Can a bar association's nonprofit lawyer referral service require participating lawyers to contribute a percentage of fees from referrals to help finance the service?
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This page answers the general question as of 1988. Ezel answers yours: whether it's allowed on your facts, under the current Tennessee Rules of Professional Conduct, with citations.
Plain-English summary
The Lawyer Referral Service of a nonprofit metropolitan bar association asked whether it could require participating lawyers to help finance the service by contributing a percentage of fees generated by referrals. The association's only revenue sources were a small client referral fee and a small annual lawyer registration fee, neither of which could be significantly increased without hurting the program, while additional revenue was needed to computerize referrals by expertise, ensure proper rotation and follow-up, and fund multi-media marketing of the service.
The opinion relied on ABA Formal Ethics Opinion 291, which found no impropriety in a bar association requiring lawyer referral service participants to help finance the service through a flat charge or a percentage of fees collected, and on EC 2-1 of the Code of Professional Responsibility, which described the legal profession's function in educating the public, facilitating the intelligent selection of lawyers, and making legal services fully available. On that basis, the opinion held there was no impropriety in a bar association requiring referral-program participants to contribute up to ten percent of any net fee realized from a referral, so long as the contributions were used exclusively for the program's administrative expenses, since that arrangement did not amount to an improper division of legal fees.
The opinion added a limit on the other side of the arrangement: a lawyer who received a referral from the bar association could not increase the hourly rate or the contingency-fee percentage charged to the client, or otherwise pass the cost of the referral-service contribution on to the client, because doing so would increase the cost of legal services to the public and was contrary to public policy.
Currency note
This opinion was issued in 1988, before Tennessee's adoption of the 2003 Rules of Professional Conduct, which replaced the former Code of Professional Responsibility. 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 bar association referral service charge participating lawyers a percentage of referral fees?
A: Yes. The opinion held that a nonprofit bar association referral service could require participants to contribute up to ten percent of the net fee from a referral, used exclusively for the program's administrative expenses.
Q: Did charging this percentage count as improper fee splitting?
A: No. The opinion concluded the contribution did not constitute an improper division of legal fees, relying on ABA Formal Ethics Opinion 291 and EC 2-1's description of the bar's role in connecting the public with legal services.
Q: Could the lawyer pass the cost of the contribution on to the client?
A: No. The opinion held that a lawyer receiving a bar-association referral could not increase the hourly rate or contingency percentage, or otherwise pass the contribution's cost on to the client, because doing so would increase the cost of legal services and was contrary to public policy.
Background and rules framework
The opinion applied EC 2-1 of the former Code of Professional Responsibility (the legal profession's role in facilitating public access to legal services) and ABA Formal Ethics Opinion 291. The modern analog is Model Rule 7.2 / Tennessee RPC 7.2, which permits a lawyer to pay the usual charges of a qualified lawyer referral service.
Citations and references
Rules of Professional Conduct (former Code):
- EC 2-1 (the profession's role in educating the public and facilitating access to legal services). Modern analog: Model Rule 7.2 / Tennessee RPC 7.2
Other opinions cited:
- ABA Formal Ethics Opinion 291 (no impropriety in a bar association requiring referral-service participants to help finance the service by a flat charge or percentage of fees)
See also
- Ohio BPC Op. 1992-001: Bar Association Referral Service Percentage Fees
- AL Ethics Op. 1995-08: Referral Service Percentage Fee
- NY State Bar Op. 651: Legal Referral Service Fee Division
- Tenn. Ethics Op. 88-F-115(a): Extending the Rule to the Tennessee Trial Lawyers Association
Source
- Landing page: https://www.tbpr.org/ethic_opinions/88-F-115
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
88-F-115 - Bar Association Lawyer Referral Service
BOARD OF PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF TENNESSEE
FORMAL ETHICS OPINION 88-F-115
The Lawyer Referral Service of a nonprofit metropolitan bar association inquires concerning the propriety of requiring participating members of help finance the service by contributing a percentage of fees generated by referrals.
The metropolitan bar association is a nonprofit organization. The only sources of revenue generated from the operation of its lawyer referral service are a small referral fee paid by the
client for the referral and a small annual registration fee by participating lawyers. These fees may not be significantly increased without adversely affecting the program.
Additional revenues are needed in order to improve the efficiency and quality of legal services delivered to the public through the program. Funds are needed to computerize the referrals to attorneys of particular expertise and to assure proper rotation as well as follow-up referrals. Additional revenues are also needed to engage in multi-media marketing of the program.
American Bar Association Formal Ethics Opinion 291 states there is no impropriety in a bar association requiring members of a lawyer referral service to help finance the service either by flat charge or a percentage of fees collected.
Ethical Consideration 2-1 of the Code of Professional Responsibility states:
The need of members of the public for legal services is met only if they recognize their legal problems, appreciate the importance of seeking assistance, and are able to obtain the services of acceptable legal counsel. Hence, important functions of the legal profession are to educate laymen to recognize their problems, to facilitate the process of intelligent selection of lawyers, and to assist in making legal services fully available.
There is no impropriety in a bar association requiring members participating in its lawyer referral program to contribute no more than ten percent of any net fee realized from a referral by the bar association to finance the referral program. Such payments should be used exclusively to assist with the administrative expenses of the referral program and therefore do not constitute improper division of legal fees.
A lawyer who receives a referral from the bar association may not increase the hourly rate or the percentage of a contingency fee, or in any other way pass on the costs of the referral service to the clients. Such a practice would increase the cost of the delivery of legal services and be contrary to public policy.
This 12th day of September, 1988.
ETHICS COMMITTEE:
Cecil D. Branstetter
Jean Nelson
Jerry C. Colley
APPROVED AND ADOPTED BY THE BOARD
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