Ezel / Ethics Opinions / WISBAR
WISBAR January 31, 2001

Can a lawyer accept a fee or commission for recommending a nonlawyer service provider to a client?

Short answer: The opinion concluded that the rules did not flatly prohibit a lawyer from receiving consideration for recommending a nonlawyer's services to a client, but that a referral fee which in substance increased the client's costs was an impermissible sharing of legal fees with a nonlawyer. The lawyer also had to give independent advice, disclose the benefit and the comparison to alternatives, and decline any benefit so substantial that it could compromise the lawyer's objectivity.

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This page answers the general question as of 2001. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.

Currency note: this opinion is from 2001
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 Not binding precedent.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 on this page as a PDF) is the authoritative source for any reliance.
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Plain-English summary

Opinion E-00-04 (January 31, 2001) considered whether a lawyer could accept a fee, commission, or other consideration for recommending a nonlawyer's services to a client during a representation. The committee began from two prohibitions: SCR 20:7.2(b) barred giving anything of value for recommending the lawyer's own services, and SCR 20:5.4(a) barred sharing legal fees with a nonlawyer. Neither rule, the committee concluded, per se prohibited a lawyer from receiving something of value for recommending another's nonlawyer services. The key limit was economic: a referral fee that in substance increased the client's costs amounted to the nonlawyer collecting fees for the lawyer's benefit, an impermissible sharing of legal fees under SCR 20:5.4(a).

The committee emphasized that recommending a service provider falls within the lawyer-client relationship, where clients place a high degree of trust and expect objective, conflict-free advice (citing SCR 20:1.1, 1.4, 2.1, and 1.7(a)). Because consideration for a referral created a risk that the lawyer's own interest would compromise that objectivity, the lawyer had to confirm under SCR 20:1.7(b) that the arrangement would not adversely affect the representation; an arrangement could not restrict the advice the client received, and it could preclude continued representation where the lawyer would have to monitor or evaluate the provider's work.

Currency note

This opinion was issued in 2001, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct (the state's Ethics 2000 update). 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: Was a lawyer flatly barred from taking a referral fee from a nonlawyer provider?

A: No. The committee concluded that the rules did not per se prohibit a lawyer from receiving consideration for recommending a nonlawyer's services, though SCR 20:5.4(a) and 20:7.2(b) set limits.

Q: What turned a referral fee into improper fee-sharing?

A: Increasing the client's cost. The committee concluded that a referral fee which in substance raised the client's costs was an impermissible sharing of legal fees with a nonlawyer under SCR 20:5.4(a), because the provider was then collecting fees for the lawyer's benefit.

Q: What did the lawyer have to tell the client?

A: The full nature and extent of the benefit, plus how the referral compared to alternatives. The committee concluded the lawyer had to disclose relative cost, suitability, and the provider's competence and reputation so the client's decision was suitably informed, and could recommend a provider only when reasonably believing it served the client's best interests.

Q: Could a referral benefit ever be too large?

A: Yes. The committee concluded that a benefit could be so substantial that it precluded a reasonable belief the referral was uninfluenced by the lawyer's own interest, and that such a benefit could not be accepted, judged case by case.

Background and rules framework

The opinion interpreted SCR 20:7.2(b) / Model Rule 7.2 (payment for recommending a lawyer's services) and SCR 20:5.4(a) / Model Rule 5.4 (sharing fees with nonlawyers), reading them together to govern referral fees from nonlawyer providers. It applied the conflict and communication rules, SCR 20:1.7 / Model Rule 1.7, SCR 20:1.4 / Model Rule 1.4, SCR 20:2.1 (independent advice), and SCR 20:1.1 (competence), to require disclosure and protect the lawyer's independent judgment.

Citations and references

Rules of Professional Conduct:

  • Wis. SCR 20:7.2(b) / Model Rule 7.2 (payment for recommendations)
  • Wis. SCR 20:5.4(a) / Model Rule 5.4 (sharing fees with nonlawyers)
  • Wis. SCR 20:1.7(a), (b) / Model Rule 1.7 (conflicts; personal interest)
  • Wis. SCR 20:1.4(b) / Model Rule 1.4 (communication); SCR 20:2.1 (independent advice); SCR 20:1.1 (competence)

See also

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