Informal Opinion Number: 2015-04

Rules: 4-1.7; 4-2.1; 4-1.8; 4-5.7
Client-Lawyer Relationship
Conflict of Interest: Current Clients
Conflict of Interest: Prohibited Transactions
Subject: Conflict of Interest - Personal Interest; Conflict of Interest - Prohibited Transactions (see also Business Transaction with Client); Fees - Division of Fees; Law-Related Services (a.k.a. Ancillary Business)
Summary: referral fee agreement with company providing law-related services; conflict of interest

Question: May Attorney enter into an agreement with a company that provides law-related services whereby Attorney receives a referral fee from the company, measured by a percentage of the fee charged by the company to Client, for each client successfully referred to the entity by Attorney?
Answer: Whether Attorney may ethically accept a referral fee in this context depends on whether, under the circumstances of each potential referral, Attorney complies with Rules 4-1.7, 4-2.1, 4-1.8(a), and 4-5.7.  The referral arrangement constitutes a personal interest conflict of interest under Rule 4-1.7(a)(2).  See Comment [10].  Attorney may engage in the referral during the representation of Client only if the conditions in paragraph (b) of Rule 4-1.7 are met.  In obtaining Client’s informed consent to the representation, Attorney must fully disclose Attorney’s relationship to the company and the potential for Attorney to receive a financial benefit as part of a successful referral.  In Attorney’s role as Advisor per Rule 4-2.1, Attorney must exercise independent professional judgment and render candid advice to Client.  If Attorney’s personal interest in obtaining a percentage of the proposed fee would jeopardize this obligation, Attorney may not engage in the referral in the course of the representation, regardless of Client consent.  Whether the referral fee arrangement would violate any law is a question outside the scope of an informal ethics opinion.  The referral fee arrangement constitutes a business transaction with Client, requiring Attorney to comply strictly with the requirements of rule 4-1.8(a).  See Comment [1].  If the referral fee arrangement constitutes the provision of law-related services to Client by Attorney or the exercise of any degree of control by Attorney over the company providing the law-related services, Rule 4-5.7 is applicable to Attorney.

Informal Opinions are ethics advisory opinions issued by the Office of Legal Ethics Counsel to members of the Bar about Rule 4 (Rules of Professional Conduct), Rule 5 (Complaints and Proceedings Thereon), and Rule 6 (Fees to Practice Law) pursuant to Missouri Supreme Court Rule 5.30(c). Written summaries of select Informal Opinions are published for informational purposes as determined by the Advisory Committee of the Supreme Court of Missouri pursuant to Rule 5.30(c). Informal opinion summaries are advisory in nature and are not binding. These opinions are published as an educational service and do not constitute legal advice.

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