Opinion 93-13
(September 1993)

The inquirer represents an attorney who is contemplating starting a for profit attorney referral business to assist members of the public in finding an attorney. A prospective client would not pay a fee to the referral service. The law firm which was retained would pay a referral fee to the referral service for any matters referred by the referral service to it.

If the referral service is operated by the lawyer in his individual capacity, the retained law firm could pay a fee to the referring attorney. Rule 1.5(e) provides:

A lawyer shall not divide a fee for legal services with another lawyer who is not in the same firm unless:

(i) the client is advised of and does not object to the participation of all the lawyers involved, and

(ii) the total fee of the lawyers is not illegal or clearly excessive for all legal services they render the client.

This subparagraph permits lawyers to divide a fee if the total fee is not illegal or excessive and the client is advised and does not object. If these requirements are met, the payment of the referral fee would not violate the Rules of Professional Conduct. Disclosure to the client of the share that each lawyer is to receive is not required.

However, if the business to be started is an entity (other than a professional corporation, see Rule 5.4), the referral fee would not be permitted. Rule 7.2(c) provides:

A lawyer shall not give anything of value to a person for recommending the lawyer's services, except that a lawyer may pay the reasonable cost of advertising or written communication permitted by the rule and may pay the usual charges of a not-for-profit referral service or other legal service organization.

Rule 5.4(a) provides that a lawyer shall not share legal fees with a nonlawyer (with exceptions not here relevant).

Rule 7.1 provides that a lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services. Any advertising done by the lawyer must be truthful and to the extent that the lawyer does not intend to perform services for the client, but intends to refer that client to another lawyer, the advertising should so state.

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.