Can a law firm hand out boxes of donuts, branded koozies, and discount coupons to the banks and real estate agents that refer it clients?

Plain-English summary

A firm wanted an employee to visit existing vendors (banks, real estate agencies) each week and drop off a box of donuts together with branded koozies, a fee sheet, a firm pamphlet, and a coupon for $50 off a consultation or closing. None of the material was addressed to a named person or asked for referrals, though the firm hoped referrals would follow.

The opinion concludes the firm may do this. Because the materials are delivered to businesses generally rather than to specific individuals, the committee holds the practice is not a solicitation, so Rule 7.3 does not apply. Enclosing marketing materials does count as lawyer advertising, so Rules 7.1, 7.2, 7.4, and 7.5 do apply.

The committee focuses on Rule 7.2(c), which bars giving "anything of value to a person for recommending the lawyer's services." The opinion states that "as long as the weekly donuts and other donut-box contents are delivered regardless of whether the vendor had referred clients to Law Firm that week, and regardless of how many," there is no quid pro quo and no violation. If delivery were contingent on referrals, the practice would violate the rule. The committee adds two points: only the donuts, koozies, and coupons (not the fee sheets or pamphlets) are things "of value," because the rule looks to value to the recipient rather than cost to the sender; and the prohibition on giving "anything" of value "contains no explicit de minimis exception."

In practice

Under this opinion, and under the South Carolina rules as they stood in 2015, a firm may give modest gifts and advertising materials to its referral sources so long as the gifts are not tied to whether or how many clients the source sends. The opinion holds that the Rule 7.2(c) line turns on contingency: gifts delivered on a fixed schedule regardless of referrals are permitted, while gifts conditioned on referrals are prohibited. The committee notes Rule 7.2(c) carries no de minimis exception, so the analysis is the same whether the gift is large or small.

Common questions

Q: Can a law firm give gifts to banks and realtors that refer it clients?

A: Yes, on these facts. The opinion permits weekly donuts and branded items to referral sources as long as the gifts are delivered regardless of whether the source referred any clients, so there is no quid pro quo under Rule 7.2(c).

Q: What turns a permitted gift into a prohibited payment for referrals?

A: Contingency. The opinion states that if delivery of the donuts were contingent on the referral of clients, the practice would violate Rule 7.2(c).

Q: Is dropping off marketing materials to a business a prohibited solicitation?

A: No. The committee holds that delivering gifts and materials to a business generally, without targeting specific individuals, is not a solicitation, so Rule 7.3 does not apply, though the advertising rules still do.

Q: Does a small or token gift escape the rule because it is inexpensive?

A: No. The opinion states the prohibition on giving "anything" of value contains no explicit de minimis exception; the donuts, koozies, and coupons are things of value because the rule measures value to the recipient.

Background and rules framework

The opinion interprets South Carolina's lawyer advertising rules: Rule 7.1 (communications concerning a lawyer's services; Model Rule 7.1), Rule 7.2 (advertising, including the 7.2(c) bar on giving anything of value for a recommendation; Model Rule 7.2), Rule 7.3 (solicitation; Model Rule 7.3), Rule 7.4 (fields of practice; Model Rule 7.4), and Rule 7.5 (firm names and letterhead; Model Rule 7.5). The committee also references the Scope note at [1], SCACR 407, characterizing the rules as "rules of reason."

Citations and references

Rules of Professional Conduct:

• MR 7.1 / SC RPC 7.1 (communications concerning a lawyer's services)
• MR 7.2 / SC RPC 7.2(c) (giving anything of value for recommending the lawyer)
• MR 7.3 / SC RPC 7.3 (solicitation of clients)
• MR 7.4 / SC RPC 7.4 (communication of fields of practice)
• MR 7.5 / SC RPC 7.5 (firm names and letterhead)

See also

• SC Bar Ethics Op. 13-05: Co-op TV ad call rotation is not a referral payment
• SC Bar Ethics Op. 13-09: Paying for "Preferred Closing Attorney" status barred
• SC Bar Ethics Op. 13-03: Title agency co-owned with a realtor

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-15-02/
• Original PDF: https://www.scbar.org/media/fp5pb4bw/15-02.pdf

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 15-02

Applicable Rules: 7.1, 7.2, 7.4, 7.5

Facts:

Law Firm would like to pursue a practice referred to as "Donut Friday," where an employee of Law Firm visits the Firm's existing vendors (e.g., banks, real estate agencies, etc.) and delivers a box of donuts to these vendors. Included with the box of donuts are a dozen koozies bearing the name of Law Firm, as well as a fee sheet, a pamphlet containing information about Law Firm and its staff, and a coupon for $50.00 off Law Firm's fee for a consultation or real estate closing. None of the marketing material is addressed or directed to any one person, nor does the material request that existing vendors refer business to Law Firm, although the intent is to receive referrals.

Question:

Can Law Firm participate in Donut Fridays?

Summary:

Law Firm may engage in Donut Fridays without violating the Rules of Professional Conduct.

Discussion:

As a preliminary matter, the mere delivery of gifts or other marketing materials to a business generally without delivery to specific individuals does not constitute a solicitation; therefore, Rule 7.3 does not apply. However, enclosing Law Firm marketing materials in a donut box does constitute lawyer advertising; therefore, the remainder of the advertising and communication rules (7.1, 7.2, 7.4, and 7.5) do apply.

The specific rule provision implicated by the facts presented is the Rule 7.2(c) prohibition on giving "anything of value to a person for recommending the lawyer's services." This provision is at issue here because the recipients of the donut boxes are existing vendors of the firm: banks and real estate agents that refer their buyer/borrower clients to Law Firm for closing-related legal services. However, as long as the weekly donuts and other donut-box contents are delivered regardless of whether the vendor had referred clients to Law Firm that week, and regardless of how many, then the requisite quid pro quo for a Rule 7.2(c) violation does not exist. If the delivery of donuts were contingent on the referral of clients to Law Firm, the practice would violate the rule.

Finally, the Committee notes that 1) only the donuts, koozies, and coupons (not the fee sheets or pamphlets) would be considered things "of value" under 7.2 because the rule contemplates value to the recipient and not cost to the sender; and 2) although the Rules of Professional Conduct are "rules of reason," see Scope at [1], SCACR 407, the prohibition on giving "anything" of value contains no explicit de minimis exception.