The New Jersey State Bar Association petitioned the Supreme Court to review and summarily reverse the Advisory Committee on Professional Ethics (ACPE) Opinion 745 regarding the payment of referral fees by court-certified attorneys to out-of-state attorneys. The NJSBA argues that the ACPE erroneously considers this payment a fee for legal services rendered in violation of the Rules of Professional Conduct 1.5(e). The brief was drafted by Christina Vassiliou Harvey, Esq., NJSBA Secretary Diana C. Manning, Esq., and Kyle A Valente, Esq.
“The referral fee mechanism is an exception to the general rule prohibiting the division of a fee by and between lawyers who are not in the same firm, unless the fee is in proportion to the services performed by each lawyer or each lawyer assumed joint responsibility for the representation,” the NJSBA said in its amicus brief. Citing to R. 1:39-6, Effect of Certification, the NJSBA further commented that “[s]uch a referral fee is one of the privileges granted to certified attorneys by the Supreme Court and the New Jersey Board on Attorney Certification in recognition of their ‘education, experience, knowledge, and skill for each designated area of practice.’”
The NJSBA argued that the plain language of R. 1:39-1 through 1:39-9 regarding Specialty Certification of Attorneys is clear that referral fees can be paid to attorneys, not limited to attorneys barred in New Jersey, and that a referral fee is not a legal fee for service. Enumerating several instances in the court rules where the words “out-of-state” and “New Jersey” are used to describe attorneys, the NJSBA argued that where there is reference simply to “attorney” there is no limitation on who may receive a referral fee.
With regard to the referral fee as a legal fee, the NJSBA further argued that Opinion 745 conflates payment of a fee under R. 1:39-6(d) with division of a legal fee under R.P.C. 1.5(e). However, R. 1:39-6(d) specifically provides that a lawyer who refers a matter to a certified attorney is entitled to the payment of a referral fee “without regard to the services performed or responsibility assumed by the referring attorney.” The NJSBA cited Eichen, Levinson & Crutchlow, LLP v. Weiner, 397 N.J. Super. 588, 595-97 (App. Div. 2008), which distinguished compensation for work on a matter from a referral fee, the NJSBA said.
As further support to reverse Opinion 745, the NJSBA argued it would discourage referrals to knowledgeable New Jersey attorneys, which would have adverse consequences to the client and a loss of confidence in the justice system.
“One purpose behind allowing payment of a referral fee involving a certified attorney is to encourage the referral of matters to experienced attorneys,” the NJSBA said. “By precluding payment of a referral fee to an out-of-state attorney, Opinion 745 incentivizes the out-of-state attorney not best suited to handle a particular claim on behalf of a New Jersey client to nevertheless seek pro hac vice admission to handle the matter or to perform a portion of the ‘services performed’ in order to derive a fee under R.P.C. 1.5(e).”
Other legal groups filed petitions seeking review of the opinion for similar reasons, including several county bar associations, the New Jersey Association for Justice, Trial Attorneys of New Jersey and the American Board of Trial Advocates.
The NJSBA awaits a disposition on the petition for review.
This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters. To learn more, visit njsba.com.