While not every state allows for its attorneys to make and receive referrals where the referring attorney receives a portion of the fee earned (that last part is the critical part), Massachusetts does. (See, this is what I have been telling you all along: Massachusetts loves you, and wants you to be happy. They’re making you pay for health insurance because they want the best for you. (Whoops! I mean “the United States is making you pay for health insurance . . .”) And, you can’t afford a house or much food because Massachusetts is just toughening you up. The commuter train is a test of your patience and forbearance. It’s all for the best. Trust us.)
The Massachusetts Rules of Professional Conduct, at Rule 1.5(e), authorize referral fees passing between attorneys. Comments 4 and 4A to the Rule 1.5 (labeled “Division of Fee”) further flesh out the requirements for payments of referral fees.
But, What are the rules governing referral fees? Well, I’m glad you asked, because I was just about to tell you:
-Fees may be divided following disclosure made to the client and following the receipt of the client’s written consent to the fee split. (It is my belief that the referring attorney has the obligation to disclose; and, this is likely a better marketing posture anyway.)
-The client need not be informed of the specific fee split percentage unless the client asks; if the client asks, you must inform the client.
-The total fee must be reasonable to be enforced.
-There is no requirement that the fee be divided in proportion to the amount of work done by individual attorneys.
-There is no requirement in the Rules that an attorney need have anything like minimum contacts with a potential client prior to referring a client out to another attorney.
The check on the system is that there are client disclosure mechanisms in place and that the fee must be reasonable, in total, to be enforceable. Beyond the Rule and commentary, there is some further information available from the Board of Bar Overseers, at its articles repository, a great resource, that I often refer to, both here at the blog and for my own research. The substantial piece, “The Ethics of Charging and Collecting Fees”, published in April 2006, contains a small section advising on the “Division of Fees”, including further expostulation upon the aforementioned Rule 1.5, and related rules and caselaw.
As long as you apply ethical rigor to your referral-generation, you will likely find that the practice of making, and taking, referrals will become extremely beneficial to your business. Referrals can be the lifeblood of a business; and, many law firms survive nearly solely on the basis of referrals. Once you build a self-perpetuating referral pipeline, the time you spend marketing yourself can be reduced dramatically, without much, or any, effect on your bottom line, because you have created, instead of revolving tasks for yourself, a repeating machine, that does much of the work for you, once you have set it to motion.
When you think of referrals for your practice, you have several lines upon which to draw your car. First, there are those referrals offered by colleagues. How do you get referrals from your colleagues? You market yourself to your fellow attorneys. You create a niche practice, tagging yourself as the expert. You keep the referring attorney seasonably informed on developments within the referred client’s case. You pay the referral fee in a timely manner, delivering it personally, if you can, with a thank you, note or speech. Most importantly, you do a good job. Remember, the referring attorney has put his trust in you, in placing his reputation on the line, by implicitly vouching for the quality of your work. There is no better guarantee of future referrals than quality work resulting in pleased clients. Speaking of those pleased clients, the second sort of referral you need to look after are client-to-client referrals. Now, this is mostly just the development of word of mouth based upon your good practices, and you are not necessarily applying the ethics rules related above in the implicit generation of present or past clients sending you your future clients. However, the application of the better part of general ethics, good legal practices and good business sense, can combine to create those referrals of future clients from existing clients. Keep in contact with your existing clients, even if nothing in particular is happening on their cases. (We’ve written about the importance of keeping in regular contact with clients previously at the LOMAP blog, here.) Work zealously for each of your clients, and don’t take shortcuts. Develop an elevator speech designed for the sorts of clients you want, as you develop and use an elevator speech for attorneys from whom you wish referrals. When you close a case, and you have waited a seasonable period before returning to your client his files, return those files impressively. Use branded folders. Or, use a branded thumbdrive, for the return of electronic documents. Close the deal better, so you can close the deal more easily (with less effort, most effort being generated by those who love you, or who like you enough to tell others so), with potential clients who are referred to you by existing clients. Your mindset should be to make the quality of your work so memorable that those past clients nearly close the deal for you. You won’t win every time; but, you can make your best effort every time.
Don’t, either, forget to push referrals out, too. After all, you don’t want to be the only one doing all the work here. As you’ve developed a pipeline of referring attorneys, likewise develop a pipeline of attorneys to whom you can refer work to. No one’s marketing can be perfectly targeted, if for no other reason than the unpredictably of human nature, as exercised through your human targets, your potential clients. It is a fact of practice that you will encounter potential clients whose cases you can’t, or don’t want to, handle. Instead of being unprepared for the eventuality, and allowing otherwise unfettered clients-to-be to return to the faceless world of lawyer-finding, give them a helping hand: refer them to your colleague who can best help them out. If an engagement is then settled upon, you’re in line for a referral fee, if you can get agreement for one (which you should determine the surety of beforehand). Give and get, something out of the reservation, in the form of a referral fee, and the good will generated, on the parts of the referred client and the referred attorney.
As with many valuable efficiency upgrades, the question respecting the creation of referral rings is one of how much effort you are willing to put in to get things established, and how very tight the systems you put into place can be made to become.
“Refer” to the LOMAP blog for these and other similar questions of practice management. Hahaha. Sorry. In retrospect, what that was was just really sad.
In last week’s last blog post, I covered responses, and future preparation options, for disaster, particularly flooding. That was when the weather sucked. Remember when I told you that New England weather was unpredictable . . . well, you already knew that anyway; but, the fact of the matter was that I was right, and, by extension, so were you. Look at the nice weather we have going on now, though. We’re so smart. So
. . . bright, even. In light of the sun’s return, and in honor of the one sungod, Ra, let us sing!
. . . Songs about the Sunshine:
Hhhmmm. Most of my “sunny” songs are depressing. Don’t know what that says about my disposition. Perhaps irony really is lost on me.
Postscript. When I wrote this, it was sunny. I have no idea what the weather is like now. Your guess is as good as mine. Actually . . . your guess is better than mine. Just look at the window. Was I right?