Making Good Business Use of Referrals
Not only are referral fees good business in Massachusetts, according to personal-injury lawyers they are essential to business.
Douglas K. Sheff of Boston, president of the Massachusetts Academy of Trial Attorneys, estimates that his practice consists of around 65 to 70 percent referrals.
“I’m proud of that,” he adds. “It says that people feel confident enough to let us handle their case.”
Richard L. Zisson of Dedham, a personal-injury lawyer, also says he “pays a lot of money” to people who refer him cases.
Indeed, one lawyer who requested to remain anonymous surmises that “there is not a personal-injury practice in the state that does not receive referral fees, or a personal-injury law firm in the state that does not [pay] referral fees.”
As Neil Sugarman of Boston states, “Referral fees are alive, well and happy.”
And this state of affairs benefits everyone involved: the referring attorney, the attorney who handles the case and the client, lawyers claim.
Specialization
In an age of specialization, referral fees ensure that the proper specialist handles the case, Sugarman says.
Fees “enable lawyers to specialize and to get a stream of cases from other attorneys who are generalists,” he adds. “It allows clients to have a more particularized and better representation in more complex cases.”
Without referral fees there is an economic incentive to keep the case yourself, which hurts the client, Sheff remarks.
Another small practitioner who requested anonymity says that he will refer out complicated medical-malpractice and products liability cases.
“I don’t try to do that case myself,” he explains. “Instead, I say, ‘Let me try to find someone who can handle that case the way it should be handled.’”
Economic considerations also ensure that a referring attorney will attempt to find the best lawyer for the job.
“There is an incentive on the part of referring attorneys to find the best possible lawyer and maximize the return for the client,” Zisson observes.
This incentive reduces the amount of abuse that might occur in the system, according to Sheff.
“Even from the grittiest most self-serving angle, if you send it to someone who won’t do as good a job, they won’t get as much money as the best lawyer in the field,” Sheff states.
Under Sheff’s theory, doing the ethical thing in terms of referral fees — for example, taking the time to find the most qualified person to handle the case will result in the most profit for the referring attorney.
Thus, lawyers doubt that cases are ever “sold” to the highest bidder.
“You can imagine lawyers selling cases to the highest bidder, but my guess is it doesn’t happen,” says Paul R. Tremblay of Waltham, an ethics professor at Boston College Law School.
The Underbelly
That isn’t to say that sweetness and light pervades the realm of referral fees.
According to one personal-injury lawyer, the “big advertisers’” practice of sifting through thousands of phone calls and referring most cases out is generally “frowned upon.”
Indeed, Assistant Bar Counsel Nancy E. Kaufman of Boston notes that “there is a concern by some that there are some lawyers who advertise as if they will handle the case when they are actually a clearing house and refer out to other lawyers. That can create confusion.”
Attorneys have also been known to fight over referrals, according to Zisson.
But, he adds, a little competition will benefit clients.
“Do the people receiving the cases fight over referrals?” he asks. “Of course they do. It’s appropriate and it encourages competent counsel to get involved when they should.”
