October 6, 1989
A lawyer may offer and advertise a discount on fees for legal services to members of certain groups such as state residents aged 60 or older.
A nonprofit legal hotline referral service consisting of lawyers may receive a referral fee, including a percentage of legal fees generated by the work it refers to other lawyers.
References: MRPC 1.5(e), 5.4(a), 7.2(c); CI-668, CI-704, CI-837, CI-863.
A nonprofit legal services organization is interested in becoming the host agency for a statewide senior citizen Legal Hotline, also a nonprofit organization. The Legal Hotline, staffed by specially trained lawyers, is available for use by all state residents aged 60 or older, regardless of income. Legal Hotline lawyers receive telephone calls, determine if callers have a legal problem, give free advice, and provide brief services. Legal problems that cannot be resolved by the Legal Hotline lawyers are referred to legal aid organizations, if the client is low-income; to an agency which receives Older American Act money if one exists in the client's locale and can solve the client's problem; or to a specially created panel of lawyers in private practice who agree to charge reduced fees for this particular clientele.
By contract with the Legal Hotline, the panel of participating private lawyers, in consideration for client referrals by the Legal Hotline, agree as follows:
- To charge much less than the market rate for the legal services they provide;
- To see the client for a one-half hour consultation for a set fee remitted to the Hotline.
- To remit to the Hotline a portion of each hourly fee charged and collected.
- To remit to the Hotline a maximum percentage of any fee collected from a referred client that exceeds a set limit or that results from a contingent fee agreement.
- Prior to performing any services for the client, to execute a fee agreement with the client that clearly discloses all of this fee sharing information and the relationship between the lawyer and the Hotline project.
We are asked whether ethics rules are violated by the fee payment and sharing aspects of the described referral plan.
Item No. 1 relates to the propriety of offering fee discounts. Fee discounts offered by lawyers for legal services are not ethically prohibited. CI-863, CI-837, CI-704, CI-668. The fee discount here offered to state residents aged 60 or older is therefore ethically permissible.
Items No. 2, 3 and 4 relate to the propriety of fee sharing. A lawyer is permitted to pay certain charges of a lawyer referral service. MRPC 7.2(c) states:
"A lawyer shall not give anything of value to a person for recommending the lawyer's services, except that a lawyer may pay the reasonable cost of advertising or written communication permitted by this rule and may pay the usual charges of a not-for-profit lawyer referral service or other legal services organization."
MRPC 5.4(a) generally prohibits a lawyer or law firm from sharing legal fees with a nonlawyer. Since the Legal Hotline, including its referral aspects, constitutes a nonprofit lawyer referral service, MRPC 7.2(c) authorizes the receiving lawyer to pay the usual charges of such a referral program. However, that prohibition does not here apply inasmuch as the Legal Hotline staff which makes the referral and subsequently receives a remittance consists entirely of lawyers. Therefore participating private lawyers may ethically share fees with the Legal Hotline, subject to the following conditions of MRPC 1.5(e):
"(e) A division of a fee between lawyers who are not in the same firm may be made only if:
"(1) the client is advised of and does not object to the participation of all the lawyers involved; and
"(2) the total fee is reasonable."
Item 5 describing the content of the fee agreement to be executed between lawyer and client appears to comply with the requirements of MRPC 1.5(e).
For additional guidance in understanding the registration requirements and other ethical considerations involved in establishing and operating a lawyer referral program, see RI-3, RI-7, RI-24 and RI-31.