February 10, 2018

Referral Fees are a Win-Win

Referral Fees are a Win-Win

Different states take different approaches to the payment of referral fees between attorneys. I am fortunate to practice in Michigan, where referral fees are permitted, within certain limitations.​

I think it’s important for colleagues and clients to know where I stand on attorney referral fees. As I have said, before, I believe the referral fees are a win-win-win. When done right, they are:

  • A win for the attorney to whom the matter is referred because that attorney gets the case;
  • A win for the attorney referring the matter because that attorney gets a referral fee;
  • A win for the client, who is able to enlist and incentivize a trusted attorney to vet and recommend another attorney with appropriate experience and expertise for the client’s case.

Referral fees are particularly important for smaller law firms and solo practitioners–and the clients who hire them. Large firms essentially have a parallel system: A client will call a lawyer at the firm, and if that lawyer is not suited to the matter, the lawyer will pass it on to a colleague within the firm with the necessary expertise. And both will be compensated—the first lawyer for originating the work, the second for performing the work. Referral fees allow smaller firms and their clients to enjoy similar benefits.