Can a New Jersey lawyer pay to join a for-profit real-estate agency listing or a lay-owned advertising company that refers clients for a fee?

Plain-English summary

The State Bar Association asked whether a New Jersey attorney could ethically participate in two organizations that functioned as referral services securing business for attorneys. In the first, a nationwide real-estate agency would publish a booklet of participating attorneys available in particular municipalities, with a listed attorney paying $300 per year; the agency's local franchisees would then refer real-estate clients to listed attorneys. In the second, a for-profit corporation owned and operated by laymen ran an advertising program placing print ads under names like "The Professional Contacts Legal Group" with a toll-free number; callers were referred to a participating lawyer, who paid a $300 annual fee plus monthly charges from $50 to $150 that varied with the volume of business rather than the cost of advertising.

The Committee applied DR 2-103(C), which barred a lawyer from giving anything of value to a person or organization to recommend or secure his employment, except payment for public communications permitted by DR 2-101 and usual fees to a lawyer referral service operated, sponsored, or approved by a bar association. It concluded that both proposed services violated that rule because neither qualified as a bar-operated referral service.

The Committee treated the for-profit corporation's "advertising program" as in reality a referral service, particularly because the monthly charges tracked the volume of business referred rather than any advertising cost. It also found that arrangement violated DR 2-103(B)(1) as false, fraudulent, misleading, or deceptive, because the corporation furnished no legal services and was not authorized to do so, yet its "Attorney at Law, Offices Throughout the State" designation presented it as one.

Currency note

This opinion was issued in 1981, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and predates the 1984 replacement of the Disciplinary Rules by the RPCs. The referral and advertising rules it applied (DR 2-103) now correspond broadly to RPC 7.2 and RPC 7.3. Treat this page as historical context, not current guidance.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: Could a lawyer pay to be listed in the real-estate agency's referral booklet?

A: No. The opinion concluded that paying the agency $300 a year for referrals violated DR 2-103(C), because the agency was not a bar-operated referral service.

Q: The second company called itself an advertising program. Did that matter?

A: No. The opinion treated it as a referral service in substance, because its monthly charges varied with the volume of business referred rather than the cost of any advertising.

Q: Why was the lay-owned company's name a separate problem?

A: The opinion found the "Attorney at Law" and "Professional Contacts Legal Group" designations misleading under DR 2-103(B)(1), because the corporation furnished no legal services and was not authorized to.

Background and rules framework

The opinion applied DR 2-103(C), which allowed payment only for permitted public communications and for a bar-operated, sponsored, or approved referral service, and DR 2-103(B)(1) against misleading promotional designations. In current New Jersey terms the analysis maps onto RPC 7.2 (paying for recommendations and use of referral services) and RPC 7.3 (solicitation). The controlling distinction was between permitted advertising costs and impermissible payments keyed to referrals.

Citations and references

Rules of Professional Conduct:

• MR 7.2 / NJ RPC 7.2 (advertising; paying for recommendations and referral services); decided under former DR 2-103(C)
• MR 7.3 / NJ RPC 7.3 (solicitation); decided under former DR 2-103(B)(1)

See also

• NJ ACPE Op. 482: Advertising Borrowed Expertise on Assistance Programs
• NJ ACPE Op. 488: Furnishing Fee Information to a Group Legal-Services Plan
• NJ ACPE Op. 505: Advertising of Prepaid Legal Services

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp481-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls.

107 N.J.L.J. 393, May 7, 1981

OPINION 481

Lawyer Referral Service To Service Real Estate Clients - Corporation's Advertising Program for Attorneys

The New Jersey State Bar Association has presented the following question: Attorneys in this State have recently been solicited to participate in two organizations which generally function as referral services securing business clients for attorneys. May a New Jersey attorney ethically participate in these activities?

The two situations to which the inquiry relates are as follows. A nationwide real estate agency desires to publish a booklet with the names and addresses of participating attorneys who are available within certain municipalities and counties to represent individuals in real estate transactions. In order to be listed an attorney would pay $300 per year to the agency. The attorneys would then be included in the booklet to be distributed to franchises of the agency statewide. The result would be referrals by the local franchisees to the listed attorneys when there are real estate transactions in the same municipality where the lawyer maintains his office. The second situation involves a corporation organized for profit which is engaged in an advertising program for attorneys in the State. The corporation is owned and operated by laymen. It places advertisements in the print media under the heading "Attorneys at Law, Offices Throughout the State" or "Legal Services" or "The Professional Contacts Legal Group". The advertisements will list a number of types of legal services and corresponding fees, together with a toll-free 800 telephone number for prospective clients to call. They will then be referred to a participating lawyer in the region nearest the callers. No money is ever paid to the corporation by the client and all arrangements for payments are made directly with the participating attorney. The State is divided into regions and the number of attorneys who may participate is limited in each region. In order to participate in this cooperative advertising and referral service, the attorneys will be required to pay an annual membership fee of $300 per year plus additional charges on a monthly basis which will range from $50 to $150 depending upon the volume of business. While the monthly charges are referred to by the corporation as advertising charges, they do not bear a direct relationship either to the amount or the cost of the advertising done in any given monthly period.

DR 2-103(C) provides: 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 communications permitted by DR 2-101 and the usual and reasonable fees or dues charged by a lawyer referral service operated, sponsored, or approved by a bar association.

In our opinion, the referral services which are proposed by the nationwide real estate agency as well as by the corporation for profit in its "advertising program for attorneys" are violative of the foregoing rule. Neither of the organizations in question qualifies as a lawyer referral service operated, sponsored or approved by a bar association.

While the profit corporation's proposal purports to be an advertising program, we regard it as a referral service, particularly since the additional charges, which are to be made on a monthly basis, do not bear any relationship to advertising but rather to the volume of business referred by the corporation. With respect to the proposed "advertising program" of the corporation for profit, we are also of the opinion that the arrangement is violative of DR 2-103(B)(1) in that its promotional opportunity is false, fraudulent, misleading or deceptive in that the corporation furnishes no legal services, nor is it authorized to furnish legal services under the law, and the designation of "Attorney at Law, Offices Throughout the State" or "The Professional Contacts Legal Group" is in reality a referral service which violates the Disciplinary Rule above referred to.