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The Handbook: Law Firm Networks
Chapter 7 – Regulations and Other Legal Considerations for Networks
Networks are generally not subject to direct official regulations, but accounting and legal firms are.
Individual professionals must also abide by them. The work product of the professionals is subject to
regulations. Some of the regulations are statutory, while others are imposed by the ethics of accounting and
bar associations. Additional consideration must be given to possible vicarious liability that affects
accounting, legal, and multidisciplinary networks. Recently, antitrust and competition regulations have been
discussed in relations to auditing services. Each is covered in this chapter.
Law Firm Networks
Law firm networks are not regulated by any governmental agencies. If they are incorporated, they file the
appropriate tax returns. If they operate in a state or country, they will generally be registered in the state or
country in which the personnel are located. There are no specific laws or regulations that would apply to a
legal network. There may be a number of ethical considerations, however, such as the unauthorized practice
of law, multi-jurisdictional practice, professional referral fees, advertising, and others.
Do the networks practice law? In networks the members pay annual dues. These fees are used for marketing
the networks, internally to fellow members and externally to possible clients. The marketing is focused on
demonstrating that the network is an alternative to large firms with multiple branches. To determine whether
this is the practice of law, one must look to the specifics of whether promotional activity comes within the
parameters of practicing law.
Under the ABA Model Code of Professional Responsibility, Rule EC 3-5, the practice of law relates to the
“rendition of services for others that call for the professional judgment of a lawyer.” Professional judgment is
further defined as the “educated ability to relate the general body and philosophy of law to a specific legal
problem of a client.”344 The underlying rationale for the rules is the assumption that there is a client.
Marketing assumes that there is no client and, therefore, it cannot be the unauthorized practice of law.
Legal networks publish a directory of members. Many now list the members’ specialties that can be practiced
outside of a state. In so doing, would the networks be promoting the unlicensed practice of law because the
attorneys may get referrals from fellow members? While the technological aspects of these issues have not
been decided, there is no reason to think that the general rule should not apply.345 The network should not be
liable since it is supplying information and is not involved in the selection.346
Referral fees for work are suspect and viewed as unprofessional. In the case of the medical field, they can be
illegal.347 Attorney rules have shifted to permit advertising. Referral fees are permitted when they are
reasonable and not related to a particular matter.348 In the case of a network, there should be no issues.
In Alabama State Bar Association v. R.W. Lynch,349 the facts were similar to a case involving a legal
network. A number of independent lawyers created a commercial for legal services. When the clients called
a given telephone number, they were referred to the attorneys who had paid for the advertising. Since it was
not based upon the number or size of the referrals, there were no ethical violations.
344 AMERICAN BAR ASSOCIATION, ANNOTATED MODEL RULES OF PROFESSIONAL CONDUCT 444 (1995)
345 WILLIAM E. HORNSBY, JR., MARKETING AND LEGAL ETHICS: THE BOUNDARIES OF PROMOTING LEGAL SERVICES 124 (2000)
346 Lawyer’s Disciplinary Board v. Allen, Coale & Van Susteren, No. 22700 (W.Va. Sup. Ct. 11/15/96).
347 42 U.S.C. Sections 1320a-7(b), which relates to Medicare and Medicaid. See Marti, Not So Fast, It’s Regulated – Some Warnings for the E-Health
Business, BUS. LAW TODAY (Sept/October 2000); see also Braender & McCarthe-Perry, Making a Virtual House Call, NAT. L. J., (August 21, 2000);
see also Meek, Telemedic: How an Apple (or Another Company) May Bring Doctors Closer, 29 CUMB. L. REV. 173 (1999)
348 AMERICAN BAR ASSOCIATION, ANNOTATED MODEL RULES OF PROFESSIONAL CONDUCT, Model Rule 7.2(c).
349 Alabama State Bar Ass’n. v. R. W. Lynch Co., 655 S. 2d 982 (Ala. 1995).
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Chapter 7 – Regulations and Other Legal Considerations for Networks
Networks are generally not subject to direct official regulations, but accounting and legal firms are.
