Opinion #167. Referring Attorneys

Issued by the Professional Ethics Commission

Date Issued: January 6, 1999

Facts

A lawyer who has practiced law for many years no longer does a substantial amount of legal work herself, but instead advertises and holds herself out as a "referring attorney." Clients will come to her with their cases, and she will find an attorney to take that case. That is all she will do on the case. Her remuneration for this effort will be a fee sharing arrangement with the referral attorney under Maine Bar Rule 3.3(d). The lawyer's activities are neither sponsored nor approved by any bar association in the State of Maine.

Against the background of these facts, Bar Counsel poses the following questions:

  1. Is this lawyer simply engaging in fee sharing permitted by Maine Bar Rule 3.3(d), or is she operating a lawyer referral service in violation of Maine Bar Rule 3.9(f)(2)?

  2. If the lawyer is operating a lawyer referral service prohibited by Maine Bar Rule 3.9(f)(2), is the lawyer engaging in misconduct or are the lawyers she refers cases to engaging in misconduct?

  3. Is there an internal inconsistency between the terms of Maine Bar Rule 3.3(d) and Maine Bar Rule 3.9(f)(2)?

Opinion

This Commission previously addressed very similar questions in Opinion No. 87 issued on August 31, 1988. Maine Manual on Professional Responsibility 0-305 (1997). In that case, we interpreted Bar Rule 3.9(f)(2) as prohibiting a lawyer from paying a referral fee to a lawyer referral service privately operated by an individual lawyer or group of lawyers or law firms. The Commission based its Opinion No. 87 on the observation that such a privately-operated lawyer referral service consisting of a limited number of select members would not qualify as a referral service "operated, sponsored, or approved by a bar association." Bar Rule 3.9(f)(2).

Opinion No. 87 did not firmly and finally close the door on this matter. Rather, it concluded diffidently that "[i]n view of the fact that there may be alternate ways to structure such a private arrangement, we expressly limit this opinion to the proposal as presented."

The facts presented here do not appear to materially differ from those presented in Opinion No. 87. At base, the same proposition is being advanced: That a lawyer be allowed to pay a fee to a referral service operated by an individual lawyer or lawyers and not operated, sponsored or approved by the bar association. Unless we are to rethink Opinion No. 87, therefore, our conclusion would remain the same: The proposed activities would consist of the operation of a lawyer referral service that is not operated, sponsored or approved by a bar association; therefore any lawyer who paid a fee in return for the referral would be violating Bar Rule 3.9(f)(2); and the lawyer operating the referral service would in turn be violating Bar Rule 3.9(f)(3) for assisting in the referring attorney's violation of Bar Rule 3.9(f)(2).

We hesitate to so conclude our analysis without further discussion, however, because Opinion No. 87, unlike the questions posed to us by Bar Counsel, did not consider the relationship between Bar Rule 3.9(f)(2) and Bar Rule 3.3(d). Bar Rule 3.3(d) prohibits unassociated lawyers from dividing a fee for legal services with one another unless:

  1. The client, after full disclosure, consents to the employment of the other lawyer and to the terms for the division of the fees; and

  2. The total fee of the lawyers does not exceed reasonable compensation for all legal services they rendered to the client.

Nothing in the language of Rule 3.3(d) requires that each lawyer actually provide substantive legal services to the client. Under either the Model Code or the Model Rules, such a requirement existed because both the Model Code and the Model Rules required that the fee division be made in proportion to the services performed or the responsibility assumed. As we have noted on a prior occasion, however, the Supreme Judicial Court apparently rejected the full breadth of the fee-sharing limitations adopted elsewhere. See Professional Ethics Opinion No. 103 (Feb. 7, 1990); Maine Manual on Professional Responsibility 0-357 (1997). The Court has modified Maine's Rule to allow, for example, the payment of a percentage fee to a referring attorney who is to have no responsibility with respect to the matter and who will have no involvement in the case other than being kept apprised of the matter by the attorney to whom the case is referred. Id.

We thus have a situation in which one Bar Rule (3.9(f)(2)) prohibits an attorney from paying a fee to a referral service not operated, sponsored or approved by a bar association, while another Bar Rule (3.3(d)) allows an attorney to pay a fee to another lawyer for what is, in essence, the service of referring a client.

Despite this apparent conflict that prompts Bar Counsel's inquiry, we conclude that the two rules are reconcilable, In reaching this conclusion, we draw a distinction between what we think are two different situations: 1) a situation in which a lawyer who holds himself out as practicing law divides a fee for legal services with another lawyer; and 2) a situation in which a lawyer principally or exclusively holds himself out as operating a referral service. In making this distinction, we are assisted by the fact that we have previously recognized that a lawyer who refers a client to another lawyer, and splits a fee with that lawyer, remains the client's lawyer with respect to the matter at hand. See Opinion No. 145 (Sept. 27, 1994), Maine Manual on Professional Responsibility 0-499 (1997) ("the conclusion is inescapable that [Bar Rule 3.3(d)] contemplates both lawyers being employed in some sense by the client ... and ... a compensated referral to a particular lawyer is in and of itself representation of [the client] in the matter. . . ") Moreover, in the normal fee-splitting situation, the desire for a referral is not necessarily the sole reason for the client to contact the referring attorney in the first instance and, even when a referral is made, the referring attorney may continue to provide substantive legal services. The referral service, on the other hand, exists for the principal purpose of making referrals, is presumably contacted by clients for that reason, and as a general matter anticipates having no substantive involvement in any of the matters that it refers.

We recognize that these distinctions are not sharply drawn, may represent variations in degree more than kind, and might be difficult to apply to a situation in which, for example, a gradually increasing percentage of a lawyer's practice consists of referrals. On the facts posed here, however, the attorney expressly holds herself out as a “referring attorney" and invites the public to seek her out for the purpose of obtaining a referral. To read Rule 3.3(d)(3) so broadly as to allow such activity under the rubric of fee division would substantially eliminate the protections of Rule 3.9(f)(2) by allowing any individual lawyer, without bar association sponsorship or approval, to operate a referral business.

Conversely, neither the result we reach here, nor the result adopted in Opinion No. 87, undercuts the plain language or spirit of Rule 3.3(d). Rule 3.3(d) does not grant permission to split fees in any and all circumstances no matter what the provisions of the other Rules. Rather, it simply creates an exception to the prohibition on fee division under certain circumstances. The fact that a subset of those circumstances (e.g., fee-splitting that occurs as a result of the operation of a referral service) might entail activity that is elsewhere prohibited by the Rules creates no inconsistency within the Rules. In short, that a lawyer is not prohibited by one rule from certain conduct does not mean that the conduct is permissible even in circumstances where it is otherwise prohibited by another rule.

In conclusion, we answer Bar Counsel's questions thus:

  1. Whether or not the attorney is engaged in fee division that would otherwise be permissible, she is also engaged in operating a referral service that is not operated, sponsored or approved by a bar association.

  2. Lawyers who compensate her for referrals do so in violation of Bar Rule 3.9(f)(2), and she violates Bar Rule 3.9(f)(3) by assisting in (indeed making possible) these violations.

  3. There is no inconsistency between the terms of Maine Bar Rules 3.3(d) and 3.9(f)(2). The rules allow lawyers to refer matters for a fee incident to the practice of law while simultaneously insisting that persons who hold themselves out as a referral service do so subject to bar association sponsorship or approval.

Opinion No. 87 remains valid, and is fully applicable to the facts presented here.


Enduring Ethics Opinion