The Florida Supreme Court rejected the proposed amendments, concluding that “much stricter regulations upon lawyer referral services are required.” It noted “the dangers that non-lawyer-owned, for-profit referral services pose to members of the public—who may be especially vulnerable after they suffer an injury, or when they face a legal matter that they never anticipated.”
The court instructed the Bar to propose amendments to Rule 4-7.22 that would preclude Florida lawyers from accepting referrals from any service not owned or operated by a member of the Bar. It also instructed the Bar to review any other rules that address lawyer referral services to determine whether new rules are necessary to implement the court’s order.
The court emphasized that, while its directives might be viewed as severe, it is “absolutely necessary to protect the public from referral services that improperly utilize lawyers to direct clients to undesired, unnecessary, or even harmful treatment or services.” It also stated that its directives would prevent conflicts of interest, such as where a lawyer feels pressured to refer a client to another business controlled by the referral service so that the lawyer may continue to receive referrals from the service.
Florida Bar Ignores Special Committee Findings
In rejecting the Florida Bar’s proposal, the court observed that the Bar had ignored the recommendations contained in the July 2012 Report of the Special Committee on Lawyer Referral Services. Because of the growth in for-profit referral services and the corresponding public concern, the Florida Bar created the Special Committee in 2011 to review the practices and rules regarding lawyer referrals. The committee conducted an investigation and issued seven recommendations in its 2012 report. The Florida Supreme Court agreed with the committee’s recommendations that greater regulation of attorneys who participate in for-profit referral services was needed to best serve the public interest.
The court noted that trends in the personal injury sector were especially concerning. The committee had found that some referral services used advertising to disguise direct solicitations. Other times, when filling out medical paperwork, patients unknowingly filled out undisclosed and unexplained law firm retainers. Most troubling to the court, some law firms affiliated with for-profit referral services steered clients toward other businesses owned by the referral service, sometimes to the detriment of the client.
Before submitting its proposed amendments to the Rule, the Florida Bar also reviewed the Special Committee’s report. However, rather than follow the Committee’s recommendations, the Bar’s proposal sought less restrictive rules. For example, the proposal allowed lawyers to accept referrals from for-profit referral services that also referred clients to other businesses for services arising from the same incident. The court determined that, in doing so, the Bar “disregarded the potential harm to the public that non-lawyer-owned, for-profit referral services present.”
“Workable Solution” Needed
“Many states and the ABA limit lawyer referral services to non-profit entities or entities approved by an appropriate regulatory agency, such as the state bar,” explains Keith Swisher, Scottsdale, AZ, cochair of the Attorney Advertising Subcommittee of the ABA Section of Litigation’s Ethics & Professionalism Committee. While 25 other states limit lawyer referral services to nonprofit entities, the Florida Supreme Court is the first to limit for-profit referral ownership to its state’s attorneys.
The court had good reason to change the rule, according to ABA Section of Litigation leaders. “The public is at significant risk from for-profit referral services who also refer other services,” cautions Scott E. Reiser, Roseland, NJ, cochair of the Section of Litigation’s Ethics and Professionalism Committee. “One worries that for-profit referral services do not take an individualized focus on each case. There was a potential for abuse and I think the Supreme Court recognized it,” he adds, noting that it appears the court is seeking a “workable solution.”
Some Florida attorneys, however, may feel the squeeze of not being able to use for-profit referral services. “The decision will obviously impact lawyers who have been affiliated with for-profit services that refer callers to both lawyers and medical facilities,” says Swisher. “It will also impact those services’ ability to recruit Florida lawyers,” he states.
But the inability to use for-profit referral services is not a business death knell for Florida attorneys. “There are still plenty of ways to market without hiring a non-lawyer owned referral service,” Reiser explains. “For example, social media, television ads, print ads, networking with doctors that can validly refer you to plaintiffs. Florida even passed a regulation that allows lawyers to text potential clients,” he adds. Moreover, “lawyers are generally free to advertise in for-profit lawyer directories, and non-profit and lawyer-owned referral services will continue their operation,” Swisher concludes.
Catherine McLeod Chiccine is a contributing editor for Litigation News.