Can lawyers set up a privately owned, for-profit lawyer referral service funded by fees from participating attorneys or a split of referred-case fees?

Plain-English summary

A lawyer proposed to start a privately operated lawyer referral service for personal injury claimants, owned and operated by selected individual lawyers or firms across the state, funded either by charges assessed to participating attorneys or by a split of fees on referred matters. Claimants needing a personal injury attorney could contact the service and receive the names of attorneys in their area.

The Commission concluded the proposal was affected by, and as structured violated, two rules. First, Rule 3.9(f)(2) prohibited a lawyer from compensating anyone to recommend or secure the lawyer's employment, except for usual and reasonable fees charged by a lawyer referral service "operated, sponsored, or approved by a bar association." The Commission reasoned that, although the Rules did not define "bar association referral service," the ordinary meaning would not cover a privately operated organization of a limited number of select members, and it knew of no basis to treat such an entity as a bar-association service. It noted that Maine's rule is more limited than the Model Code (DR 2-103(C)) and Model Rules (Rule 7.2), so out-of-state decisions construing the more flexible provisions were not on point, and that even those provisions had been narrowly construed. Second, Rule 3.3(d) permitted fee division with a lawyer who is not a partner or associate only if the client consents after full disclosure and the total fee is reasonable; absent that, the service could not be funded by sharing fees with the referring organization. The Commission expressly limited its opinion to the proposal as presented, noting there might be alternate ways to structure such an arrangement.

Currency note

This opinion was issued in 1988, 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 Treat this page as historical context, not current guidance.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 lawyers pay to participate in a privately operated, for-profit referral service?

A: The opinion concluded no, as structured; Rule 3.9(f)(2) allowed paying for referrals only through a lawyer referral service operated, sponsored, or approved by a bar association.

Q: Does a select group of private lawyers count as a "bar association referral service"?

A: The opinion concluded it does not; the ordinary meaning of that term would not cover a privately operated organization of a limited number of select members.

Q: Could the service be funded by splitting fees on referred cases?

A: The opinion concluded no, because Rule 3.3(d) permits fee division with a non-partner lawyer only with the client's consent after full disclosure and a reasonable total fee.

Q: Did the Commission rule out every possible structure?

A: No. The opinion expressly limited itself to the proposal as presented and noted there may be alternate ways to structure such a private arrangement.

Background and rules framework

The opinion interprets former Maine Bar Rule 3.9(f)(2) (compensation for recommending a lawyer; the bar-association referral service exception) and Rule 3.3(d) (division of fees with a lawyer outside the firm). These correspond to ABA Model Rule 7.2 (payments for recommendations, including the "usual charges" of a not-for-profit or qualified lawyer referral service) and Model Rule 1.5(e) (division of fees between lawyers). The opinion stresses that Maine's rule was narrower than the Model Code's DR 2-103(C) and Model Rule 7.2.

Citations and references

Rules of Professional Conduct:

• Model Rule 7.2 (payments for recommendations; referral services); Model Rule 1.5(e) (division of fees)
• Maine Bar Rule 3.9(f)(2); Rule 3.3(d)
• Model Code DR 2-103(C) (referenced for contrast)

Other opinions cited:

• ABA Informal Ops. 85-1510, 85-1512; Nassau County (N.Y.) Op. 84-1; South Carolina Op. 86-13(b); D.C. Op. 170; Alabama Op. 86-78; California Formal Op. 1986-90

See also

• Maine Ethics Op. 99: Referral Service Fees
• Maine Ethics Op. 103: Pure Referral Fee Split
• ABA Formal Op. 474: Referral Fees and Conflicts

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=91475

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: August 31, 1988

Questions Presented

An attorney is contemplating starting a privately operated lawyer referral service for personal injury claimants. The service would be owned and operated by individual lawyers or law firms selected throughout the State. The service would operate either from charges assessed to participating attorneys or from a fee split on referred matters. Clients in need of an attorney to handle a personal injury matter could contact the service and receive the name of one or more attorneys in their area of the State to handle the matter.

Opinion

The proposal is affected by two sections of the Bar Rules.

First, Bar Rule 3.9, governing advertising and solicitation, provides in sub-section (f)(2) that:

A lawyer shall not compensate, or give anything of value, to a person or organization to recommend or secure his employment by a client, or as a reward for having made a recommendation resulting in his employment by a client, except that he may pay for public communication permitted by these rules and may pay the usual and reasonable fees in dues charged by a lawyer referral service operated, sponsored, or approved by a bar association. (emphasis supplied).

Second, Bar Rule 3.3(d) permits fee division with another lawyer who is neither a partner nor associate of the lawyer only if (a) the client after full disclosure consents to the division, and (b) the total fee charged does not exceed reasonable compensation for all services rendered to the client.

As structured, the proposed service appears to violate both those rules. First, Rule 3.9(f)(2) expressly prohibits a lawyer from paying a fee to anyone to recommend his/her services, except a usual and reasonable fee charged by a "bar association" referral service. While the Rules do not define the term "bar association referral service," the ordinary meaning of that term would limit it to such types of associations as existed at the time of the adoption of the rules and presumably were within the contemplation of the draftsmen. Plainly, a privately operated organization consisting of a limited number of select members would not qualify as a "bar association referral service" within the ordinary meaning of that term. We know of no basis to argue that such an entity constitutes a "bar association" service.

A review of decisions from other jurisdictions reveals no decisions directly on point. That lack of guidance results from the fact that the provisions of both the Model Code of Professional Responsibility and the Model Rules of Professional Conduct contain limitations on participation on referral services that are materially different from those in the Maine Bar Rules.[1] Maine's Rule is more limited than the provisions of either the Model Code or Model Rules.

Nonetheless, in all cases where the more flexible provisions of the Model Code and Model Rules have been interpreted, such interpretations have narrowly construed the provisions regarding participating in such services. ABA Committee on Ethics and Professional Responsibility. Informal Opinion 85-1510 (2/16/85) and Informal Opinion 85-1512 (3/26/85); Bar Association of Nassau County, N.Y., Committee on Professional Ethics, Opinion 84-1 (2/84); So. Carolina Bar Ethics Advisory Commission, Opinion 86-13(b) (10/9/86); D.C. Bar Committee on Legal Ethics, Opinion 170 (4/15/86); Alabama State Bar Disciplinary Commission, Opinion 86-78 (8/14/86); California State Bar Standing Committee on Professional Responsibility and Conduct, Formal Opinion 1986-90 (11/5/86). We conclude, therefore, that the provisions of Rule 3.9(f)(2) do not permit participation in the service as proposed.

In addition, Rule 3.3(d) prohibits fee division, unless expressly consented to by the client. Absent such conduct, the proposed referral service could not be funded by a sharing of fees with the referring organization.

In 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.

Footnote

[1] The Model Code in DR 2-103(c) permits participating and the payment of a referral fee to bar association services, public defender programs and other non-profit or for-profit programs meeting specifically defined criteria. Model Rule 7.2 permits the payment of "usual charges" to participate in a not-for-profit lawyer referral service or other legal service operation.