Can a lawyer who gets clients through a bar association's lawyer referral service pay the service a percentage of the fees earned from those clients?

Plain-English summary

Opinion E-88-8 asked whether the Rules of Professional Conduct permit lawyers registered with a bar association's lawyer referral service to contribute toward the expense of operating the service by remitting an agreed-upon percentage of attorney's fees collected. The committee answered yes, citing SCR 20:7.2(b), ABA Formal Ethics Opinion 291 (1956), and the California decision in Emmons, Williams, Mires & Leech v. State Bar of California.

The committee qualified its answer. Because such a fee-sharing arrangement is permissible only when the referral service is operated by a bar association on a nonprofit basis, it concluded that the fees remitted to the service should be reasonably related to the cost of operating it, citing SCR 20:7.2(b) and SCR 20:5.4(a). It further concluded that the fees charged to referral clients should not be inflated to account for the amount shared with the referral service unless the clients are fully informed of the arrangement before the representation begins and the clients consent, citing SCR 20:1.4(b), 20:1.5(c) and (e), 20:2.1, and 20:8.4(c). Finally, the committee directed those involved with referral programs to SCR 11.06 on group and prepaid legal services plans, while stating that whether that rule was relevant to the question was beyond its jurisdiction to decide.

Currency note

This opinion was issued in 1988, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update). The advertising and referral rule SCR 20:7.2 and the fee-sharing rule SCR 20:5.4 were later revised. 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 Treat this page as historical context, not current guidance.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: Can a lawyer pay a bar referral service a cut of fees from referred clients?

A: Per the opinion, yes, under SCR 20:7.2(b), but only where the service is a nonprofit bar association program and the remitted amount is reasonably related to the cost of operating it.

Q: Can the lawyer pass the referral cost on to the client?

A: Not by inflating the fee. The committee concluded fees should not be inflated to cover the shared amount unless the client is fully informed beforehand and consents.

Q: Why was this allowed when fee sharing with nonlawyers is generally barred?

A: The committee tied the result to SCR 20:7.2(b) and the nonprofit, cost-based nature of a bar association referral service, distinguishing it from prohibited fee splitting under SCR 20:5.4(a).

Background and rules framework

The opinion interpreted SCR 20:7.2(b) / Model Rule 7.2 (paying for referrals and recommendations) together with SCR 20:5.4(a) / Model Rule 5.4 (sharing fees with nonlawyers) and SCR 20:1.5 / Model Rule 1.5 (fees and disclosure), as applied to a bar association's lawyer referral service.

Citations and references

Rules of Professional Conduct:

• Wis. SCR 20:7.2(b) / Model Rule 7.2 (referral services)
• Wis. SCR 20:5.4(a) / Model Rule 5.4 (sharing fees with nonlawyers)
• Wis. SCR 20:1.5(c), (e) / Model Rule 1.5 (fees); SCR 20:1.4(b), 20:2.1, 20:8.4(c)

Cases:

• Emmons, Williams, Mires & Leech v. State Bar of California, 6 Cal. App. 3d 565, 86 Cal. Rptr. 367 (1970)

Other opinions cited:

• ABA Formal Op. 291 (1956)

See also

• WI Ethics Op. E-94-2: Disclosing a Referral Fee Markup
• WI Ethics Op. EF-10-02: Referral Fee Responsibilities
• WI Ethics Op. E-00-04: Fees for Referring Providers

Source

• Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
• Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-88-8.pdf