Can a lawyer hold herself out to the public as a 'referring attorney' who finds other lawyers for clients and collects a fee split, or is that an unauthorized lawyer referral service?

Plain-English summary

A lawyer who no longer did much legal work herself advertised and held herself out as a "referring attorney": clients would bring her their cases, she would find an attorney to take each case, that was all she did, and her compensation was a fee-sharing arrangement with the receiving lawyer under Maine Bar Rule 3.3(d). Her activities were not sponsored or approved by any bar association. Bar Counsel asked whether she was merely engaging in permitted fee sharing under Rule 3.3(d) or was operating a lawyer referral service prohibited by Rule 3.9(f)(2); if the latter, whether she or the lawyers she referred to (or both) were committing misconduct; and whether Rules 3.3(d) and 3.9(f)(2) are internally inconsistent.

The Commission relied on its earlier Opinion No. 87 (1988), which had read Rule 3.9(f)(2) to prohibit a lawyer from paying a referral fee to a referral service privately operated by an individual lawyer or group of lawyers, because such a private service does not qualify as one "operated, sponsored, or approved by a bar association." Finding the facts here materially the same, it would reach the same result unless it rethought Opinion No. 87. The Commission then addressed the relationship Opinion No. 87 had not considered: Rule 3.3(d) allows unassociated lawyers to divide a fee with client consent and a reasonable total fee, and nothing in Rule 3.3(d) requires each lawyer to perform substantive services (the Maine Supreme Judicial Court having rejected the proportional-services limitation found elsewhere, per Opinion No. 103). That created an apparent conflict: one rule forbids paying a fee to a non-approved referral service, while another permits paying a fee for what is essentially a referral.

The Commission concluded the two rules are reconcilable by distinguishing a lawyer who holds himself out as practicing law and divides a fee on a referred matter (remaining the client's lawyer, per Opinion No. 145) from a lawyer who principally or exclusively holds himself out as operating a referral service. On these facts, the attorney expressly held herself out as a "referring attorney" and invited the public to seek her out for referrals; reading Rule 3.3(d) to permit that would gut Rule 3.9(f)(2). It answered Bar Counsel's questions: she was operating a referral service not sponsored or approved by a bar association; lawyers who compensated her for referrals violated Rule 3.9(f)(2), and she violated Rule 3.9(f)(3) by assisting them; and there is no inconsistency between Rules 3.3(d) and 3.9(f)(2), because the fee-division exception does not authorize conduct another rule prohibits. Opinion No. 87 remained valid.

Currency note

This opinion was issued in 1999, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer set up a business as a "referring attorney" and collect fee splits?

A: The opinion concluded no, on these facts. A lawyer who principally holds herself out to the public as making referrals operates a referral service that, under the Maine Bar Rules, must be sponsored or approved by a bar association.

Q: Who commits misconduct, the referring lawyer or the lawyers who pay her?

A: The opinion concluded both. Lawyers who pay for referrals violate Rule 3.9(f)(2), and the lawyer running the referral service violates Rule 3.9(f)(3) by assisting (indeed making possible) those violations.

Q: Isn't this just permitted fee division under Rule 3.3(d)?

A: The opinion drew a line. A practicing lawyer who refers a matter and splits the fee remains the client's lawyer and may divide a fee under Rule 3.3(d); a lawyer whose principal business is making referrals is operating a referral service governed by Rule 3.9(f)(2).

Q: Do the fee-division rule and the referral-service rule conflict?

A: The opinion concluded no. Rule 3.3(d) only creates an exception to the prohibition on fee division; it does not authorize conduct that another rule, such as Rule 3.9(f)(2), separately prohibits.

Background and rules framework

The opinion interprets Maine Bar Rule 3.9(f)(2) (paying for referrals only through a bar-association-operated, sponsored, or approved referral service), Rule 3.9(f)(3) (assisting another's violation), and Rule 3.3(d) (division of fees between unassociated lawyers). These correspond to ABA Model Rule 7.2 (lawyer referral services and payment for recommendations) and Model Rule 1.5(e) (division of fees between lawyers). The Commission built on its prior Opinions No. 87, No. 103, and No. 145 interpreting Maine's distinctive fee-division and referral provisions.

