BAR ASSOCIATION OF NASSAU COUNTY
COMMITTEE ON PROFESSIONAL ETHICS
Opinion No. 2008-02
(Inquiry No. 721 )
Conflict of interest – – an orthopedist refers a client to inquiring attorney and inquiring attorney pays the orthopedist for his initial medical report and agrees to pay expenses reasonably incurred by the orthopedist with respect to attending and/or testifying.
A lawyer may enter into a non-exclusive reciprocal referral arrangement with a non-lawyer orthopedist as long as the attorney does not provide a monetary or other tangible benefit in exchange for the referral. The attorney may advance the orthopedist’s fees for a medical report as well as expenses reasonably incurred by the orthopedist with respect to attending or testifying.
An orthopedist’s patient asks the orthopedist whether he knows of any attorneys who represent plaintiffs in personal injury actions. The orthopedist refers the patient to his friend, the inquiring attorney, and gives the patient the attorney’s name and business card. The inquiring attorney pays the orthopedist a fee for the orthopedist’s initial report and agrees to pay expenses reasonably incurred by the orthopedist for attending and/or testifying with respect to the patient’s case. The inquiring attorney indicates that other than the fee for the initial report, “no payment at all” is made to the orthopedist.
The inquiry poses the following questions which the Committee answers in turn.
1. Is the foregoing practice ethical if there is no payment to the orthopedist? Yes.
Several DR’s regulate the extent of non-exclusive reciprocal referral arrangements. DR 2-103(D) provides:
A lawyer shall not compensate or give anything of value to a person or organization to recommend or obtain employment by a client, or as a reward for having made a recommendation resulting in employment by a client…
The inquiring attorney states that “no payment at all” will be made to the orthopedist by the attorney. This fact precludes any violation of the prohibition in DR 2-103(D) that: “A lawyer shall not compensate or give anything of value to a person or organization to recommend or obtain employment by a client, or as a reward for having made a recommendation resulting in employment by a client”.
2. Does DR 2-103(D) bar the referral of the client to the attorney if the attorney pays the orthopedist a reasonable fee for his professional services? No.
As noted above, DR 2-103(D) prohibits an attorney from compensating or giving anything of value to a person or organization to recommend or obtain employment of the attorney by a client, or as a reward for making a recommendation resulting in employment.
At first glance, the exception set forth in DR 2-103(D)(1) appears irrelevant to the inquiry as it pertains to referrals by an attorney to a nonlegal professional or nonlegal professional services firm and does not expressly refer to referrals from the nonlegal professional to the attorney. However, as Professor Simon notes:
The rule [DR 2-103(D)] says only that a lawyer or law firm may refer clients ‘to’ a nonlegal professional. But obviously the rule also applies to referrals from nonlegal professionals. Why else would the rule mention fee sharing with non-lawyers? Sharing legal fees with non-lawyers is relevant only if the law firm is receiving referrals from the non-lawyers, because referrals to the non-lawyers do not generate legal fees.
Simon at p. 239.
“Anything of value” as used in DR 2-103(D) means that an attorney may not make a gift to a referring orthopedist, may not reduce the client’s fee in consideration for the referral by the orthopedist, and may not pay the orthopedist’s expenses as compensation for further referrals. Simon at pp. 234. “Nor may a lawyer say ‘thank you’ for a referral after the fact by giving the referring person cash or anything of value.” Simon at p. 234. However, as discussed above, an attorney may refer patients to an orthopedist because “merely trading referrals on a non-exclusive basis is not covered by DR 1-107(C) . . .” Simon at p. 235.
The exception in DR 2-103(D)(2) is inapplicable here because inquiring attorney is not paying dues or fees to a qualified legal assistance organization and is not paying referral fees to another lawyer as permitted by DR 2-107.
The Committee’s finding in BANC Op. 97-8 (1997), impliedly suggested that a referral from a chiropractor to an attorney in exchange for referrals from the attorney to the chiropractor constituted compensation from the attorney to the chiropractor for referrals in violation of DR 2-103(D). However, this finding pre-dates the 2001 amendments to DR 2-103(D), and the 2001 addition of DR 1-107, authorizing non-exclusive reciprocal referral agreements with nonlegal professionals. Accordingly, the Committee declines to follow BANC Op. 97-8 (1997) insofar as it contradicts the decision reached here.
Additionally, DR 5-103(B)(2) says that while representing a client in connection with contemplated or pending litigation, a lawyer shall not advance or guarantee financial assistance to the client, except that, a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of a matter. Thus, pursuant to the rule, the inquiring attorney may absorb the costs of the orthopedist’s fees provided that the costs are genuinely allocated toward the orthopedist’s services and not a referral fee. The attorney may advance these costs and expenses and not impose them upon the client if the client was hired on a contingency basis.
Furthermore, DR 7-109(C) states that a lawyer shall not pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon the content of his or her testimony or the outcome of the case. The attorney may advance, guarantee, or acquiesce in the payment of : (1) expenses reasonably incurred by a witness in attending or testifying; (2) reasonable compensation to a witness for the loss of time in attending, testifying, preparing to testify or otherwise assisting counsel; and (3) a reasonable fee for the professional services of an expert witness. Here, the inquiring attorney appears to be advancing fees for the professional services of the orthopedist as well as expenses reasonably incurred by a witness in attending or testifying. As long as the compensation is reasonable and is not contingent upon the content of the orthopedist’s testimony, then there is no violation of DR 7-109(C).
An attorney may enter into the described representation of a client, however, no payment can be made by the attorney to the referring orthopedist for the referral. The attorney may advance the orthopedist’s fees for the medical report and expenses reasonably incurred with respect to attending or testifying.
(Approved by the Full Committee on April 23, 2008)