May a law firm join a for-profit business networking association whose members exchange sales leads and referrals?

Plain-English summary

The inquirer considered having his law firm join a business association described as a professional organization structured to help members develop sales and marketing leads and contacts. The association, nationwide and divided into state councils, admitted no more than one business or profession per council; members profiled their skills at regular meetings, exchanged information designed to generate business, asked for leads, and used "lead information" forms to refer potential clients or customers to other council members. The annual membership charge was $650.

The Committee concluded that, by joining, the law firm would not be giving compensation to the organization to recommend or secure clients. It reasoned that the organization's purpose was to create a pool of individuals in industry, commerce, and the professions who would meet and make their abilities and needs known to one another, which it found not unlike what occurs in service clubs such as Rotary, Kiwanis, and similar organizations. On that basis the Committee concluded that joining such a group would not violate the Disciplinary Rules (now the Rules of Professional Conduct).

Currency note

This opinion was issued in 1984, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and it was decided under the then-current Disciplinary Rules, now replaced by the RPCs. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could a law firm join a for-profit business networking association?

A: Yes. The opinion concluded that joining such a lead-exchange association did not violate the rules.

Q: Was the membership fee a prohibited payment for client recommendations?

A: No. The opinion concluded that joining did not amount to giving compensation to the organization to recommend or secure clients, because the group's purpose was to let members make their abilities and needs known to one another.

Q: How did the Committee characterize the association?

A: Per the opinion, it was not unlike service clubs such as Rotary, Kiwanis, and similar organizations.

Background and rules framework

The opinion applies the rule against giving value to a person or organization for recommending the lawyer's services, then expressed in the Disciplinary Rules and now in RPC 7.2 (advertising; payment for recommendations). The Committee distinguished a prohibited paid referral arrangement from membership in a general business or civic association whose purpose is mutual acquaintance among members.

Citations and references

Rules of Professional Conduct:

• MR 7.2 / NJ RPC 7.2 (advertising; restriction on giving value for recommending the lawyer's services)

See also

• NJ ACPE Op. 674: Membership in an Organization Designed to Foster the Exchange of Referrals
• NJ ACPE Op. 645: Joint Advertising and Client Referral Programs
• NJ ACPE Op. 624: Lawyer Operating a For-Profit Adoption Referral Service
• NJ ACPE Op. 741: Paying for Client Referrals Disguised as Leads

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp539-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls.

114 N.J.L.J. 369, October 11, 1984

OPINION 539

Law Firm Membership In An Association Of Businesses

The inquirer is considering having his law firm become a member of a business association which describes itself as a professional organization specifically structured to aid its members in the development of sales and marketing leads and contacts for business expansion. The association is, or will become, nationwide in scope, and the states in which it operates are divided into councils. The members of each council, through an exchange of information, familiarize themselves with the services and skills of other members of the council. This exchange of information at meetings is designed to generate business. The annual membership charge is $650. The councils meet regularly. A potential list of prospective products and service industry members represented runs the gamut from accounting to word processing services and includes "law firms".

The council is so structured that no more than one business or profession will be admitted to membership. The members meet in small discussion groups and are asked to profile their skills and services. Members are permitted to ask for leads for future business. "Lead information" forms are used to refer potential clients or customers to other council members.

We do not believe that, by joining the organization, the law firm is giving compensation to the organization to recommend or secure clients. The organization's purpose is to create a pool of individuals in industry, commerce and the professions in which business and professional men will meet and make known to each other their abilities and needs. This is not unlike what occurs in service clubs such as Rotary, Kiwanis, and similar organizations.

We do not believe that the joining of such a group would violate the Disciplinary Rules.***

***Rules of Professional Conduct