Citations and references

Rules of Professional Conduct:

• Model Rule 7.2 (lawyer referral services; payment for recommendations)
• Model Rule 1.5(e) (division of fees between lawyers)
• Maine Bar Rule 3.3(d), 3.9(f)(2), 3.9(f)(3)

Other opinions cited:

• Maine PEC Opinion No. 87 (Aug. 31, 1988); Opinion No. 103 (Feb. 7, 1990); Opinion No. 145 (Sept. 27, 1994).

See also

• Maine Ethics Op. 87: Privately Operated Lawyer Referral Service
• ABA Formal Op. 474: Referral Fees and Conflicts of Interest
• NY State Bar Op. 1086: Referral Fee From an Investment Advisor

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=89544

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: January 6, 1999

Facts

A lawyer who has practiced law for many years no longer does a substantial amount of legal work herself, but instead advertises and holds herself out as a "referring attorney." Clients will come to her with their cases, and she will find an attorney to take that case. That is all she will do on the case. Her remuneration for this effort will be a fee sharing arrangement with the referral attorney under Maine Bar Rule 3.3(d). The lawyer's activities are neither sponsored nor approved by any bar association in the State of Maine.

Against the background of these facts, Bar Counsel poses the following questions:

• Is this lawyer simply engaging in fee sharing permitted by Maine Bar Rule 3.3(d), or is she operating a lawyer referral service in violation of Maine Bar Rule 3.9(f)(2)?

• If the lawyer is operating a lawyer referral service prohibited by Maine Bar Rule 3.9(f)(2), is the lawyer engaging in misconduct or are the lawyers she refers cases to engaging in misconduct?

• Is there an internal inconsistency between the terms of Maine Bar Rule 3.3(d) and Maine Bar Rule 3.9(f)(2)?

Opinion

This Commission previously addressed very similar questions in Opinion No. 87 issued on August 31, 1988. Maine Manual on Professional Responsibility 0-305 (1997). In that case, we interpreted Bar Rule 3.9(f)(2) as prohibiting a lawyer from paying a referral fee to a lawyer referral service privately operated by an individual lawyer or group of lawyers or law firms. The Commission based its Opinion No. 87 on the observation that such a privately-operated lawyer referral service consisting of a limited number of select members would not qualify as a referral service "operated, sponsored, or approved by a bar association." Bar Rule 3.9(f)(2).

Opinion No. 87 did not firmly and finally close the door on this matter. Rather, it concluded diffidently that "[i]n view of the fact that there may be alternate ways to structure such a private arrangement, we expressly limit this opinion to the proposal as presented."

The facts presented here do not appear to materially differ from those presented in Opinion No. 87. At base, the same proposition is being advanced: That a lawyer be allowed to pay a fee to a referral service operated by an individual lawyer or lawyers and not operated, sponsored or approved by the bar association. Unless we are to rethink Opinion No. 87, therefore, our conclusion would remain the same: The proposed activities would consist of the operation of a lawyer referral service that is not operated, sponsored or approved by a bar association; therefore any lawyer who paid a fee in return for the referral would be violating Bar Rule 3.9(f)(2); and the lawyer operating the referral service would in turn be violating Bar Rule 3.9(f)(3) for assisting in the referring attorney's violation of Bar Rule 3.9(f)(2).

We hesitate to so conclude our analysis without further discussion, however, because Opinion No. 87, unlike the questions posed to us by Bar Counsel, did not consider the relationship between Bar Rule 3.9(f)(2) and Bar Rule 3.3(d). Bar Rule 3.3(d) prohibits unassociated lawyers from dividing a fee for legal services with one another unless:

• The client, after full disclosure, consents to the employment of the other lawyer and to the terms for the division of the fees; and

• The total fee of the lawyers does not exceed reasonable compensation for all legal services they rendered to the client.

