There are many reasons a young lawyer may refer a file to another colleague – perhaps because the matter falls outside his or her area of expertise, involves a different jurisdiction, is the subject of a conflict, or simply cannot be taken on due to workload issues. While passing up a new matter can sometimes seem painful, when handled correctly these situations can in fact lead to a positive outcome for your practice and the client. Here are some pointers for handling a referral:
- Choose the right colleague to refer
You’ve put a lot of effort into growing your professional network – keeping in touch with law school classmates, volunteering in local pro bono initiatives, and of course attending each and every OBA YLD East event. Time to put that Rolodex (or social media contact list) to good use!
When deciding to whom you will refer a client, it's important to consider the complexity of the matter involved and the expectations of the client. Does the file require a senior practitioner to provide oversight, or can costs be saved by sending it to a more junior colleague? Is the client more comfortable dealing with a local lawyer who can accommodate face-to-face meetings, or will most communication with the client be conducted over email? Would the client prefer a lawyer who is able to provide services in French or another language?
If you're in a large firm, you may be able to refer the matter in-house to a colleague with the appropriate expertise. Internal referrals can be an effective form of business development, and clients often appreciate the streamlining of communications and billing that comes with having a one-stop shop for legal advice. Regardless of the breadth of practice areas in your firm, be sure to tap your colleagues for recommendations - harness the entire firm's network if you can. You may also want to consider if you can refer the work to a colleague who may be able to reciprocate in future, or who has sent you work in the past.
- Avoid conflicts of interest
If referring a new matter to another firm, always bear in mind the need for conflict checks before providing fulsome details of the case at hand. As with any file, the lawyer handling the matter will need to know the identity of the prospective client, any potentially adverse parties, and the general nature of the matter in order to query whether they are able to act.
- Communicate clearly with all parties involved
The client needs to be kept aware of the status of his or her file at all times. If you believe it will be necessary to refer a file, let the client know as soon as possible and seek their instructions. A client has full discretion in choosing who to retain. Never disclose confidential or privileged client information to a third party without obtaining client consent.
Similarly, communication with new counsel is key to ensuring a smooth referral or handover of the file. Make sure all necessary documents are provided in a timely fashion and in a suitable format. Ensure that the lawyer receiving the retainer, as well as the client, is aware of any upcoming deadlines or limitation periods, and confirm same in writing.
If you are referring a matter for reasons other than a conflict of interest, be sure the new counsel knows if they are going to be dealing with the client directly or if your own firm will be retaining them and acting as a go-between with the client. In the latter case, ensure that you obtain cost quotes from external counsel as appropriate and keep the client updated with respect to fees - costs can ratchet up quickly if there are two law firms advising on a file!
- Follow the Rules of Professional Conduct
Remember that referrals must always be in the best interests of the client. This is a fiduciary obligation that applies to both the referring and referred lawyer.
In many areas of practice, referrals are generally given gratis. However, if you are expecting compensation for the referral, be sure to stay up to date on the applicable rules. The Law Society of Ontario has made recent changes with respect to the Rules of Professional Conduct and Bylaw 9,which deal with referral fee arrangements. If a referral fee is to be paid to the referring lawyer, the referral fee cannot increase the total cost to the client, cannot be demanded upfront, and cannot exceed $25,000 (15% for the first $50,000 of legal fees and 5% of all legal fees thereafter to an absolute cap of $25,000). Appropriate disclosure must be made to the client regarding the referral fee, and the client, the referring lawyer, and the lawyer accepting the referral must enter into a referral agreement.
Happy referring!