The Lawyer Referral Service of a nonprofit metropolitan bar association inquires concerning the propriety of requiring participating members of help finance the service by contributing a percentage of fees generated by referrals.
The metropolitan bar association is a nonprofit organization. The only sources of revenue generated from the operation of its lawyer referral service are a small referral fee paid by the
client for the referral and a small annual registration fee by participating lawyers. These fees may not be significantly increased without adversely affecting the program.
Additional revenues are needed in order to improve the efficiency and quality of legal services delivered to the public through the program. Funds are needed to computerize the referrals to attorneys of particular expertise and to assure proper rotation as well as follow-up referrals. Additional revenues are also needed to engage in multi-media marketing of the program.
American Bar Association Formal Ethics Opinion 291 states there is no impropriety in a bar association requiring members of a lawyer referral service to help finance the service either by flat charge or a percentage of fees collected.
Ethical Consideration 2-1 of the Code of Professional Responsibility states:
The need of members of the public for legal services is met only if they recognize their legal problems, appreciate the importance of seeking assistance, and are able to obtain the services of acceptable legal counsel. Hence, important functions of the legal profession are to educate laymen to recognize their problems, to facilitate the process of intelligent selection of lawyers, and to assist in making legal services fully available.
There is no impropriety in a bar association requiring members participating in its lawyer referral program to contribute no more than ten percent of any net fee realized from a referral by the bar association to finance the referral program. Such payments should be used exclusively to assist with the administrative expenses of the referral program and therefore do not constitute improper division of legal fees.
A lawyer who receives a referral from the bar association may not increase the hourly rate or the percentage of a contingency fee, or in any other way pass on the costs of the referral service to the clients. Such a practice would increase the cost of the delivery of legal services and be contrary to public policy.
This 12th day of September, 1988.
Cecil D. Branstetter
Jerry C. Colley
APPROVED AND ADOPTED BY THE BOARD