Can a lawyer pay an Internet service for leads, whether a flat monthly fee or a charge per click or referral, without violating the rule against paying for recommendations?

Plain-English summary

An Internet company that had been referring cases to lawyers for free planned to charge for the service, either a set fee per "hit" or referral to a particular lawyer, or a flat monthly or yearly advertising fee regardless of the number of hits. The lawyer asked whether paying either way would violate Rule 7.2(c), which bars giving anything of value for recommending the lawyer's services, subject to an exception for the reasonable cost of advertisements.

The committee concluded both pricing models were permissible for a service open to attorneys generally. A flat advertising fee was no different from the general fees charged by television stations and newspapers, where the service provider plays no role in the user's decision. The harder question was per-hit pricing; the committee treated it like media advertising rates that vary with audience size or circulation, where the cost reflects effectiveness. Because the technology measures effectiveness more precisely does not make per-hit payment improper, so reasonable payments based solely on the number of hits (not on whether the user becomes a client) are permissible advertising charges under Rule 7.2(c).

The committee drew a clear line: the answer changes if the service provider is in any way active in directing the user to a particular attorney. Like the yellow pages, the service may list lawyers but must not exercise control over which one the user chooses or make subjective judgments steering users to one lawyer over another. A service that restricted participation (the committee's extreme example: one allowing only one attorney per practice area) would be improper, citing a Nebraska opinion that found a screened, limited for-profit service violated Rule 7.2(c). Finally, the committee reaffirmed (per its Opinion 00-10) that a participating lawyer may not pay the service any portion of the fees received from clients obtained through it, under Rule 5.4(a).

Currency note

This opinion was issued in 2001, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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: Could a lawyer pay an Internet service a flat monthly fee for advertising?

A: The committee concluded yes: a set monthly or yearly fee is the reasonable cost of advertising under Rule 7.2(c), no different from general advertising rates charged by newspapers or television stations.

Q: Could the lawyer pay the service per "hit"?

A: The committee concluded yes, treating per-hit pricing as a measure of advertising effectiveness like audience- or circulation-based media rates, so long as payment is not tied to whether the user actually becomes a client.

Q: When does paying an Internet service cross into improper payment for a referral?

A: The committee concluded it does if the service actively directs users to a particular lawyer, makes subjective recommendations, or screens or limits participating lawyers; such a service may violate Rule 7.2(c).

Q: Could the lawyer give the service a percentage of fees earned from clients it produced?

A: The committee concluded no: under Rule 5.4(a), a lawyer may not pay the service any portion of the fees received from clients obtained through it.

Background and rules framework

The opinion interpreted South Carolina RPC 7.2(c) (giving something of value for recommending the lawyer's services, with an exception for the reasonable cost of advertisements) and 5.4(a) (sharing legal fees with a nonlawyer), corresponding to the like-numbered Model Rules. The committee built on its Opinion 00-10 (free Internet matching service) and cited a Nebraska State Bar opinion and a New York City Bar opinion.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 7.2(c) / Model Rule 7.2: paying for recommendations versus the reasonable cost of advertising.
• South Carolina RPC 5.4(a) / Model Rule 5.4: no sharing of legal fees with a nonlawyer.

Other opinions cited:

• S.C. Bar Ethics Advisory Op. 00-10 (free Internet attorney-matching service).
• Nebraska State Bar Ass'n Advisory Committee Op. 95-3; Ass'n of the Bar of the City of New York Op. 2000-1.

See also

• SC Bar Ethics Op. 16-06: Online Fee-Split Referrals
• SC Bar Ethics Op. 11-05: Daily-Deal Legal Services
• SC Bar Ethics Op. 13-09: Paying for Preferred Attorney
• SC Bar Ethics Op. 07-08: Joining a Referral Source's Ad

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-01-03/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 01-03

Company “A” proposes to set up an Internet site referring cases to attorneys in a particular area of law in which that attorney along with other attorneys in the State of South Carolina practice. The Internet site is now furnishing referrals to lawyers at no charge. Because the company is now “up and running”, it desires as it has planned all along to run a business based on advertising and referrals. Company “A” has contacted attorney and suggested charging “X” dollars for each referral or hit on a web site going to that particular attorney. In the alternative, it is considering simply charging a set advertising fee on a monthly or yearly basis for the service regardless of the number of hits or referrals.

