BC Lawyers and Referral Fees

Marni MacLeod

**Updated October 19, 2017, from a post originally written on the subject by Jeremy Hessing-Lewis in March 2012**

Just about any lawyer will tell you that their best clients come through referrals. Referral relationships tend to be among a successful lawyer’s most valuable assets. However, members of the Law Society of British Columbia need to ensure that all referrals comply with fees and disbursements requirements and specifically Rule 3.6-7 of the BC Professional Conduct Code.

As a quick summary, the BC referral rules are as follows:

Division of fees and referral fees

3.6-7. A lawyer must not:

(a) directly or indirectly share, split or divide his or her fees with any person other than a lawyer; or

(b) give any financial or other reward for the referral of clients or client matters to any person other than a lawyer.

[12/2015]

Commentary

[1]  This rule prohibits a lawyer from entering into arrangements to compensate or reward non-lawyers for the referral of clients. It does not prevent a lawyer from engaging in promotional activities involving reasonable expenditures on promotional items or activities that might result in the referral of clients generally by a non-lawyer.

There are exceptions for entities that qualify as multi-disciplinary practices (MDPs). You will find them in Rule 3.6-8 with associated commentary, and in Rule 1 Definitions and Rules 2-38 to 2-49 of the Law Society Rules.

Directories and Commercial Referral Services

Participating in commercial referral services, like legal directories that require monthly or annual subscriptions, is permitted, subject to some fairly strict limitations. The Annotations to Rule 3 provide further guidance. With regard to the use of commercial directories and subscriptions the constraints include:

Annotations to rule 3.6-7  Division of fees and referral fees

A lawyer who uses the services of a commercial lawyer referral service does not violate Chapter 9, Rule 2 of the Professional Conduct Handbook* provided the following criteria are met:

  • the service does not charge a fee to the client;
  • the fee the lawyer pays is not for the referral for a particular client, but is a fee for the lawyer’s name to be placed or maintained on a roster of available lawyers;
  • the service maintains a roster of lawyers to whom clients are referred after the service determines the area of law in which the lawyer’s services are required;
  • the fee charged to a lawyer is a flat fee and does not reflect the number of referrals made; and
  • when the client contacts the referral service, the service provides the client with information about several different lawyers who practice in a given area and leaves it up to the client to determine which lawyer, if any, to contact. [PCH]

EC March 2000, item 7

*N.B. The annotation above continues to appear in the current version of the BC Professional Code. However, there is no concordance, so we assume that it continues to refer to the current rules regarding referral fees which appear to be contained in Chapter 3, Rule 3.6-7. This makes sense if we consider the purpose of the rule which is to prevent a “paying for clients” regime.

Legal directories are typically structured according to practice areas. Accordingly, lawyers will also need to comply with the “preferred area of practice” requirements. Essentially, you can state a preferred practice area only if you regularly practice in that area.

Finally, a lawyer may accept referrals from a divorce center that provides materials on divorce as well as the names of qualified lawyers at no charge. See the Annotation below for further guidance:

Provided a lawyer does not pay for the referrals, a lawyer is not prohibited by Chapter 9, Rule 2 of the Professional Conduct Handbook from acting for a client who comes to him through a divorce centre, which provides materials on the general subject of divorce and provides, without fee, names of lawyers that practice in the area of family law. [PCH]
EC April 2000, item 6

Commentary

When BC clients ask me whether it’s ok to join commercial legal referral services or directories my response is always to recommend that they review the terms of the relationship carefully in light of the general rule that BC lawyers cannot pay referral fees to non-lawyers. Before you sign on, you should be satisfied that the service falls within the parameters of the annotation to Rule 3.6-7 or take steps to consult a Law Society practice advisor (they are there to provide this type of information).

Why Bother with Referral Services and Directory Listings?

Commercial referral networks, including online legal directories, have been generating referrals (in the online sense) for years. One of the key metrics we look at when we review a law firm’s analytics are inbound referrals. Quality (rule compliant) directories and referral services can drive traffic to your website in two ways: 1) by providing direct contact details for your website (and your lawyers) and 2) improving search engine rankings by establishing high-value inbound links to your website. No one knows the details of Google’s search algorithm (outside Google), but we are confident that  inbound links to your website, from authoritative websites relevant to your practice, factor into Google’s page rank formula. This is consistent with Google’s “prime directive” which is to provide the most useful, relevant information to the end user. Links from reputable websites that enjoy a high page rank themselves, and provide useful, relevant information on matters related to your practice, are seen as a “vote of confidence” by Google that your site will also provide information a user is seeking.

So, the bottom line is to understand the terms of your listing and make sure you are satisfied they comply with the BC Law Society rules.

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