The Ban on Paying

Paying for Referrals

The Ban on Paying

Model Rule 7.2(b) opens with a flat prohibition: a lawyer shall not compensate, give, or promise anything of value to a person for recommending the lawyer's services, except for the specific payments the rule goes on to permit.¹ Three phrases in that sentence do the work. Compensate, give, or promise covers value delivered before, after, or only in prospect. Anything of value reaches well beyond cash. And for recommending aims the ban at a purchased endorsement by another person. The permitted payments get their own sections below. This section fixes the baseline they depart from. That baseline is the Model Rule, and because each state adopts its own version, the exceptions a jurisdiction recognizes can differ.

Advertising stands on different footing from endorsement. Since Bates v. Arizona State Bar, 433 U.S. 350 (1977), attorney advertising has counted as commercial speech protected by the First Amendment, and the Court has only extended that protection since.² One useful way to see the field is as a tug-of-war between that protection and regulators' wish to keep law a profession rather than a mere business. Rule 7.2(a) is consistent with the Court's direction: a lawyer may communicate information about the lawyer's services through any media.³

The two subsections therefore govern different transactions. A lawyer who buys newspaper space or broadcast time buys distribution of the lawyer's own message, and listeners discount that message because they know the lawyer stands behind it. A lawyer who pays a stranger to tell people to hire the lawyer buys the stranger's voice. Listeners credit a recommendation because they assume the speaker has nothing to gain, and payment destroys that assumption while hiding that it is gone. The ban accordingly spares the purchase of publicity. Florida's version, for example, expressly lets a lawyer pay the reasonable cost of advertising.⁴

Two concerns explain why the rules draw the line at payment. The first is independence. A lawyer who pays others to channel clients grows economically dependent on those channels, because a paid recommender has a stake in where the client ends up. A lawyer whose caseload rests on that recommender has a reason to keep the source satisfied, and keeping the source satisfied can pull against what the client needs, as when the best advice is to settle early or to question the bills of the very business that sent the case. The later sections on fee sharing raise the same worry about third-party influence over a representation.

The second concern is evasion. The Supreme Court has called face-to-face solicitation "a practice rife with possibilities for overreaching, invasion of privacy, the exercise of undue influence, and outright fraud," and it has justified strong controls on that practice by pointing to the "coercive force of the personal presence of a trained advocate" and the "pressure on the potential client for an immediate yes-or-no answer to the offer of representation."⁵ If lawyers could pay third parties to funnel cases, those intermediaries would be tempted to use exactly those methods on the lawyer's behalf, out of the lawyer's sight and beyond easy detection. The payment is the lawyer's only lever over that conduct and also the source of the temptation, so the rule removes the payment.

The bartender scenario involves cash, but anything of value reaches gifts and favors too.⁶ Suppose the lawyer gives a chiropractor two basketball tickets for each patient the chiropractor refers. The tickets cost the lawyer something and benefit the chiropractor, which makes them payment for recommendations in all but form. Because the rule bars compensating, giving, and promising alike, it makes no difference whether the benefit arrives before or after the referral, or whether it takes the form of money, entertainment, or a return favor. A cash-only ban would collapse at once. The lawyer would swap the cash for dinners and tickets and buy the same stake in the recommender's conduct, defeating both concerns behind the ban. The rule does contain a narrow exception for nominal gifts, which a later section covers.

Because the Model Rule is only a baseline, a lawyer must check the rule in force where the lawyer practices. Florida's version, as reproduced in In re Amendments to the Rules Regulating the Florida Bar, 24 So. 3d 63 (Fla. 2009), forbids a lawyer to give anything of value to a person for recommending the lawyer's services, and it lists three exceptions: the reasonable cost of advertising or of written or recorded communications the rules permit; the usual charges of a lawyer referral service or other legal service organization; and the purchase of a law practice under its rule 4-1.17.⁷ Florida's text uses the verb give alone, where the Model Rule says compensate, give, or promise, and the Model Rule's list of exceptions is longer. The sections ahead take those exceptions one at a time.