NEW YORK STATE BAR ASSOCIATION
Committee on Professional Ethics
|Opinion #791 – 02/01/2006||Topic: Referrals and solicitation.|
|Amplifies: N.Y. State 741 (2001)||Digest: A lawyer may not participate in an organization that requires the lawyer to refer potential clients or customers to other lawyers or to nonlawyer members in exchange for their referral of legal business, or charges membership fees and other fees and requires nonlawyer members to refer potential clients to the lawyer.|
|Code: DR 2-103(B)|
1. We have been asked to reconsider N.Y. State 741 (2001), in which we concluded: “A lawyer may not participate in a business networking organization that requires the lawyer to refer clients to other members in exchange for their referral of legal business.” This opinion reaffirms and expands on N.Y. State 741.
2. The inquiring attorney belongs to a local chapter of a business networking organization. The organization requires members generally to bring referrals or visitors to the chapter meetings, and permits local chapters to set a minimum number of referrals or visitors. The inquirer states, however, that, unlike the business networking organization discussed in N.Y. State 741, her chapter does not require lawyers to refer clients to other members in exchange for their referral of legal business. In addition, the policies of the organization to which the inquirer belongs provide that professional standards outlined in a formal code of ethics supersede the organization’s policies.
3. In exchange for the privilege of membership in the local chapter, a member pays three fees: (1) an “initial registration fee” that goes to the national umbrella organization; (2) an “annual fee” whose purpose is not specified; and (3) an occasional “monthly fee” that is used to pay for working space and breakfast.
A. The Continued Viability of N.Y. State 741.
4. After reviewing and reconsidering N.Y. State 741 (2001), we continue to believe that its reasoning is sound and its conclusion is correct. A lawyer may not participate in a business networking organization that requires the lawyer to refer clients to other members in exchange for their referral of legal business, and that conclusion is correct whether or not the organization charges the lawyer any membership fees or other fees.
5. While the inquirer’s chapter does not require a lawyer to make referrals to the other members, we believe that an attorney’s participation in that chapter would violate DR 2-103(B) of the New York Code of Professional Responsibility because it requires nonlawyer members to make referrals to the lawyer. Even if professional standards in a formal code of ethics (such as the New York Code of Professional Responsibility) supersede the organization’s policies for lawyers, we have no indication that similar professional standards governing the various nonlawyer members of the local chapter would supersede their mandate to bring referrals to other chapter members.
6. In effect, by paying the initial registration fee and the annual fee, the lawyer is paying for referrals. We briefly addressed that aspect of the organization at issue in N.Y. State 741. We will elaborate on that aspect here.
B. The Relevance of DR 2-103(B).
7. DR 2-103(B) provides as follows:
A lawyer shall not compensate or give anything of value to a person or organization to recommend or obtain employment by a client, or as a reward for having made a recommendation resulting in employment by a client, except that: