Thursday, June 24, 2021

"Price lists for client leads" likely violate bar on referral fees: NJ Supreme Court Committees

A Joint Opinion of two committees of the Supreme Court of New Jersey sharply cautions lawyers regarding paying marketing companies for "referrals" of clients.  The issue before the two committees Advertising and Ethics Advisory involves marketers who "price referrals" based not on advertising costs but on the potential lucrativeness of the case leads provided.

Unlike bar association opinions which provide guidance, the two New Jersey Committees carry the authority of the court - though any bar association or licensed lawyer can petition the Court for review.



JOINT OPINION Committee on Attorney Advertising Opinion 47  Advisory Committee on Professional Ethics Opinion 741:   Lawyers Shall Not Pay For Client Referrals; Purported “Leads” Offered by Marketing Companies May Be Disguised Referrals

 The Committee on Attorney Advertising has been made aware that an out-of-state marketing company is sending emails to New Jersey lawyers offering to connect the lawyers with clients for specific mass tort cases. The emails list prices for claimants “starting at” $700 for persons adversely affected by the drug Zantac; $500 for persons injured by faulty earplugs made by 3M; $1,000 for persons suffering side effects after hernia mesh surgery, and $1,800 for persons whose eyesight was damaged by the drug Elmiron. The emails also state that the company can provide names of claimants who suffered sex abuse by clergy. The company states that it has an 86% “retention rate.” 

As the activity concerns potential violations of the ethics 2 rules governing referrals and fee-sharing, the Committee on Attorney Advertising and the Advisory Committee on Professional Ethics issue this Joint Opinion to remind lawyers that they are prohibited from paying for client referrals, and purported “leads” offered by marketing companies may be disguised referrals. This activity raises concerns about violation of Rule of Professional Conduct 7.3(d), which provides: 

A lawyer shall not compensate or give anything of value to a person or organization to recommend or secure the lawyer’s employment by a client, or as a reward for having made a recommendation resulting in the lawyer’s employment by a client except that the lawyer may pay for public communications permitted by RPC 7.1 and the usual and reasonable fees or dues charged by a lawyer referral service operated, sponsored, or approved by a bar association. 

Accordingly, lawyers may not pay a non-lawyer or marketing company to refer clients to them.

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