Lawyer Referral Services: How They Work and Whether Your Firm Should Join One

A lawyer referral service connects people who need a lawyer with lawyers who have agreed to take referrals in a given practice area. For the public it is a phone number or website that answers the question "who should I call?" For a law firm it is one more source of new matters, with its own rules, costs and quirks. This guide looks at referral services from the firm's side: how they work, what the ethics rules allow, and whether joining one is worth it.

How a lawyer referral service works

Most referral services follow the same basic pattern. A person calls or fills out a form, a staff member screens the matter to find out what kind of legal problem it is, and the service refers them to a lawyer on the matching panel. Many services rotate referrals among panel members, while some match on location, language or experience. Many also offer the caller an initial consultation at a reduced fee.

Referral services are often run by state or local bar associations, usually as a public service program. Others are run by nonprofit organizations, and some are private. Which kind you are dealing with matters, because the ethics rules treat them differently.

What the ethics rules allow

The general rule is that a lawyer cannot give anything of value to someone for recommending the lawyer's services. ABA Model Rule 7.2(b)(2) carves out an exception: a lawyer may pay the usual charges of a legal service plan or a not-for-profit or qualified lawyer referral service. The comments to the rule explain that a qualified referral service is one approved by an appropriate regulatory authority.

States adopt their own versions of this rule, and some go further. California, for example, requires lawyer referral services to be certified through its State Bar. Before you join any referral program, confirm that it is a not-for-profit or approved service under your state's rules, and read your bar's ethics opinions if the arrangement looks unusual. Our article on attorney referral fees covers the separate rules for splitting fees with another lawyer.

Typical panel requirements

Bar-run services in particular set conditions for joining a panel. Common ones include:

• Good standing. An active license with no current discipline.
• Malpractice insurance. Proof of professional liability coverage is a standard condition.
• Experience. Some panels require a minimum level of experience or a number of matters handled in the subject area, especially for complex practice areas.
• Service commitments. Agreeing to the service's consultation terms, response times and client complaint process.

How the fees work

Referral services usually charge panel members a membership or registration fee, sometimes per panel. Many also charge a percentage fee on legal fees earned from referred matters, often only above a set threshold. The exact structure varies widely by service and by state, so read the agreement closely, including how and when you have to report fees on referred cases. Treat that reporting obligation seriously. Falling behind on it is one of the more common ways firms end up in a dispute with a referral program.

Referral services versus lead generation

A referral service recommends a particular lawyer to the caller. That recommendation is exactly why the rules limit who may be paid for it. Lead generation works differently. The comments to Rule 7.2 say a lawyer may pay others for generating client leads, as long as the lead generator does not recommend the lawyer, any payment is consistent with the rules on fee sharing and professional independence, and the lead generator's communications are not false or misleading.

In practice the two serve different purposes. A bar referral panel tends to deliver a modest, steady stream of mixed matters with screening already done. A lead generation program is built around the case types and states you choose and the volume your intake team can handle. Directories are a third channel again. Our guide to legal directories covers how they compare.

Getting value from a referral panel

1. Answer fast. A referred caller has often been given more than one name. The firm that calls back first usually gets the consultation. Our article on speed to lead explains why minutes matter.
2. Honor the consultation terms. If the service promises a reduced-fee first meeting, deliver it exactly as described.
3. Pick panels you actually want. Joining every panel brings calls your firm will only decline.
4. Track the source. Tag every referred matter in your intake form so you can compare signed cases and fees against what the panel costs.
5. Report on time. Keep a simple process for reporting fees on referred matters so the relationship stays in good standing.

Is it worth joining?

For a newer firm or a solo practice, a bar referral panel can be an inexpensive way to get consultations and build experience in a practice area. For an established firm, it is usually a supplement rather than a main source of cases, because volume is limited and matters arrive mixed. Judge it the way you would any marketing channel: by the signed cases and fees it produces against what it costs in fees and staff time.

The short version

A lawyer referral service screens callers and refers them to panel lawyers. The ethics rules let you pay the usual charges of a not-for-profit or qualified referral service, but not to pay others for recommending you. Check your state's rules, read the panel agreement, answer referrals quickly and track what each panel actually produces.