Ethical Considerations When Joining a Networking Organization

You are an ambitious family law attorney who wants to increase your client base.  After exploring several marketing options, you decide the best way to increase your business is to obtain client referrals by joining a professional networking organization.  You consider several organizations and decide to request an application for membership to one that meets weekly and requires a $500.00 annual membership fee.

You review the organization’s application and note its policies provide that the organization’s primary purpose is to “increase business opportunities by passing referrals to members of the organization.”   You further note that if accepted as a member, you will be required to make a minimum number of referrals to the members of the organization or bring a prospective new member to every meeting in order to remain a member in good standing.

Although you are able to commit to the organization’s policies, you ask yourself—“Can I abide by the policies in light of my ethical obligations under the new California Rules of Professional Conduct, effective November 2018?”

Your research reveals Rule 7.2 (Advertising) which provides guidance. With certain exceptions,[i] Rule 7.2, provides “(b) A lawyer shall not compensate, promise or give anything of value to a person[ii] for the purpose of recommending or securing the services of the lawyer or the lawyer’s law firm . . . .” (Cal. Prof. Rule of Conduct, Rule 7.2.)

Your annual membership fee of $500.00 and your commitment to making a minimum number of referrals is giving something “of value” because you are giving these to the organization “for the purpose” of “recommending or securing” your legal services by receiving referrals from other members.

“Yikes,” you say to yourself, as you continue reading Rule 7.2 with the hope of finding an exception to paragraph (b) that would allow you to join the organization.  You are delighted to find that under Rule 7.2(b)(4), a lawyer may “refer clients to another lawyer or a nonlawyer professional pursuant to an arrangement . . . that provides for the other person to refer clients or customers to the lawyer,” if (1) the “reciprocal referral arrangement is not exclusive”; (2) the client is informed of the “existence and nature of the arrangement”; and, (3) the arrangement is not otherwise prohibited by the California Rules of Professional Conduct or the State Bar Act. (See Cal. Prof. Rule of Conduct, Rule 7.2(b)(4).)

Here, the organization’s policies appear to establish an exclusive “reciprocal referral arrangement” because members are supposed to provide business referrals to one another—or bring a prospective new member to every meeting—in exchange for the business referrals members receive.  This conclusion is even more likely if you would be the organization’s only family attorney member, thereby directing all family law referrals exclusively to you.  If so, this referral arrangement would appear to run afoul of Rule 7.2(b)4(i).  However, if the referral arrangement is not exclusive—for example, if you are one of three family law attorney members who receive referrals based on the ability to best serve the referred person’s needs—then you must inform the referred client of the “existence and nature of the arrangement” to comply with Rule 7.2(b)4(ii).  

But that’s not all.  As noted earlier, the reciprocal referral arrangement must also not otherwise violate the California Rules of Professional Conduct or the State Bar Act.  This includes your duty of competence under Rule 1.1, which would be violated if the referral arrangement caused you to accept a case you are not competent to handle.  Additionally, Rule 5.4 bars you as a lawyer, from allowing a person who recommends you to “direct or regulate” your independent professional judgment or “interfere with the lawyer-client relationship in rendering legal services.” (See Cal. Prof. Rule of Conduct, Rule 5.4(c).)

For now, you take a break from your legal research with the knowledge there are many ethical considerations to examine before deciding to join a professional networking organization.  Yes—joining one may add to your firm’s bottom line but do so cautiously. After all, your bar card may be at risk.

[i] Rule 7.2 (b) contains several in applicable exceptions.

[ii] “Person” is defined as “a natural person or an organization.” (Cal. Prof. Rule of Conduct, Rule 1.0.1 (g-1).)

Alara Chilton is an attorney at law.

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**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**