Can a lawyer pay people who refer clients a flat fee for 'administrative' work, like filling out and filing forms, on each referred matter?

Plain-English summary

The inquirer represents medical providers in arbitrations against insurance carriers. Friends and family offered to refer providers to him in exchange for a fee. In response, the inquirer proposed to pay the referring individuals a flat fee for "administrative, non-attorney related work," such as completing and filing the arbitration request form for each referred matter, whether or not he is ultimately paid.

The opinion applies Rule 7.2(a), which bars a lawyer from giving anything of value to recommend or obtain employment by a client or as a reward for a recommendation resulting in employment, and Comment [1], which states that lawyers may not pay others for channeling professional work. The opinion notes the only exceptions, Rules 1.5(g) and 5.8, do not apply. The opinion concludes that paying the referrers for completing and filing the arbitration forms is a thing of "value" because the opportunity for paid work is as much a thing of value as a direct payment, and that the paid work is a reward for delivering clients, equivalent to a payment for a referral. Drawing on N.Y. State 1237 (2022), where giving a real estate broker the ability to charge a lower commission in exchange for referrals violated Rule 7.2(a), the opinion reaches the same conclusion here.

In practice

Under this opinion, a lawyer may not promise a nonlawyer referrer paid administrative work tied to each referred matter, because the opportunity for that paid work is a thing of value given as a reward for the referral, which Rule 7.2(a) prohibits. Per the opinion, this holds even though the form-filing work could lawfully be done by a nonlawyer, because the vice is the quid pro quo for the referral.

Common questions

Q: Can a lawyer pay a referrer for "administrative" tasks instead of a referral fee?

A: Per the opinion, no. Promising paid administrative work on each referred matter is a thing of value given as a reward for the referral and is equivalent to a prohibited referral payment under Rule 7.2(a).

Q: Does it matter that nonlawyers may lawfully do the form-filing work?

A: Per the opinion, no. Even though the work could be done by a nonlawyer, the arrangement is barred because the paid work is a quid pro quo for delivering clients.

Background and rules framework

The opinion interprets New York Rule 7.2(a) (no payment for recommendations or employment), noting that its only exceptions, Rules 1.5(g) and 5.8, do not apply. Rule 7.2 corresponds to ABA Model Rule 7.2.

Citations and references

Rules of Professional Conduct:

• New York Rules of Professional Conduct 7.2(a)
• ABA Model Rule 7.2 (analogue)

Other opinions cited:

• N.Y. State 1237 (2022): giving a referrer something of value in exchange for referrals violates Rule 7.2(a)
• N.Y. State 1014 (2014): the rule targets payments to "touts," "runners," and "ambulance chasers"

See also

• NYSBA Ethics Op. 1267: Paying a Lawyer-Matching Website
• NYSBA Ethics Op. 1271: Online Bidding Service Fees
• LACBA Ethics Op. 467: Referral Fees & Client Consent

Source

• Landing page: https://nysba.org/ethics-opinion-1279/