Referral Fees: Think Thrice

Michael

I continue to encounter confusion about referral fees.  This week, the topic arose during an inquiry I received, and again at a CLE seminar I presented.

My position remains that Vermont’s rules do not authorize straight referral fees.

Here’s my quick analysis:

  1. Rule 7.2(b) prohibits a lawyer from “giving anything of value to a person for recommending the lawyer’s services;”
  2. Rule 7.2(b)(4) authorizes lawyers to make referrals and enter into reciprocal referral arrangements; but,
  3. Comment [8]  states that “[e]xcept as provided in Rule 1.5(e), a lawyer who receives referrals from a lawyer or nonlawyer must not pay anything solely for the referral . . .”
  4. Rule 1.5(e) authorizes lawyers who are not in the same firm to share fees if:
    • the division is in proportion to the services each performs, OR, each lawyer assumes joint responsibility for the representation;
    • the client confirms in writing the client’s agreement to the division of the fee; and,
    • the overall fee is reasonable.

Here’s a primer on referral fees.  And, here’s a post that discusses what it means”to assume joint responsibility for a representation,” and thereby trigger Rule 1.5’s authorization of a division of fees.

dollar sign