Nothing in the language of Rule 3.3(d) requires that each lawyer actually provide substantive legal services to the client. Under either the Model Code or the Model Rules, such a requirement existed because both the Model Code and the Model Rules required that the fee division be made in proportion to the services performed or the responsibility assumed. As we have noted on a prior occasion, however, the Supreme Judicial Court apparently rejected the full breadth of the fee-sharing limitations adopted elsewhere. See Professional Ethics Opinion No. 103 (Feb. 7, 1990); Maine Manual on Professional Responsibility 0-357 (1997). The Court has modified Maine's Rule to allow, for example, the payment of a percentage fee to a referring attorney who is to have no responsibility with respect to the matter and who will have no involvement in the case other than being kept apprised of the matter by the attorney to whom the case is referred. Id.

We thus have a situation in which one Bar Rule (3.9(f)(2)) prohibits an attorney from paying a fee to a referral service not operated, sponsored or approved by a bar association, while another Bar Rule (3.3(d)) allows an attorney to pay a fee to another lawyer for what is, in essence, the service of referring a client.

Despite this apparent conflict that prompts Bar Counsel's inquiry, we conclude that the two rules are reconcilable, In reaching this conclusion, we draw a distinction between what we think are two different situations: 1) a situation in which a lawyer who holds himself out as practicing law divides a fee for legal services with another lawyer; and 2) a situation in which a lawyer principally or exclusively holds himself out as operating a referral service. In making this distinction, we are assisted by the fact that we have previously recognized that a lawyer who refers a client to another lawyer, and splits a fee with that lawyer, remains the client's lawyer with respect to the matter at hand. See Opinion No. 145 (Sept. 27, 1994), Maine Manual on Professional Responsibility 0-499 (1997) ("the conclusion is inescapable that [Bar Rule 3.3(d)] contemplates both lawyers being employed in some sense by the client ... and ... a compensated referral to a particular lawyer is in and of itself representation of [the client] in the matter. . . ") Moreover, in the normal fee-splitting situation, the desire for a referral is not necessarily the sole reason for the client to contact the referring attorney in the first instance and, even when a referral is made, the referring attorney may continue to provide substantive legal services. The referral service, on the other hand, exists for the principal purpose of making referrals, is presumably contacted by clients for that reason, and as a general matter anticipates having no substantive involvement in any of the matters that it refers.

We recognize that these distinctions are not sharply drawn, may represent variations in degree more than kind, and might be difficult to apply to a situation in which, for example, a gradually increasing percentage of a lawyer's practice consists of referrals. On the facts posed here, however, the attorney expressly holds herself out as a ?referring attorney" and invites the public to seek her out for the purpose of obtaining a referral. To read Rule 3.3(d)(3) so broadly as to allow such activity under the rubric of fee division would substantially eliminate the protections of Rule 3.9(f)(2) by allowing any individual lawyer, without bar association sponsorship or approval, to operate a referral business.

Conversely, neither the result we reach here, nor the result adopted in Opinion No. 87, undercuts the plain language or spirit of Rule 3.3(d). Rule 3.3(d) does not grant permission to split fees in any and all circumstances no matter what the provisions of the other Rules. Rather, it simply creates an exception to the prohibition on fee division under certain circumstances. The fact that a subset of those circumstances (e.g., fee-splitting that occurs as a result of the operation of a referral service) might entail activity that is elsewhere prohibited by the Rules creates no inconsistency within the Rules. In short, that a lawyer is not prohibited by one rule from certain conduct does not mean that the conduct is permissible even in circumstances where it is otherwise prohibited by another rule.

In conclusion, we answer Bar Counsel's questions thus:

• Whether or not the attorney is engaged in fee division that would otherwise be permissible, she is also engaged in operating a referral service that is not operated, sponsored or approved by a bar association.

• Lawyers who compensate her for referrals do so in violation of Bar Rule 3.9(f)(2), and she violates Bar Rule 3.9(f)(3) by assisting in (indeed making possible) these violations.

• There is no inconsistency between the terms of Maine Bar Rules 3.3(d) and 3.9(f)(2). The rules allow lawyers to refer matters for a fee incident to the practice of law while simultaneously insisting that persons who hold themselves out as a referral service do so subject to bar association sponsorship or approval.

Opinion No. 87 remains valid, and is fully applicable to the facts presented here.