Questions:
Does an Internet service providing a referral to an attorney in a particular area of law violate S.C. Rule of Professional Conduct 7.2(c) or any other rule relating to a lawyer not giving anything of value to a person recommending the lawyer’s services if the service:
(1) charges a set fee per Internet hit or referral; or
(2) charges a monthly fee as advertising without regard to the number of hits or referrals given to that attorney or firm.

Summary of Opinion:
South Carolina Rule of Professional Conduct 7.2(c) prohibits lawyers from giving “anything of value to a person for recommending the lawyer's services” but includes an exception for the “reasonable cost of advertisements.” A lawyer may ethically make payments to an Internet service for advertising the lawyer’s services based either on a set monthly or yearly fee or based on the number of hits or referrals from the service to the lawyer. Lawyers could not ethically pay the service any portion of the fees received from clients obtained through the service. See S.C. Rule Prof. Cond. 5.4(a). This opinion deals only with services that are open to attorneys generally. Services that restrict or screen attorney participation may violate Rule 7.2(c).

Opinion:
South Carolina Rule of Professional Conduct 7.2(c) states, “A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may pay the reasonable cost of advertisements permitted by this Rule and may pay the usual charges of a not-for-profit lawyer referral service or other legal service organization.” In Opinion #00-10, the Committee advised that a lawyer could ethically participate in an Internet service that matched attorneys and clients when the service did not charge the lawyers a fee for participating in the service. Thus, this inquiry poses a question not before the Committee in Opinion #00-10.

Television stations and newspapers charge general fees for placing advertisements. An Internet service may establish a schedule of reasonable monthly or yearly advertising fees and lawyers who choose to advertise on the service may ethically pay these fees under Rule 7.2(c). In both cases, the service provider plays no role in the decision-making process of the recipient of the information provided.

The more difficult question is whether a lawyer may pay an Internet service based on the number of “hits.” A “hit” is recorded each time an Internet user accesses a particular Internet web site or link. Rule 7.2(c) draws a distinction between payments for recommending the lawyer’s services, which are ethically improper, and payments for the reasonable cost of advertising, which are permissible. Under Rule 7.2(c), it would be improper for a lawyer to pay someone for referring a specific client to a lawyer. The issue is whether payments to an Internet based on the number of “hits” to a particular lawyer are the electronic equivalent of payment for specific referrals. Television stations and newspapers vary their advertising fees based on the effectiveness of its advertising. It is common for the charge for such ads to be based in part on the size of the viewing audience or the circulation of the newspaper. The size of the viewing audience is measured by carefully conducted surveys; the circulation of a newspaper is based on the number of issues routinely sold. The fact that the technology available to an Internet service allows for a more precise measurement of its effectiveness, does not, in and of itself, make the method of payment impermissible. The Committee finds that reasonable payments to an Internet service based solely on the number of hits (and not based on whether the user ultimately becomes a client) are a way of determining advertising charges based on the effectiveness of the Internet advertisement and are permissible under Rule 7.2(c).

A different answer would be reached if the Internet site provider was in any way active in directing the user to a particular attorney. For example, many attorneys list their names in the telephone book’s yellow pages. However, the publisher of the book exercises no control over which advertiser the customer chooses from the choices provided. So long as the Internet site provider does not make specific recommendations to a particular attorney and there are no subjective judgements made by a third party in directing the user to one attorney over another, payments based on the number of hits is permissible. The Committee perceives a user accessing an electronic “yellow pages” which is open to all attorneys who choose that form of advertising without restricting the number of lawyers in a particular area. To take an extreme example, payment by a lawyer to a service that only allowed one attorney in each practice area would be improper. See Nebraska State Bar Association Advisory Committee Op. #95-3 (for-profit referral service that provides lawyers’ names to Internet users at “on-line shopping malls,” charges a fee ranging from $375 to $950 per six month period, and limits the number of attorneys listed in the subject matter specialties violated Rule 7.2(c). See also Assn. Of the Bar of the City of New York, Op. #2000-1.

In Opinion #00-10, the Committee noted that participating lawyers could not ethically pay the Internet matching service any portion of the fees received from clients obtained through the service. This has not changed. See S.C. Rule Prof. Cond. 5.4(a). The inquirer should consult that opinion for further ethical guidance.