Can two Texas lawyers agree to send each other all of their cases in the other's practice area, even if no fees are split?

Plain-English summary

The opinion considers a personal injury lawyer (Lawyer A) and a criminal defense lawyer (Lawyer B) who propose to agree that Lawyer A will refer all prospective criminal clients to Lawyer B and Lawyer B will refer all prospective personal injury clients to Lawyer A, with no fees shared and no compensation paid for the referrals.

Rule 7.03(c) bars a lawyer, in order to solicit professional employment, from paying, giving, or offering anything of value to a prospective client or any other person, except actual litigation expenses, financial assistance allowed by Rule 1.08(d), or legitimate referral fees allowed by Rule 1.04(f) or Rule 7.03(b). The Committee reasons that an undertaking by one lawyer to refer cases to another is itself an item of value to that other lawyer. Because Lawyer A and Lawyer B are exchanging these valuable undertakings for the purpose of soliciting professional employment, each lawyer is giving something of value to the other to solicit employment, which violates Rule 7.03(c). The Committee adds that if a lawyer obtains employment as a result of the agreement, that lawyer will also violate Rule 7.03(d) by charging or collecting a fee resulting from the prohibited solicitation, and Rule 7.06(a) by accepting or continuing employment obtained through the solicitation arrangement.

In practice

Under this opinion, and under the Texas rules as they stood at the time, two lawyers may not enter a reciprocal arrangement to refer each other all cases in the other's practice area. The opinion holds that the mutual promise to refer is a thing of value exchanged to solicit professional employment, violating Rule 7.03(c) even where no fees are divided, and that a lawyer who gains employment through the arrangement additionally violates Rule 7.03(d) (charging a fee from prohibited solicitation) and Rule 7.06(a) (accepting employment obtained through the solicitation). The opinion notes the result rests on the exchange of valuable referral undertakings, not on any fee being paid.

Common questions

Q: Can I set up a "you send me your X cases, I'll send you my Y cases" deal with another lawyer?

A: Per Opinion 629, no. The Committee concludes that each lawyer's promise to refer is something of value given to solicit employment, so the reciprocal arrangement violates Rule 7.03(c).

Q: Does it matter that we are not splitting any fees?

A: No. The opinion holds the violation arises from exchanging valuable referral undertakings to solicit employment, not from sharing fees; the arrangement is prohibited even though no fees change hands.

Q: What other rules are implicated if a referral actually produces a client?

A: The Committee says a lawyer who obtains employment through the agreement also violates Rule 7.03(d) by charging or collecting a fee resulting from the prohibited solicitation and Rule 7.06(a) by accepting or continuing that employment.

Background and rules framework

The opinion interprets Texas Disciplinary Rule 7.03(c) (no giving anything of value to solicit employment, subject to the referral-fee exceptions in Rules 1.04(f) and 7.03(b); compare ABA Model Rule 7.2 on reciprocal referral arrangements and Model Rule 7.3 on solicitation), with Rule 7.03(d) (no fee from prohibited solicitation) and Rule 7.06(a) (no accepting employment obtained through prohibited solicitation).

Citations and references

Rules of Professional Conduct:

• MR 7.2 (reciprocal referral arrangements); MR 7.3 (solicitation of clients)
• Texas Disciplinary Rules 7.03(c), 7.03(d), 7.06(a); referencing Rules 1.04(f) and 1.08(d)

See also

• TX Ethics Op. 643: Lawyer-Owned Debt-Management Company Referrals
• TX Ethics Op. 641: Client Referrals From a Financial-Planning Company
• TX Ethics Op. 688: Fee Division After Withdrawal for a Nonconsentable Conflict

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-629/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_629.pdf

Original opinion text

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

QUESTION PRESENTED

Is it permissible under the Texas Disciplinary Rules of Professional Conduct for a personal injury lawyer to agree to refer all criminal cases to another lawyer in exchange for the other lawyer's agreement to refer all personal injury cases to the personal injury lawyer?

STATEMENT OF FACTS

Lawyer A, whose practice is focused on personal injury cases, frequently receives telephone and other communications from individuals with legal problems involving other areas of law. Lawyer B's practice is focused on criminal defense. Lawyer A and Lawyer B propose to agree that Lawyer A will refer to Lawyer B all prospective criminal defense clients who contact Lawyer A and Lawyer B will refer to Lawyer A all prospective personal injury clients who contact Lawyer B. Under the proposed agreement, no fees on referred cases will be shared and neither lawyer will receive any compensation from the other for the referral of prospective clients under this agreement.

DISCUSSION

Rule 7.03(c) of the Texas Disciplinary Rules of Professional Conduct provides as follows:

"A lawyer, in order to solicit professional employment, shall not pay, give, advance, or offer to pay, give, or advance anything of value, other than actual litigation expenses and other financial assistance as permitted by Rule 1.08(d), to a prospective client or any other person; provided however, this provision does not prohibit the payment of legitimate referral fees as permitted by Rule 1.04(f) or by paragraph (b) of this Rule."

Thus Rule 7.03(c) prohibits a lawyer from paying or otherwise transferring anything of value to any other person, including a lawyer, for the purpose of soliciting professional employment, subject to exceptions that are not involved here. In the circumstances considered, Lawyer A is undertaking to refer all criminal cases to Lawyer B in exchange for an undertaking from Lawyer B to refer all personal injury cases to Lawyer A. An undertaking by one lawyer to refer cases to another lawyer is an item of value to the other lawyer. Here, Lawyer A and Lawyer B are exchanging these valuable undertakings for the purpose in each case of soliciting professional employment. Hence this arrangement, in which each lawyer gives something of value to the other lawyer in order to solicit professional employment, constitutes a violation by each lawyer of Rule 7.03(c). Moreover, if one of the lawyers obtains professional employment as a result of the agreement with the other lawyer, the lawyer obtaining employment will violate Rule 7.03(d) by charging or collecting a professional fee resulting from the prohibited solicitation and will violate Rule 7.06(a) by accepting or continuing professional employment obtained as a result of the solicitation arrangement.

CONCLUSION

It is not permissible under the Texas Disciplinary Rules of Professional Conduct for a personal injury lawyer to agree to refer all criminal cases to another lawyer in exchange for the other lawyer's agreement to refer all personal injury cases to the personal injury lawyer.

Tex. Comm. On Professional Ethics, Op. 629 (2013)