MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 2013-06
Attorney participation in a for-profit referral organization with non-attorneys (Reconsideration of Ethics Docket 05-11)
We are asked to revisit our decision in Ethics Docket 05-11 wherein we addressed attorney participation in a for-profit referral organization with non-attorneys. In that opinion, we decided that such participation was a violation of the Maryland Lawyers’ Rules of Professional Responsibility and implicated Rules 1.7, 5.4, 7.2(c), and 7.3. The request notes that the policies of the organization in question have changed and may “alter the Committee’s perspective on attorney membership” in the organization.
THE COMMITTEE’S RESPONSE
The Committee previously revisited Ethics Docket 05-11 in Ethics Docket 2007-16 and, at that time, declined to reverse or alter its earlier analysis. While we again decline to revisit or alter 05-11, we review this inquiry based upon its own unique facts, and based upon those unique facts presented, we believe that – subject to the caveats set out below – participation in the organization described in this inquiry is not per se prohibited.
Facts
The Committee adopts the following unchanged description of the organization used in Ethics Docket 05-11 and adopted in Ethics Docket 2007-16:
This organization has multiple chapters around the world. Each chapter consists of various professionals and business people who seek to obtain referrals and learn marketing techniques. Only one person from any given profession or line of business can join any individual chapter. The particular chapter that has approached you includes, among others, a beauty consultant, heating and air conditioning contractor, investment advisor, and AFLAC insurance agent.
The chapters hold weekly meetings. At these meetings, there is usually a general presentation on how to better market your business. A chapter officer may also draw attention to other seminars that are taking place in the area that address marketing techniques. This is followed by a detailed presentation by one member educating the others about his or her business. Finally, at the end of the meeting, members exchange referrals they have obtained for each other (if any) during the course of the past week.
The referral organization is a for profit entity. It earns its revenue through annual membership fees paid by each member. The members do not pay fees to each other and the organization does not make any referrals. You characterize the organization’s role as helping to bring people together to make “free referrals among themselves.”
You further state that there is no requirement that you provide referrals to other members, or that you obtain referrals from them. You write that it is “theoretically possible to join a chapter only for the various educational programs they provide.” The organization has no quotas and there are no “quid pro quo referrals.”
Both of the Committee’s prior opinions also recited the following information from the organization’s website, which remains substantially the same:
Belonging to [our organization] is like having dozens of sales people working for you because all of them carry several copies of your business cards around with them.
When they meet someone who could use your products or services, they hand out your card and recommend you. It’s as simple as that! It’s simple because it’s based on a proven concept by [the organization’s founder . . . called “givers gain.” If I give you business you’ll give me business and we’ll both benefit as a result.
Since 2005, several key changes have been made to the organization’s policies and requirements. For example, the “How to Join” section of the organization’s website previously stated that members “are required to participate in the group by either bringing bona-fide referrals and/or visitors to their chapter of [the organization].” This has been changed and the website now reads, “Participation in the chapter by members is a key to the success of the group. Members can participate by bringing bona-fide referrals and/or visitors to their [organization] chapter.” The organization has also made changes regarding member compliance with professional obligations. Prior to 2005, the organization’s “Networking Code of Ethics” required members “live up to the ethical obligations” imposed by their professions. This portion of the code has changed and now explicitly states that the professional standards outlined in a formal code of conduct for any profession supersede any of the organization’s standards. Members are required to acknowledge this policy.
The BNI program has enhanced its Leadership Education to make sure members fully understand what the various attorney’s ethical guidelines are and how to properly give a referral with the permission of their client.
The membership committees are also fully trained to interview every perspective member so they understand all the rules, especially the ethical guidelines, check for proper licensing of the perspective member and do background checks where necessary to assure the highest quality BNI member. Finally, another significant change is to the organization’s previous statement that it “operates to provide members with a personal sales force that carries the business cards of members.” This statement now contains an asterisk directing readers to the following notation:
some professions, specifically attorney and certain health care professionals, may not be permitted to seek direct referrals through in-person solicitation through the use of business cards pursuant to their ethical code. Members of [the organization] that belong to these professionals are directed to follow their profession’s own ethical guidelines.
