Can a lawyer referral service take a percentage of the fees earned on cases it refers?

Plain-English summary

The opinion answered an inquiry from a local bar association that operated a non-profit lawyer referral service and wanted to collect a percentage of the fees earned in certain cases it referred to participating attorneys. The Board concluded that any such division of attorney's fees with the referral service is the sharing of fees with a nonlawyer, prohibited by Standard 26 of Bar Rule 4-102.

The Board reasoned that although the bar association's membership consists of licensed lawyers, the association itself has no authority to engage in the practice of law, so dividing fees with the referral service is fee sharing with a nonlawyer. It added that under Standard 13(b) a lawyer may not compensate or give anything of value to a person or organization as a reward for a recommendation that results in the lawyer's employment, and may pay only the usual and reasonable fees or dues charged by a bona fide lawyer referral service operated by an organization authorized by law.

Currency note

The State Bar of Georgia flags this opinion as no longer providing an accurate interpretation of the ethical rules: on June 9, 2004, the Supreme Court of Georgia amended Rule 7.3, and the State Bar directs readers to Rule 7.3(c)(2), which it says now addresses the issue. This opinion was also issued in 1994, before the State Bar adopted the Georgia Rules of Professional Conduct in 2001, which replaced the Standards of Conduct it construes. Treat this page as historical context, not current guidance. Verify against the current Rules of Professional Conduct, in particular Rule 7.3(c)(2), before relying on any specific rule mentioned here.

Common questions

Q: Can a lawyer referral service collect a percentage of the fees on cases it refers?

A: Under this opinion, no. The Board held that dividing attorney's fees with a referral service is the sharing of fees with a nonlawyer in violation of Standard 26.

Q: What can a lawyer pay a referral service?

A: The opinion said a lawyer may pay only the usual and reasonable fees or dues charged by a bona fide lawyer referral service operated by an organization authorized by law, under Standard 13(b), and may not give value as a reward for a referral.

Q: Is this opinion still current?

A: No. The State Bar flags it as no longer an accurate interpretation after the June 9, 2004 amendment of Rule 7.3, and points readers to Rule 7.3(c)(2).

Background and rules framework

The opinion construed former Standard of Conduct 26 (no sharing of legal fees with a nonlawyer), now associated with Rule 5.4(a), and Standard 13(b) (payments to referral services). The State Bar now directs readers to Rule 7.3(c)(2) for the current treatment of referral-service arrangements.

Citations and references

Rules of Professional Conduct:

• MR 5.4 / Ga. RPC 5.4(a) (sharing legal fees with a nonlawyer; analog to former Standard 26)
• MR 7.2 / Ga. RPC 7.3(c)(2) (referral arrangements; the current rule the State Bar points to)

Former standards construed:

• Standards of Conduct 26 and 13(b) of Bar Rule 4-102

See also

• GA Ethics Op. 88-2: In-House Lawyer Collecting Fees That Benefit a Lay Employer
• ABA Formal Op. 465: Daily-Deal Marketing Programs

Source

• Landing page: https://www.gabar.org/handbook?rule=rule494

Original opinion text

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

State Bar of Georgia

Issued by the Supreme Court of Georgia

On September 9, 1994

Formal Advisory Opinion No. 94-1

On June 9, 2004, the Supreme Court of Georgia amended Georgia Rule of Professional Conduct 7.3. As a result, this formal advisory opinion no longer provides an accurate interpretation of the ethical rules. Please see Rule 7.3 (c)(2) which adequately addresses the issue discussed in this opinion.

For an explanation regarding the addition of headnotes to the opinion, click here .

Ethical Propriety of Lawyer Referral Service Collecting a Percentage of Fees in Certain Cases Referred to Participating Attorneys by the Service

Any division of attorney's fees with a lawyer referral service constitutes the sharing of fees with a nonlawyer in violation of Standard 26 of Bar Rule 4-102.

Correspondent represents a local bar association that operates a non-profit lawyer referral service. The inquiry concerns the ethical propriety of the lawyer referral service collecting a percentage of fees in certain cases referred to participating attorneys by the service.

Standard 26 of Bar Rule 4-102 provides in pertinent part that a lawyer or law firm shall not share legal fees with a nonlawyer.

While the membership of the local bar association is composed of lawyers who are licensed to practice law in the state, the local bar association, in and of itself, has no authority to engage in the practice of law. Therefore, any division of attorney's fees with a lawyer referral service would constitute the sharing of fees with a nonlawyer in violation of Standard 26 of Bar Rule 4-102.

Moreover, "[a] lawyer shall not compensate or give anything of value to a person or organization...as a reward for having made a recommendation resulting in his [or her] employment by a client."The lawyer may pay only "the usual and reasonable fees or dues charged by a bona fide lawyer referral service operated by an organization authorized by law...."Standard 13(b).