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November 1, 2018
Ethics opinion addresses payment methods of for-profit qualifying providers

By Jim Ash
Senior Editor

The Board of Governors, at its October 12 meeting on Amelia Island, voted unanimously to approve a proposed formal advisory ethics opinion regarding for-profit referral qualifying providers who match clients with lawyers.

Qualifying providers include lawyer referral services, online matching services, directories, group or pooled advertising programs, and tips or leads programs.

But not all board members agreed whether certain online referral services, some of which have been changing their business models to keep up with Bar rules, meet the qualifying provider definition.

The board voted unanimously to approve Proposed Advisory Opinion 17-2, regarding payment methods and “for-profit qualifying providers.”

Board Review Committee on Professional Ethics Chair Larry Sellers said the proposal, in part, was designed to clarify protections against fee-splitting with non-lawyers.

“So, how did we get here?” Sellers asked board members. “Well, a Florida Bar member asked in an advertising inquiry whether a lawyer referral service may charge a different set fee for a referral for different types of cases — for example, $10 per referral each for personal injury cases and $15 per referral for family law.”

While online providers call the payment arrangement a “pay-per-lead structure,” previous board decisions consider it an “impermissible sharing of fees,” Sellers said.

Under the new rule, a qualifying provider is, “any person, group, or persons, associations, organizations or entities that receive any benefit or consideration, monetary or otherwise, for the direct or indirect referral of respective clients to the lawyers or law firm.”

The proposed opinion stresses that each case would have to be weighed on its own merits because of the wide array of fee arrangements available in the digital marketing arena.

However, it says the following fee arrangements would be “generally permissible.”

• A reasonable, pre-arranged fixed charge per time period such as weekly, monthly, or yearly.

• A reasonable, pre-arranged fixed charge for each time a consumer views information about a specific lawyer, commonly referred to as “pay per click.”

• A reasonable, pre-arranged fixed charge per matter referred to the lawyer that is not contingent on the outcome of the matter and does not vary based on the amount at issue in the matter.

• A reasonable, pre-arranged fixed charge per matter referred to the lawyer that varies based on the type of matter only if the varying charge is based on demonstrably different marketing and administrative costs, rather than the perceived value of the case.

The opinion goes on to list the following arrangements as “generally impermissible.”

• A charge calculated as a percentage of the fee received by a lawyer.

• A charge calculated as a percentage of the client’s recovery in the matter.

• A charge based on the perceived value of the case referred to or accepted by a participating lawyer;

• A flat charge that differs based on the perceived value of the case referred to or accepted by the participating lawyer;

• A flat charge per case accepted by a participating lawyer; and

• A flat charge per case accepted by a participating lawyer that differs based on the type of matter (e.g., personal injury versus family law).

The board voted unanimously to agree with the decision of the Board Review Committee on Professional Ethics that the online referral service, “LegalRFQ,” is a qualifying provider.

However, when it came to the committee’s decision that also defined the online services, “411-Pain,” and “Ask Gary,” as qualifying providers, one board member objected.

Board member Adam Rabinowitz noted that 411-Pain does not charge lawyers for participating in the network, and therefore, any benefit is “speculative.”

“The theory is that more medical providers are going to be subscribing to 411-Pain if they believe that there’s going to be a referral or some kind of relationship that can be developed with a legal professional,” Rabinowitz said. “By coming to a conclusion that these referral organizations somehow get an indirect benefit, is an improper stacking of inferences, and therefore, if it’s not applicable in a court of law, why are we permitted to do it?”

But Sellers said the rule language is broad, and the Florida Supreme Court is opposed to any service that links lawyers with other professions.

“The one thing that we need to understand is that all of these folks are happy to comply with our rule,” Sellers said. “But there is one little issue, and you may remember this, the Supreme Court asked that we, in our qualifying provider rule, also prohibit something called ‘dual referral.’”

The board voted, with one objection and two members abstaining, to agree with the decision of the committee.

[Revised: 12-14-2018]