Since beginning my own law firm earlier this year, I have taken referrals and referred cases to other lawyers much more than when I worked at larger law firms. I used to believe that referrals only helped attorneys receiving work, since these lawyers are able to generate revenue from clients that are referred to them. Of course, there are some ways to ethically share fees as a result of referrals, but referring attorneys can also realize a number of other benefits from referring out matters. In addition, clients often realize a number of benefits from having their cases referred to another attorney rather than working with the first lawyer to whom they contact.
One benefit of referring matters that I did not understand until after I started my own firm is that referring a client to another attorney is a far more polite way to pass on work without impugning the merits of a case or hurting anyone’s feelings. Oftentimes, friends and people referred to me by acquaintances might propose litigation that would either be costly or does not have a high likelihood of success. It is difficult to turn such people down, since prospective clients are often unwilling to see the deficiencies in their cases or understand the practical issues of filing a given lawsuit.
However, it is much more polite to refer a case to someone else than to turn a matter down outright. In addition, even if an attorney has a difficult talk about why a lawsuit might not be practical, clients usually appreciate being referred to another lawyer whom they can talk to about a given matter.
Moreover, and I hate to use this expression in this context even though it fits, one person’s trash is another person’s treasure. Even if one lawyer does not see value in a matter, another attorney might discern the merits of a case. For instance, I was involved with a personal injury lawsuit recently that was turned down by three respectable attorneys. However, this case eventually settled for several hundred thousand dollars without too much hardball litigation. The attorney that handled the case and filed the lawsuit a day before the statute of limitations expired was referred to the client by the third lawyer who turned the matter down. In any case, referring work to other attorneys can help clear a lawyer’s desk of matters they do not wish to handle, and this can maintain relationships with clients who might appreciate being referred to another lawyer.
Another major advantage of referring cases to other lawyers is that this can increase the number of clients that are referred to the referring attorney. Attorneys are usually more than happy to refer clients to an attorney if they themselves received a referral. In fact, nearly all of the referrals I have made have positively impacted my practice. For instance, many attorneys who have accepted my referrals have referred matters to me or reviewed me positively online. Referring cases is a good way to pay it forward, and there is a solid chance that this deposit into the “favor bank” will yield dividends in the future.
Referring cases to another attorney is also usually beneficial to the client. Oftentimes when a lawyer is on the fence about whether to accept a matter or refer it to another attorney, it is because the referring attorney does not have much experience with a given issue. Of course, lawyers sometimes work on a matter even though they might not be totally familiar with a type of case because they want to get paid for doing the work. However, in these situations, another lawyer who is more experienced with a given legal matter might be able to give a client better representation. In addition, doing less-than-ideal work for a client could make a client think that a lawyer is bad at handling all matters, and this could jeopardize future work generated by an attorney. As a result, referring cases when there is any hesitation about one’s experience with legal issues is usually beneficial for everyone involved in the matter.
In addition, there are a number of other reasons why referring out a matter might benefit a client as well as the attorneys involved. Sometimes, attorneys wish to refer out prospective clients that are located a far distance from an attorney’s office. This makes it much easier for the client to meet with their attorney and lets an attorney avoid the hassle of handling a matter far away. In addition, when attorneys at bigger firms refer matters to lawyers at smaller firms (which happens all the time, how many of us have gotten an email at a bigger firm looking for an attorney to refer work to!) the attorney at a smaller firm usually charges less money. This can save the client cash and avoids a situation in which an attorney at a bigger firm cannot properly handle a matter because they are afraid of racking up huge legal bills due to higher hourly rates.
All told, referrals are commonplace within the legal industry, as they are in other professions. Of course, everyone probably understands that referrals are good for the attorney receiving work, and for the referring attorney if referral fees are allowed. However, it is also important to note that there are many reasons why referrals are good for referring attorneys, lawyers receiving work, and clients themselves.
Jordan Rothman is a partner of The Rothman Law Firm, a New Jersey and New York full-service law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jrothman@rothmanlawyer.com.