NYSBA Issues Ethics Opinion Clarifying the Rules Involving Referrals

In a recent development, the New York State Bar Association (NYSBA) has issued Ethics Opinion 1279, addressing the issue of referral fees between attorneys and nonlawyers. This opinion, dated February 18, 2025, provides crucial guidance on the ethical boundaries concerning such arrangements.

Background

The inquiry leading to this opinion involved an attorney representing medical providers in arbitration against insurance carriers over claim denials. The attorney considered compensating friends and family members for referring medical providers as clients. The proposed compensation was a flat fee for each referral, intended to cover “administrative, non-attorney related work,” such as completing and filing arbitration request forms.

Key Findings

The NYSBA concluded that this arrangement violates Rule 7.2(a) of the New York Rules of Professional Conduct. This rule prohibits lawyers from offering anything of value to a person or organization as compensation for recommending or obtaining employment by a client. The opinion emphasizes that even if the payment is framed as compensation for administrative tasks, if it’s contingent upon the referral of a client, it constitutes a violation.

The opinion further clarifies that while nonlawyers may perform certain administrative tasks, compensating them on a per-referral basis effectively serves as a referral fee, which is impermissible. The only exceptions to this rule are outlined in Rules 1.5(g) (which involves the sharing of legal fees between attorneys not associated in a law firm) and 5.8 (which involves contractual agreements between lawyers and nonlegal professionals) Both exceptions pertain to specific circumstances not applicable in this scenario.

Implications for Legal Practice

This opinion serves as a critical reminder for attorneys to exercise caution when structuring relationships that might involve client referrals. Even well-intentioned arrangements can inadvertently cross ethical boundaries if not carefully designed.

For those navigating the complexities of professional conduct, it’s advisable to consult with legal ethics counsel or refer directly to the NYSBA’s published opinions to ensure compliance with all applicable rules and regulations.

For more detailed information, you can access the full text of Ethics Opinion 1279 on the NYSBA website.

The attorneys at Tesser, Ryan & Rochman, LLP are experienced in representing attorneys in licensing and disciplinary matters and can help ensure that you meet your professional obligations with confidence. Call now at (212) 754-9000.

This blog post is for informational purposes only and does not constitute legal advice. For specific guidance, please consult a qualified attorney.