Ezel / Ethics Opinions / NYSBA
NYSBA 2013-10-02

Can a New York real estate lawyer accept a referral fee from a home security company for clients who sign up using a code on flyers in the lawyer's office?

Short answer: Yes. The opinion concludes that nothing bars a lawyer from being paid for providing passive space for a third party's flyers when the lawyer does not recommend the service and it is unrelated to the legal work.
Currency note: this opinion is from 2013
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked at the bottom of this page) is the authoritative source for any reliance.

NY State Bar Ethics Opinion 981: A referral fee from a home security company

Short answer: A lawyer may accept a referral fee from a home security company for clients who sign up using a code on flyers left in the lawyer's office, where the lawyer does not recommend the service and the service is unrelated to the legal work.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.

View original opinion

Plain-English summary

A lawyer whose practice is predominantly residential real estate was offered $150 by a home security company for each person who signs up for security services using a code on flyers placed in the lawyer's office. The inquiry assumes the lawyer is not recommending the services and that they are not substantially related to the legal services the lawyer provides. The lawyer asked whether he may accept the fee.

The opinion concludes he may. It distinguishes its prior referral-fee opinions, which all involved a service provider related in some way to the legal services the lawyer was providing. Here the home security service is unrelated, the flyers are available to anyone passing through the waiting room (clients, delivery persons, companions), and the lawyer expresses no opinion on the quality or suitability of the services. On these facts, the opinion holds that nothing in the rules prohibits a lawyer from being compensated for providing passive space for third-party advertising.

The opinion cautions that the answer could change if the lawyer were to recommend the services, or if the non-legal services were related to the legal services he provides; in that case the prior opinions, which turned on a Rule 1.7 conflict analysis (whether the fee would compromise the lawyer's duty to make referrals in the client's best interest), should be carefully considered.

In practice

The opinion holds that, under the New York rules as they stood at the time, a lawyer may accept compensation for providing passive space for a third party's advertising flyers, such as a home security company's, where the lawyer does not recommend the service and it is unrelated to the legal work. Per the opinion, the result rests on those two conditions; if the lawyer recommends the service or it is related to the representation, the conflict analysis under Rule 1.7 from the committee's prior referral-fee opinions applies.

Common questions

Q: Can a real estate lawyer be paid for letting a security company leave flyers in the office?

A: Yes. The opinion concludes that being compensated for providing passive advertising space does not violate the rules when the lawyer does not recommend the service and it is unrelated to the legal work.

Q: What makes this different from a prohibited referral fee?

A: The opinion explains that its prior referral-fee opinions all involved a provider related to the legal services; here the service is unrelated, the lawyer makes no recommendation, and the flyers are simply available to anyone in the waiting room.

Q: When would the lawyer need to reconsider?

A: The opinion cautions that if the lawyer recommends the service, or if the non-legal service is related to the legal services provided, the lawyer should carefully consider the prior opinions, which analyzed referral fees under Rule 1.7.

Background and rules framework

The opinion interprets New York Rule 7.2(a)'s bar on paying for referrals as informed by Comment [1] (which permits paying for advertising and group advertising), and frames the limiting analysis under Rule 1.7 (conflicts of interest, the analog of Model Rule 1.7) and Rule 5.4 (professional independence). The dividing line is whether the lawyer recommends the service or it relates to the representation.

Citations and references

Rules of Professional Conduct:

  • NY Rule 7.2(a) (paying for referrals; Comment [1] on advertising)
  • MR 1.7 / NY Rule 1.7 (conflict analysis applied in the prior referral-fee opinions)
  • MR 5.4 / NY Rule 5.4 (professional independence)

Other opinions cited:

  • N.Y. State 667 (1994): referral fee from a mortgage broker permitted on conditions
  • N.Y. State 845 (2010): real estate broker may share a commission with referring lawyers
  • Nassau County 2001-10: referral fee from a termite treatment company
  • D.C. Opinion 361 (2011): referral fee permitted; Arizona Opinions 95-10 and 06-02 prohibited

See also

Source