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Lawyers and Accountants 2019 -
Kansas’s rule 5.5(a) states that a lawyer must not practice law in a jurisdiction where doing so would violate
regulations of the profession in that jurisdiction. When John does practice in other jurisdictions, Kansas could
penalize John for his practice. These rules would seem to be in opposition to both clients’ interests (to have
the best possible legal representation) and the objective of multidisciplinary practices (ton use the best
professional for the job). John is open to sanctions both in the state in which he is practicing without a license
and in Kansas. However, the bar has tended to ignore unauthorized practice of law by attorneys from other
jurisdictions, particularly corporate counse1,165 absent some egregious circumstances.166
[3] Referral Fees167
Referral fees for work are suspect and viewed as unprofessional. In the case of the medical field, they can be
illegal.168 While the rules are very strict in the medical field, attorney rules have substantially changed to
permit advertising. The restrictions seem to be aimed at referral fees that are outright solicitation or are fee
splitting. States have their own statutes.
Referral fees are permitted when they are reasonable and not related to a particular transaction or matter.169
For example, firms lending funds to other firms and accepting referrals as payment and payment of a bonus
for each referral by an employee are prohibited. The service provider, such as PSI, cannot charge a
transactional fee for each referral but it can charge a percentage of the overall transaction. If the amount is
excessive, the fee may be suspect.
PSI offers the possibility of referrals both from the public and from other professionals. WSG offers
professionals the opportunities to get to know others, share information and, in particular, place information
about them in the database. Each receives a fee. Are these referral fees prohibited by bar regulations?
In Alabama State Bar Association v. R.W. Lynch,170 the court dealt with facts similar to PSI. In that case a
number of independent attorneys created a commercial for legal services. When clients called a telephone
number, they were referred to the attorneys who had paid for the ad. This was held not to be a referral
service, but permissible advertising. Since payments are not based upon the number or size of the referrals,
John’s participation in PSI should pose no referral ethical issues.
WSG is different in that it is more of a networking organization. Attorneys can participate in a networking
group provided that the membership fee is fixed and not based upon work generated, the referral function
is not the sole purpose, the lawyer does not accept clients based upon referrals from other members, lawyers
do not solicit members and the lawyer does not set up a booth at the networking convention.171 In short, as
165 The best example is that of in-house counsel who do practice in almost every jurisdiction without any sanctions. The same result is generally true
for lawyers practicing in a different state. Vigil, Regulating In-house Counsel: A Catholicon or a Nosy 78 Marg. L. Rev., 307 (1994); Pull admission
Reciprocity Is In-house Lawyers’ Goal, 9 Laws. Man. on Prof. Conduct (ABA/BNA) Current Reports at 352 (1993).
166 “Standing alone, unauthorized practice out-of-state by an attorney in-state may not be considered sufficiently noteworthy to excite prosecution
efforts from disciplinary authorities in the lawyer’s home state.” Wolfram infra n 14 at 686.
167 7 Martin, Not So Fast, It’s Regulated — Some Warnings for the B-health Business, Bus. Law Today
(Sept./Oct. 2000); Braender and McCarthy-Perry, Making a Virtual House Call, Nat. L.J. Cl (Aug. 21, 2000); Meek, "Telemedicine: How an Apple (or
Another Computer) May Bring Your Doctors Goser," 29 Cumb. L. Rev, 173 (1999).
168 There is an anti-referral statute, 42 U.S.C. § 1320a-7(b), which pertains to Medicare and Medicaid
169 ABA Model Rule 7.2(c).
170 655 So. 2d 982 (Ala. 1995).
171 Md. State Bar Ass’n. On Ethics, Op. 88-78 (1988).
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Kansas’s rule 5.5(a) states that a lawyer must not practice law in a jurisdiction where doing so would violate
regulations of the profession in that jurisdiction. When John does practice in other jurisdictions, Kansas could
penalize John for his practice. These rules would seem to be in opposition to both clients’ interests (to have
the best possible legal representation) and the objective of multidisciplinary practices (ton use the best
professional for the job). John is open to sanctions both in the state in which he is practicing without a license
and in Kansas. However, the bar has tended to ignore unauthorized practice of law by attorneys from other
jurisdictions, particularly corporate counse1,165 absent some egregious circumstances.166
[3] Referral Fees167
Referral fees for work are suspect and viewed as unprofessional. In the case of the medical field, they can be
illegal.168 While the rules are very strict in the medical field, attorney rules have substantially changed to
permit advertising. The restrictions seem to be aimed at referral fees that are outright solicitation or are fee
splitting. States have their own statutes.
Referral fees are permitted when they are reasonable and not related to a particular transaction or matter.169
For example, firms lending funds to other firms and accepting referrals as payment and payment of a bonus
for each referral by an employee are prohibited. The service provider, such as PSI, cannot charge a
transactional fee for each referral but it can charge a percentage of the overall transaction. If the amount is
excessive, the fee may be suspect.
PSI offers the possibility of referrals both from the public and from other professionals. WSG offers
professionals the opportunities to get to know others, share information and, in particular, place information
about them in the database. Each receives a fee. Are these referral fees prohibited by bar regulations?
In Alabama State Bar Association v. R.W. Lynch,170 the court dealt with facts similar to PSI. In that case a
number of independent attorneys created a commercial for legal services. When clients called a telephone
number, they were referred to the attorneys who had paid for the ad. This was held not to be a referral
service, but permissible advertising. Since payments are not based upon the number or size of the referrals,
John’s participation in PSI should pose no referral ethical issues.
WSG is different in that it is more of a networking organization. Attorneys can participate in a networking
group provided that the membership fee is fixed and not based upon work generated, the referral function
is not the sole purpose, the lawyer does not accept clients based upon referrals from other members, lawyers
do not solicit members and the lawyer does not set up a booth at the networking convention.171 In short, as
165 The best example is that of in-house counsel who do practice in almost every jurisdiction without any sanctions. The same result is generally true
for lawyers practicing in a different state. Vigil, Regulating In-house Counsel: A Catholicon or a Nosy 78 Marg. L. Rev., 307 (1994); Pull admission
Reciprocity Is In-house Lawyers’ Goal, 9 Laws. Man. on Prof. Conduct (ABA/BNA) Current Reports at 352 (1993).
166 “Standing alone, unauthorized practice out-of-state by an attorney in-state may not be considered sufficiently noteworthy to excite prosecution
efforts from disciplinary authorities in the lawyer’s home state.” Wolfram infra n 14 at 686.
167 7 Martin, Not So Fast, It’s Regulated — Some Warnings for the B-health Business, Bus. Law Today
(Sept./Oct. 2000); Braender and McCarthy-Perry, Making a Virtual House Call, Nat. L.J. Cl (Aug. 21, 2000); Meek, "Telemedicine: How an Apple (or
Another Computer) May Bring Your Doctors Goser," 29 Cumb. L. Rev, 173 (1999).
168 There is an anti-referral statute, 42 U.S.C. § 1320a-7(b), which pertains to Medicare and Medicaid
169 ABA Model Rule 7.2(c).
170 655 So. 2d 982 (Ala. 1995).
171 Md. State Bar Ass’n. On Ethics, Op. 88-78 (1988).
61