Individual professionals must also abide by them. The work product of the professionals is subject to
regulations. Some of the regulations are statutory, while others are imposed by the ethics of accounting and
bar associations. Additional consideration must be given to possible vicarious liability that affects
accounting, legal, and multidisciplinary networks. Recently, antitrust and competition regulations have been
discussed in relations to auditing services. Each is covered in this chapter.
Law Firm Networks
Law firm networks are not regulated by any governmental agencies. If they are incorporated, they file the
appropriate tax returns. If they operate in a state or country, they will generally be registered in the state or
country in which the personnel are located. There are no specific laws or regulations that would apply to a
legal network. There may be a number of ethical considerations, however, such as the unauthorized practice
of law, multi-jurisdictional practice, professional referral fees, advertising, and others.
Do the networks practice law? In networks the members pay annual dues. These fees are used for marketing
the networks, internally to fellow members and externally to possible clients. The marketing is focused on
demonstrating that the network is an alternative to large firms with multiple branches. To determine whether
this is the practice of law, one must look to the specifics of whether promotional activity comes within the
parameters of practicing law.
Under the ABA Model Code of Professional Responsibility, Rule EC 3-5, the practice of law relates to the
“rendition of services for others that call for the professional judgment of a lawyer.” Professional judgment is
further defined as the “educated ability to relate the general body and philosophy of law to a specific legal
problem of a client.”344 The underlying rationale for the rules is the assumption that there is a client.
Marketing assumes that there is no client and, therefore, it cannot be the unauthorized practice of law.
Legal networks publish a directory of members. Many now list the members’ specialties that can be practiced
outside of a state. In so doing, would the networks be promoting the unlicensed practice of law because the
attorneys may get referrals from fellow members? While the technological aspects of these issues have not
been decided, there is no reason to think that the general rule should not apply.345 The network should not be
liable since it is supplying information and is not involved in the selection.346
Referral fees for work are suspect and viewed as unprofessional. In the case of the medical field, they can be
illegal.347 Attorney rules have shifted to permit advertising. Referral fees are permitted when they are
reasonable and not related to a particular matter.348 In the case of a network, there should be no issues.
In Alabama State Bar Association v. R.W. Lynch,349 the facts were similar to a case involving a legal
network. A number of independent lawyers created a commercial for legal services. When the clients called
a given telephone number, they were referred to the attorneys who had paid for the advertising. Since it was
not based upon the number or size of the referrals, there were no ethical violations.
344 AMERICAN BAR ASSOCIATION, ANNOTATED MODEL RULES OF PROFESSIONAL CONDUCT 444 (1995)
345 WILLIAM E. HORNSBY, JR., MARKETING AND LEGAL ETHICS: THE BOUNDARIES OF PROMOTING LEGAL SERVICES 124 (2000)
346 Lawyer’s Disciplinary Board v. Allen, Coale & Van Susteren, No. 22700 (W.Va. Sup. Ct. 11/15/96).
347 42 U.S.C. Sections 1320a-7(b), which relates to Medicare and Medicaid. See Marti, Not So Fast, It’s Regulated – Some Warnings for the E-Health
Business, BUS. LAW TODAY (Sept/October 2000); see also Braender & McCarthe-Perry, Making a Virtual House Call, NAT. L. J., (August 21, 2000);
see also Meek, Telemedic: How an Apple (or Another Company) May Bring Doctors Closer, 29 CUMB. L. REV. 173 (1999)
348 AMERICAN BAR ASSOCIATION, ANNOTATED MODEL RULES OF PROFESSIONAL CONDUCT, Model Rule 7.2(c).
349 Alabama State Bar Ass’n. v. R. W. Lynch Co., 655 S. 2d 982 (Ala. 1995).
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