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Ezel / Ethics Opinions / NYSBA
NYSBA May 25, 2001

Can a lawyer join a business networking group whose members are required to refer clients to one another?

Short answer: The opinion concluded that a lawyer may not participate in a business networking organization that requires members to refer clients to, and accept referrals from, other members in exchange for those members' referrals, because the mandatory cross-referrals create a personal-interest conflict and the dues paid for referrals violate the bar on giving anything of value to obtain employment.

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This page answers the general question as of 2001. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.

Currency note: this opinion is from 2001
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The inquirer wanted to join a local chapter of a business networking organization that admits one member per profession, charges a registration fee and annual dues, and requires members to bring referrals and follow up on the referrals they receive. The committee identified several problems with a lawyer's participation.

First, the obligation to steer clients to the organization's real estate broker or insurance agent member creates a conflict under DR 5-101(A): the lawyer's membership interest may affect the independent professional judgment the client is entitled to, so the lawyer could properly make such a referral only after disclosing the membership and the referral obligation and obtaining the client's consent. Second, the lawyer could not agree in advance to accept every legal matter referred by other members, because DR 6-101(A) bars handling matters beyond the lawyer's competence and some referrals would present competence, time, or conflict problems.

The committee's central holding rested on DR 2-103(B), which bars a lawyer from giving anything of value to obtain employment. Because the lawyer pays substantial dues for a membership that entitles the lawyer to referrals and requires the lawyer to refer in return, the dues are a payment "of value" to obtain referrals from a non-qualified organization, which the rule prohibits. The committee added that DR 2-103(A) bars in-person solicitation and DR 1-102(A)(2) bars circumventing a rule through another's acts, so encouraging other members to recommend the lawyer's services orally could compound the violation.

Currency note

This opinion was issued in 2001, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. 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: Can a lawyer join a networking group that requires reciprocal referrals?

A: The opinion concluded no. Paying dues for a membership that entitles the lawyer to referrals and requires referrals in return is giving something of value to obtain employment, which DR 2-103(B) prohibits.

Q: What is the conflict problem with mandatory referrals?

A: Under DR 5-101(A), the duty to refer clients to a specific broker or agent member can affect the lawyer's independent judgment, so the lawyer could refer only after disclosing the membership and obligation and obtaining the client's consent.

Q: Could the lawyer just let other members hand out business cards?

A: The opinion noted that asking another person to hand out a business card without saying more is permissible, but encouraging other members to recommend the lawyer's services orally could violate the in-person solicitation bar in DR 2-103(A).

Background and rules framework

The opinion interpreted New York's former Code of Professional Responsibility: DR 5-101(A) (personal-interest conflicts), DR 6-101(A) (competence), DR 2-103(B) (giving value to obtain employment), DR 2-103(A) (in-person solicitation), and DR 1-102(A)(2) (circumventing a rule through another). The Model Rule analogues are Rule 7.2(b) (not giving value for a recommendation), Rule 1.7 (conflicts of interest), and Rule 7.3 (solicitation). New York replaced the Code with the Rules of Professional Conduct in 2009; the DR numbers cited here are historical.

Citations and references

Rules of Professional Conduct:

  • MR 7.2(b) (no payment for a recommendation); MR 1.7 (conflicts); MR 7.3 (solicitation)
  • NY DR 1-102(A)(2); DR 2-103(A), (B); DR 5-101(A); DR 6-101(A)

Other opinions cited:

  • N.Y. State 566 (1984): a lawyer may not pay a real estate brokerage to recommend the lawyer
  • N.Y. State 691 (1997): a charitable donation to a referral organization is permitted only if genuinely charitable
  • N.Y. State 659 (1994): a lawyer may let a third party distribute the lawyer's ad without paying a fee

See also

Source

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