In Kentucky, may a lawyer give gifts or incentives to Realtors to get them to steer real estate closings to the lawyer?

Plain-English summary

A lawyer asked whether gifts or incentives could be offered to Realtors so that the Realtors would ask lenders to refer real estate closings to the lawyer's office. The Committee answered no. Because the proposal offered something of value to Realtors in exchange for recommendations and referrals, the Committee concluded it violated Rule 7.20(2).

The opinion quoted the rule's text: "A lawyer shall not give anything of value to a non-lawyer for recommending the lawyers services, except that a lawyer may pay the reasonable cost of advertising or communication permitted by this rule." The proposed gifts and incentives did not fall within the advertising-cost exception, so they were prohibited.

Currency note

This opinion was issued in 1994, before Kentucky's adoption of the 2002 Ethics 2000 revisions to the Rules of Professional Conduct and the substantial 2009 revisions (SCR 3.130). The Kentucky Bar Association notes that the rules and the Attorneys' Advertising Commission Regulations are amended periodically, and that lawyers should consult the current version before relying on this opinion. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could a lawyer give Realtors gifts to encourage them to send closing business?

A: No. The Committee concluded that offering something of value to Realtors for recommendations and referrals violated Rule 7.20(2).

Q: What is the one exception the rule allowed?

A: The opinion quoted Rule 7.20(2)'s exception permitting a lawyer to pay the reasonable cost of advertising or communication the rule allows; gifts and incentives for referrals were not such costs.

Background and rules framework

The opinion interprets KRPC 7.20(2) (Model Rule 7.2(b)), which prohibits giving anything of value to a person for recommending the lawyer's services, subject to a narrow exception for the reasonable cost of permitted advertising.

Citations and references

Rules of Professional Conduct:

• MR 7.2(b) / KRPC 7.20(2) (giving anything of value for recommending the lawyer's services)

See also

• KBA Ethics Op. E-369: Paying Into a Welcome-Package Coupon Service
• KBA Ethics Op. E-366: Dividing Fees With a Referring Lawyer
• KBA Ethics Op. E-385: Legal-Aid Referrals From Service Organizations

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-367.pdf

Original opinion text

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

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-367
Issued: June 1994

The Rules of Professional Conduct are amended periodically. Lawyers should consult the current version of the rules and comments, SCR 3.130 (available at http://www.kybar.org) and the Attorneys' Advertising Commission Regulations, before relying on this opinion.

Question:

May an Attorney offer gifts or incentives to Realtors to encourage the Realtors to request that lenders refer real estate closings to Attorney's office?

Answer:

No.

References:

Kentucky Rule of Professional Conduct 7.20(2)
OPINION

The question states that something of value will be offered to Realtors for recommendations and referrals. This proposal violates Rule 7.20(2), which provides: "A lawyer shall not give anything of value to a non-lawyer for recommending the lawyers services, except that a lawyer may pay the reasonable cost of advertising or communication permitted by this rule."
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Note to Reader
This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor rule). The Rule provides that formal opinions are advisory only.