Conflicts of Interest in Lawyer Referral Arrangements with Nonlawyer Professionals

The legal profession has long been concerned about limiting the involvement of nonlawyers in the practice of law. However, changes in the economy and developments in the manner in which legal services are delivered to clients have generated frictions with the traditional rules of the legal profession. One such development involves the proliferation of referral arrangements between lawyers and nonlawyer professionals. In August 2002, the American Bar Association modified the Model Rules of Professional Conduct to permit law firms to create reciprocal referral agreements with lawyers and other professionals. However, the rule says nothing about the ethical propriety of a lawyer receiving payments from the nonlawyer for referring clients to that nonlawyer. This article is a comprehensive examination of the ethical considerations that underlie these law firm referral arrangements, including most prominently the conflicts of interests that these arrangements engender.