The Ethical Considerations of Legal Referrals
Referral marketing allows law firms to produce a steady stream of new clients at a minimal cost. Scoring occasional referrals from close professional connections or satisfied clients is one thing, but actively seeking them out is different. Attorneys unfamiliar with this approach sometimes worry about the ethical implications, particularly for referral protocol that involves financial transactions.
The good news? There really is no need to worry about the ethics of law firm referrals. As long as you are open and honest about your intentions, you can make the most of referral marketing without crossing any ethical lines.
Keep the following considerations in mind as you develop your law firm’s referral strategy:
Client-Based Referrals
Satisfied clients are your law firm’s most underutilized marketing resource. They have the power to drive qualified leads your way. Many, however, don’t realize the valuable role they can play for your law firm.
It’s perfectly acceptable to let previous clients know that you’re on the hunt for new prospects — and that those pleased by your previous services should let others know. This effort to increase awareness regarding the need for referrals may play out on social media, in email newsletters, and in other follow-up communications.
As you integrate clients and other non-lawyers into your referral strategy, keep this critical rule of thumb in mind: monetary exchanges and other forms of compensation are not acceptable. This is clearly stated in the American Bar Association’s Model Rules of Professional Conduct, which adds, “a lawyer shall not give anything of value to a person for recommending the lawyer’s services.”
Referrals From Attorneys
Attorneys regularly forward client information to each other in the interest of not only helping one another, but of also serving those in need of quality legal representation. A fee-based referral system makes it possible to build a strong stream of revenue that persists even when attorneys are unable to take on all prospects themselves.
The ABA’s Model Rules of Professional Conduct allow for the use of fee-based attorney referrals, but with a few key stipulations worth noting. According to Rule 1.5 (e), divisions of fees should occur in “proportion to the services performed by each lawyer.” However, non-proportional arrangements may be possible if “each lawyer assumes joint responsibility.”
Referring attorneys often differ in how they approach the issue of joint responsibility for the client in non-proportional referral arrangements. At a minimum, aim to reference responsibility in the initial referral agreement. Some lawyers, however, prefer to take additional steps, such as regularly reaching out to ensure that referred clients remain satisfied with the quality of their representation. Online referral management tools also help firms track to whom they’ve sent leads and who has sent referrals to them.
No matter how divisions occur between attorneys, clients should be notified of such arrangements. The total fee should remain reasonable; it’s clearly bad form to gouge clients for the sake of a referral.
Regardless of who makes your law firm’s most valuable referrals and whether these arrangements generate fees, it’s important to recognize their efforts and demonstrate gratitude for their thoughtfulness. Together, transparency and thankfulness can go a long way toward building an effective — and ethical — referral marketing strategy.
