer's independent judgment.

In practice

The opinion addresses the specific after-the-fact, low-value gifts described in the inquiry. Its analysis turns on purpose, timing, value, absence of an exchange, and independent judgment under the rule as it stood in 2002.

Common questions

Q: Did the opinion forbid every gift after a referral?

A: No. It permits the described modest thank-you gifts when they are not payments for recommendations.

Q: Did it matter that the gifts followed the referral?

A: Yes. The committee cited their timing, intended gratitude, and low value in concluding there was no referral payment.

Q: Does the conclusion cover a promised referral payment?

A: No. The opinion distinguishes its facts from a quid pro quo payment for recommending the lawyer.

Background and rules framework

The opinion applies Arizona ER 7.1(j), as it stood in 2002, to giving value for a recommendation. It compares earlier Arizona opinions about incidental charitable referrals, employer-distributed brochures, and paid internet referral services.

Citations and references

Rules of Professional Conduct:

• AZ ER 7.1(j): things of value for recommending a lawyer
• AZ ER 7.1(r)(3): referral-service qualification discussed through Opinion 99-06

Other opinions cited:

• Arizona Opinion 96-09: brochures and discounted rates distributed by an employer
• Arizona Opinion 98-10: incidental referrals after a charitable donation
• Arizona Opinion 99-06: fees for internet referrals

See also

• AZ Ethics Op. 98-10: Charitable Donations and Referrals
• AZ Ethics Op. 99-06: Internet Referral Fees

Source

• Landing page: https://www.azbar.org/for-legal-professionals/ethics/ethics-opinions/?V=Opinions&OpinionId=285
• Official opinion API: https://api.azbar.org/EthicsRules/Opinion/?Id=285

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

RELEVANT ARIZONA ETHICS OPINIONS

Ariz. Op. 96-09

Ariz. Op. 98-10

Ariz. Op. 99-06

OPINION

The Committee has discussed ER 7.1(j) in prior Formal Opinions.

Arizona Opinion 96-09 discussed whether it was ethical for a law firm to provide printed materials describing its legal services and a schedule of discounted rates to an employer with the intent that they be distributed to employees.  The Committee addressed whether the "soft benefit" provided to an employer under the proposal was a "thing of value" under ER 7.1(j).  The Committee concluded that there were several reasons why the benefit did not confer value as contemplated under ER 7.1(j).

In Ariz. Op. 98-10, the Committee concluded that a lawyer may receive referrals from a non-profit organization to whom the lawyer had made a charitable donation as long as the referrals were incidental to the charitable activity and not consideration for the lawyer's charitable donations.

In Ariz. Op. 99-06, the Committee determined that it was unethical for Arizona lawyers to participate in an Internet service that sent legal questions from individuals to attorneys based upon the subject matter of the question.  The lawyers also could not pay a fee for such referrals or give the service a portion of the legal fees earned from the referral.  In reaching this conclusion, the Committee noted:

ER 7.1(j) prohibits a lawyer from giving "anything of value to a person for recommending the lawyer's services, except that a lawyer . . . may pay the usual charges of a lawyer referral service or other legal service organization."  ER 7.1(j) "must be read in conjunction with ER 7.1(r)(3)," which permits a lawyer to be recommended by or to cooperate with a lawyer referral service only where the organization is operated, sponsored or approved by a bar association. . . . In short, before a lawyer may pay the usual charges of a referral service or be recommended to clients by the service, that service must satisfy the requirement of ER 7.1(r)(3).

Other jurisdictions that have addressed this issue have applied a strict interpretation of the rule.

In Rhode Island Op. 89-05 (5/29/89), the Ethics Committee concluded that a lawyer whose former client recommended him to a person where employment resulted and eventuated in a successful and lucrative case could not give the original client a gift, even if the gift cost less than one hundred dollars ($100.00).  The Ethics Committee noted that the idea ran afoul of the provision against giving anything of value for recommending the lawyer's services.

The Alabama State Bar Disciplinary Commission, in Op. 91-43 (11/18/91), held that an "attorney hotline", which for a fee, produced and aired television commercials for select attorneys and then referred to those attorneys potential clients who responded to the ad, was an unethical for-profit referral service.

In Informal Op. 92-24 (11/2/92), the Connecticut Bar Association Committee on Professional Ethics held that a lawyer could not compensate clients for referring another client to him by performing services for the referring client on a pro bono or reduced basis, or by using any other method that rewarded the referring client.

The Pennsylvania Bar Association Committee on Legal Ethics and Professional Responsibility, in Op. 83-107 (1993), concluded that it was improper for a lawyer to reduce fees ordinarily charged to a client after the client referred other cases to the lawyer.  A gift certificate in a nominal sum in appreciation for the client's referring cases might be construed as a violation because it is giving cash equivalents, although it was acceptable for a lawyer to enclose nominal gift certificates in a package of documents presented to clients at a real estate closing for selecting the attorney as their lawyer.

While prior Arizona Ethics Opinions have not specifically addressed this issue, the opinions from other jurisdictions hold that ER 7.1(j) makes it unethical for an attorney to give a gift, no matter how de minimis, to another attorney or non-attorney for a client referral.

The Committee declines to read ER 7.1(j) as narrowly as other jurisdictions and seeks instead to interpret the rule in light of its purpose, to prohibit a lawyer from paying someone else to recommend his or her services.  Annotated Model Rules of Professional Conduct (Fourth Edition), at page 511.

The Committee does not believe ER 7.1(j) is implicated under the facts presented by the inquiring attorney, since the circumstances do not suggest that the proposed gifts are made to be payments to the recipients for having recommended the attorney.  They are to be given after the referral, rather than before, and are intended as an expression of thanks, rather than as compensation.  Finally, the gifts do not have a significant value.  These facts lead the Committee to conclude that neither the inquiring attorney nor the recipients would view the gifts as payments for a referral, and that they therefore would not violate ER 7.1(j). 

CONCLUSION

A strict interpretation of ER 7.1(j) prohibiting a de minimis gift, where no quid pro quo is present, for referring a client to an attorney is an unrealistic and harsh view.  Where the independent judgment of the attorney giving the gift is not affected or influenced, the intent of the rule is not to prohibit a de minimis gift as an expression of thanks and professional courtesy after the referral has been made.