The New Jersey Supreme Court vacated the Supreme Court Advisory Committee on Professional Ethics’ Opinion 745, removing prohibitions on the decades-old practice of allowing certified attorneys to pay referral fees to lawyers in other states regardless of whether they are licensed in New Jersey. The NJSBA petitioned the Supreme Court to review ACPE 745 and requested a stay of its implementation pending that review. It was joined by a number of other organizations in its ask to the Supreme Court to clarify the prohibition.
In a statement, NJSBA President William H. Mergner Jr. lauded the Supreme Court’s decision as a victory for attorneys, their clients and the greater legal practice in New Jersey. The NJSBA sought swift relief in the courts after the ACPE opinion upended decades of interpretation on how New Jersey attorneys should handle referrals and cast uncertainty over preexisting referral arrangements. Thankfully, the Supreme Court granted quick review and issued a decision that is well-reasoned and fair to all parties, Mergner said.
“Under this ruling, certified New Jersey attorneys can continue to practice in good faith when they accept referrals from their out-of-state counterparts and agree to pay a referral fee. Attorneys with preexisting referral agreements will not face a potential ethics violation or lawsuit for breaking these pacts. Most importantly, clients will not be deprived of competent counsel across state lines,” Mergner said.
The ACPE opined that such fees were tantamount to fee-splitting, classifying the referral fees as fees for legal work. In a unanimous opinion penned by Chief Justice Stuart Rabner, the Court pointed out that these fees are not paid for legal services and therefore do not invoke the unauthorized practice of law to prohibit such fees from being paid.
“As the Court Rules and their history reveal, Rule 1:39-6(d) was designed, in part, both to enhance access to the experienced attorneys who had been vetted with care and also to increase referrals to those lawyers,” the Supreme Court said. “Allowing certified attorneys to pay referral fees facilitates those aims. Removing that incentive for out-of-state lawyers would have the reverse effect.”
NJSBA Treasurer Diana C. Manning argued this matter before the Supreme Court and NJSBA members Christina Vassiliou Harvey and Kyle A. Valente contributed to the Association’s brief. Several entities joined the NJSBA in challenging Opinion 745, including New Jersey Association for Justice, the Trial Attorneys of New Jersey, the American Board of Trial Advocates, Blume Forte Fried Zerres & Molinari, and the Bergen, Essex, Hudson and Middlesex county bar associations.
For a full copy of the opinion, click here.
Assembly Appropriations Committee Gives Nod to Bills on Use of Force, Eminent Domain
The NJSBA weighed in on bills in the Assembly Appropriations Committee and is monitoring a series of bills as follows:
Use of Force Reporting:
A4175 (Park)/S2348 (Singleton) would require the Attorney General to review and, if necessary, review its use-of-force policy at least every even-numbered year or in such shorter timeframe as needed. The New Jersey State Bar Association supports the bill, highlighting the need for a practical approach to review data and confirm that use-of-force policies are applied uniformly and that law enforcement are consistently taking reasonable and appropriate action.
The bill had already been voted out of the Assembly Appropriations Committee in December of last year. But it was re-referred to the committee on Feb. 20 for a vote on amendments to the bill. It remains pending in the Senate Budget and Appropriations Committee having been reported out of the Senate Law and Public Safety Committee.
Eminent Domain:
A4468 (Venezia) was voted out of the Assembly Appropriations Committee where it awaits a Senate companion bill. The NJSBA supports this bill, which would replace the fixed interest rate award in eminent domain cases with an interest rate based on just compensation awards. Under current law, interest rate awards in certain cases are either fixed or set at an applicable “legal rate.” This bill eliminates the fixed rates and provides that interest will be fixed and determined by the court in a summary manner after a final determination of compensation. That determination may consider factors such as prevailing commercial interest rates, the prime rate or rates, the applicable legal rates of interest, and an appropriate interest rate on a just compensation award that justly indemnifies the condemnee for the loss of the use of the compensation to which the condemnee was entitled. The NJSBA commented that the bill promotes clarity in the applicable law and fairness in the administration of eminent domain cases.