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Home / Case Digests / Committee on Professional Ethics — Fee-Splitting: Opinion 885

Committee on Professional Ethics — Fee-Splitting: Opinion 885

NYSBA Committee on Professional Ethics


Referral Agreements

Opinion 885

Background: The inquirer handles tax certiorari proceedings for the reduction of property assessments and is paid on a contingency basis. The inquirer was approached by a non-attorney who owns a company that represents residential homeowners in small claims assessment review proceedings. The non-attorney offered to refer commercial clients to the attorney in exchange for a referral fee. The non-lawyer would perform some services for the clients, including a preliminary valuation of the property.

Questions: The inquiring attorney asks if it would be ethically permissible for an attorney who receives referrals of potential clients from a non-lawyer to reduce the attorney’s customary contingency fee, refunding the balance with the understanding that the client would owe an amount to the non-attorney? In the alternative, may an attorney be retained by the non-attorney’s company, billing the company an hourly fee and returning any tax refund directly to the client? Finally, the attorney asked whether he may accept referrals of clients from the non-lawyer if the inquirer knows that the non-lawyer seeks new clients via direct solicitation?

Opinion:  With respect to the first question, an attorney may not reduce fees as part of an arrangement to accept referrals from a non-attorney who provides services to clients seeking tax deductions. This constitutes an impermissible fee-splitting arrangement. With respect to the second question the committee stated that an attorney may not be retained by a non-lawyer company to provide legal services to a client as this is prohibited by the New York Judiciary Law. Finally, the direct solicitation by the non-lawyer would not be attributable to the attorney unless the attorney uses the non-lawyer to circumvent applicable rules on advertising.