Opinion 2003-7
(June 2003)

The inquirer asks if a treating physician, who is also an active member of the Bar, may receive a referral fee from another attorney when the treating physician refers the patient’s third party claim to that attorney. This inquirer thus is acting as both “doctor” and “attorney” to the patient/client. In addition the inquirer asks if the treating physician is precluded from testifying, is he still permitted to accept the referral fee. The way that question is phrased suggests the inevitable problem with such a referral fee.

In the abstract, provided there is compliance with Pennsylvania Rule of Professional Conduct (the “Rules”)1.5e, which obviously includes the express knowledge by the client of the inquirer’s dual role, there is nothing unethical about a duly licensed attorney on active status with the Pennsylvania Supreme Court referring a case and accepting a referral fee. Rule 1.5e requires that the total fee charged the client is not clearly excessive or illegal, and that the client is aware of and does not object to the splitting of the legal fee. No work, other than the actual referral is required by the referring attorney.

However, the facts cannot be reviewed in the abstract. Since the ability of the inquirer to receive the referral fee derives from his status as an attorney, the analysis of the impact of the potential receipt of that referral fee must be examined as if the inquirer or another attorney in his law firm were actively representing the client as attorney, not as physician. Consequently, Pennsylvania Rule of Professional Conduct 1.7(b) must be considered.

Rule 1.7b provides that:

(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person, or by the lawyer’s own interests, unless:

(1) the lawyer reasonably believes the representation will not be adversely affected; and (2) the client consents after full disclosure and consultation…

As in any “conflict of interest” analysis, protection of the rights of the client is paramount. Here, the inevitable risk that the interest of the referring attorney in the referral fee might harm the client must always be considered.

For example, would the medical objectivity of the treating physician (number of visits, diagnosis, prognosis) be subject to attack as tainted by an interest in having the patient receive a larger award, in which the doctor/attorney will share?

If the answer is potentially yes, then the referring lawyer’s “own interest” creates an impermissible conflict.

The potential problem is made even clearer by the second part of the inquiry: “Is the inquirer/treating physician precluded from testifying, because of his interest in the referral fee?”

If he were precluded, that in itself would appear to be harm to the client, since the question as phrased indicates that, but for the interest in the referral fee, the doctor would testify.

Pennsylvania Rule of Professional Conduct 3.4 provides in part that:

A lawyer shall not:

(b) …pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon …the outcome of the case; but a lawyer may pay, cause to be paid, guarantee or acquiesce in the payment of…

(2) reasonable compensation to a witness for the witness’s loss of time in attending or testifying,…

Viewed separately, the Committee did not conclude that the situation as presented would result in a violation of Rule 3.4b. As treating physician, provided the inquirer is paid a non-contingent fee for his time in testifying as to the client’s medical treatment, this type of payment is expressly permitted under Rule 3.4(b)(2), and distinguishes the physician function from the attorney function. Likewise as noted above there is no inherent prohibition on the physician/attorney receiving a referral fee.

However, significant conflict of interest issues arise under Rule 1.7b1 and the Committee has concluded that at least based on the facts presented, an effective waiver of the conflict may in fact be impossible.

While on the face of the Rule it would appear to be up to the client to waive the conflict, the Comment to the Rule, which is meant to provide guidance in its interpretations, provides in part that:

A client may consent to representation notwithstanding a conflict. However, as indicated in … paragraph (b)(1) with respect to material limitations on representation of a client, when a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved cannot properly ask for such agreement…[emphasis added.]

Applying the standard in the Comments to the facts of this inquiry, the client would be asked by his or her trial counsel to waive a conflict which might result in the trier of fact significantly if not completely discounting the testimony of the individual responsible for treating (and possibly also describing to the jury) the extent and nature of the client’s injuries for which the client is suing. Put in that light, it appears any attorney would be hard pressed to advise the client to waive the conflict and as such, the reasonableness of the asking the client to waive the inquirer’s conflict is brought into question.

Finally, the Committee hastens to point out that in examining this issue, it has not dealt with any medical ethics issues, laws, rules and/or regulations that might impact the situation.

CAVEAT: The foregoing opinion is advisory only and is based upon the facts set forth above. The opinion is not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. It carries only such weight as an appropriate reviewing authority may choose to give it.

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.