Discussion
In Ethics Docket 2007-16, the Committee acknowledged that theoretically a lawyer could ethically participate in the organization at issue in that opinion but was skeptical because the facts presented indicated an organization primarily dedicated to reciprocal referrals:
Participating in the Organization and paying dues, but never making a referral and never receiving a referral would be consistent with “ethical standards of the attorney’s profession” and should not be a violation, but the whole reason for participating is networking, getting and giving referrals. It was this circumstance which led to our comment in 05-11 that:
‘ . . the Committee is not naive. Participation in this organization is intended to harness the efforts of others to market your legal services. The possibility of joining solely for the educational benefits strikes the Committee as purely “theoretical.”‘
Our opinion in docket 05-11 was carefully considered when it was issued and has been reviewed a number of times since then by the committee. It was quoted by the ABA Journal & Report of Friday April 22, 2005, which cited a professional ethics expert who agreed with our analysis in regard to Rules 1.7 and 5.4. We see no need to repeat here the discussion which was presented in our 05-11 opinion.
While these prior opinions were in response to a for-profit, primarily referral-based organization, the organization described in this opinion purports to have a broader business development purpose with optional referral participation. Therefore, the Committee’s concerns that a lawyer selected by such an organization would be required explicitly or implicitly, to participate in actions that would violate the Rules are somewhatreduced.
Importantly, the organization is generally devoted to business development but is not a mandatory referral organization. Members are explicitly allowed to participate by either bringing referrals or visitors to their chapter. Thus, attorneys can bring visitors to chapter meetings instead of engaging in any prohibited referral arrangement. Referrals are optional, and there is no quid pro quo. Furthermore, the organization does not promote prohibited solicitations by attorneys or others operating on their behalf. The organization’s policies note that attorneys “may not be permitted to seek direct referrals through in-person solicitation through the use of business cards pursuant to their ethical code.” It notes that these members should “follow their profession’s own ethical guidelines.” Finally, the organization’s code of ethics requires that members sign off and acknowledge that their professional standards supersede any of the organization’s standards. This acts as an explicit reminder that the lawyer’s professional responsibilities are paramount and should be followed regardless the written or unwritten policies of a given organization. The other leaders and members are also educated as to the ethical requirements imposed on attorneys to reduce the risk that the other members engage in any course of conduct from which the attorney would be prohibited. Beyond the organization’s education of other members, the attorneys take measures to ensure that the other members are not engaging in ‘in person’ solicitation on the attorney’s behalf.
Conclusion
The Committee believes that lawyer participation in the described organization is not per se prohibited. Because referrals are not a condition of participation, the lawyer can exercise independent judgment when recommending the services of another. See Rules 1.7(b) and 5.4. Now, without such a written requirement, the lawyer is not required to make a referral in exchange for another or something else of value. Rule 7.2(c). While the express policies of the Organization have been altered so as to no longer require unethical conduct, the Committee cautions any attorney participating in such an organization that he or she cannot engage in quid pro quo referrals or any other conduct that compromises his or her independent judgment or a client’s interests. The organization’s policy that imposes a limit of one professional per discipline for individual chapter gives the Committee some concern as to the parameters in which that independent judgment must be exercised. When making a referral, the lawyer should make certain that the referral is based on his or her independent assessment of the professional’s qualifications and not in anticipation of a quid pro quo referral, the “giver’s gain,” or any other benefit flowing back to him or her. Regarding referrals to the lawyer, he or she should be careful to adhere to the exceptions outlined in Rule 7.2(c).
We reiterate that attorney members must abide our earlier precautions regarding in person solicitation and take action to ensure that other members do not engage in any in person solicitation on the attorney’s behalf. Moreover, given the caveats now inserted in the organization’s policies that recognize that attorneys’ ethics may preclude such forms of solicitation, the Committee finds that those policies do not require a violation of the ethical rules. Again, membership is not per se prohibited, but instead, we again emphasize that the attorney must be most careful in this scenario to be mindful of, and abide by, the various applicable Rules of Professional Conduct.