Can a D.C. lawyer pay to participate in a for-profit Internet-based lawyer referral service, including a fee for each client the service sends?

Plain-English summary

Opinion 342 (published November 2007) responds to several inquiries about whether lawyers may participate in Internet-based referral services that charge lawyers a fee. The services described do not charge the prospective client, charge lawyers a flat participation fee, cap participating lawyers' fees at their usual rates, set qualification requirements, and post disclaimers that the service does not recommend a particular lawyer or give legal advice. None of the services solicit clients by in-person contact; the consumer must initiate contact to receive a referral. The Committee concludes that participation in such programs is permitted under the D.C. Rules.

The two operative rules are Rule 7.1 (communications about a lawyer's services) and Rule 5.4 (professional independence). Effective February 1, 2007, D.C. Rule 7.1(b)(2) bars a lawyer from giving anything of value to a person for recommending the lawyer's services "through in-person contact," and Comment [5] states that a lawyer may no longer conduct in-person solicitation through a paid intermediary. But Comment [6] continues to provide that a lawyer "may participate in lawyer referral programs and pay the usual fees charged by such programs." The opinion reconciles these by drawing the line at in-person contact: referral programs are permitted because they do not engage in unsolicited in-person contact with prospective clients, who instead must initiate contact electronically. The opinion notes that "in-person contact" includes telephone contact but not electronic mail, and that the lawyer must still ensure the listing complies with Rule 7.1(a) (not false or misleading; substantiable claims).

On fees, the opinion concludes a flat fee to participate, a flat fee per transmittal, or a flat fee for each client secured is permissible so long as it is among the "usual fees" charged by comparable services. Rule 5.4 generally bars sharing fees with nonlawyers to protect the lawyer's professional independence, but a non-contingent payment for a referral, one paid regardless of the success or outcome of the representation, is a marketing expense rather than a division of legal fees (quoting Opinion 286). Unlike the Model Rule, D.C. Rule 7.1 does not limit paid participation to not-for-profit or regulated referral services; the D.C. drafters omitted that limitation. Rule 5.4 does distinguish nonprofits for actual fee-sharing (Rule 5.4(a)(5) permits sharing fees with a qualifying 501(c)(3) organization), but as long as a for-profit program is paid a flat fee rather than a portion of fees earned, Rule 5.4 is not violated. The opinion adds that a participating lawyer must have no financial interest in, or employment or contractual relationship with, the referral service, or Rule 5.4(b) would likely be implicated.

In practice

Under the D.C. rules as they stood at the time of the opinion, a lawyer may participate in not-for-profit and for-profit Internet-based referral services that charge a flat participation fee, a flat fee per transmittal, or a flat fee per client secured. The opinion concludes such fees are not prohibited: because the service does not engage in unsolicited in-person contact, the payment is not to a prohibited paid intermediary under Rule 7.1(b)(2), and because the fee is flat rather than a share of the legal fees earned, it is not prohibited fee-sharing under Rule 5.4.

The opinion concludes the lawyer must ensure the listing satisfies Rule 7.1(a) (not false or misleading), the fee must be among the "usual fees" charged by comparable services, and the lawyer must have no financial, employment, or contractual interest in the referral service, which could raise a Rule 5.4(b) problem. Because the opinion predates later rule developments, verify the current D.C. rules before relying on specific requirements.

Common questions

Q: Can a D.C. lawyer pay a for-profit company to send it client referrals online?

A: The opinion concludes yes, where the company charges a flat fee (to participate, per transmittal, or per client secured) rather than a share of the legal fees earned, and does not engage in in-person solicitation.

Q: Does paying a referral fee violate the rule against paying intermediaries?

A: The opinion concludes no, because Rule 7.1(b)(2) bars only payment for recommendations made "through in-person contact," and Internet referral services do not make unsolicited in-person contact. "In-person contact" includes telephone calls but not e-mail.

Q: Is a per-client fee prohibited fee-sharing under Rule 5.4?

A: The opinion concludes no, so long as the fee is flat and not contingent on the outcome of the case or the amount of the legal fees. A non-contingent referral payment is a marketing expense, not a division of legal fees.

Q: Are there limits the lawyer must observe?

A: The opinion concludes the listing must comply with Rule 7.1(a) (not false or misleading), the fee must be a "usual" fee charged by comparable services, and the lawyer must have no financial interest in or employment relationship with the referral service, which could implicate Rule 5.4(b).

Background and rules framework

The opinion interprets D.C. Rule 7.1 (communications about a lawyer's services), including Rule 7.1(a) (false or misleading communications) and Rule 7.1(b)(2) (the post-February 2007 bar on paying for recommendations through in-person contact), together with Comments [5] and [6]. It reads those against D.C. Rule 5.4 (professional independence and the general bar on sharing fees with nonlawyers), including Rule 5.4(a)(5) (sharing fees with a qualifying 501(c)(3) organization) and Rule 5.4(b). The opinion contrasts D.C. Rule 7.1 with Model Rules 7.2 and 7.3, which limit paid referrals to not-for-profit or "qualified" lawyer referral services.

Citations and references

Rules of Professional Conduct:

• D.C. RPC 7.1, 7.1(a), 7.1(b)(2), Comments [5] and [6] / Model Rule 7.1 (communications about a lawyer's services)
• D.C. RPC 5.4, 5.4(a)(5), 5.4(b) / Model Rule 5.4 (professional independence; fee-sharing)
• Model Rule 7.2(b)(2) and Model Rule 7.3 (paid referrals; in-person solicitation), for comparison

Other opinions cited:

• D.C. Ethics Ops. 249 (1994), 261 (1995), 286 (1998), 302 (2000), and 307 (2001)

See also

• DC Ethics Op. 369: Sharing Legal Fees With a Referral Service
• DC Ethics Op. 361: Referral Fees From Nonlawyer Providers
• ABA Formal Op. 474: Referral Fees and Conflicts
• AL Ethics Op. 1995-08: LRS Percentage-Fee Programs

Source

• Landing page: https://www.dcbar.org/for-lawyers/legal-ethics/ethics-opinions-210-present/ethics-opinion-342