To Pay for Lead or Not To Pay for Lead
By now you probably have been made aware of Pay for Lead programs through advertisements or direct solicitations, but are such programs ethically permissible? According to the comments for Rule 7.2 of the ABA’s Model Rules for Professional Conduct, although you may not actually pay others to recommend you, you may pay for client leads under certain circumstances. The comments provide that:
“Paying Others to Recommend a Lawyer
“Moreover, a lawyer may pay others for generating client leads, such as Internet-based client leads, as long as the lead generator does not recommend the lawyer, any payment to the lead generator is consistent with Rules 1.5(e) (division of fees) and 5.4 (professional independence of the lawyer), and the lead generator’s communications are consistent with Rule 7.1 (communications concerning a lawyer’s services). To comply with Rule 7.1, a lawyer must not pay a lead generator that states, implies, or creates a reasonable impression that it is recommending the lawyer, is making the referral without payment from the lawyer, or has analyzed a person’s legal problems when determining which lawyer should receive the referral.”
This does not mean you may pay others to send you a case. That is still prohibited. What is the difference between sending you a case or a lead? I think the best way to illustrate that is to consider the business model of what I understand to be the prototype for pay-for-lead marketing programs, TotalAttorneys (TA).
“This does not mean you may pay others to send you a case. That is still prohibited”
TA was formed 10 years ago by attorneys, as many of these legal service/product startups are. Their business model was to market nationally, and then deliver the leads to local attorneys. Their leads come from various sites all across the internet and encompass various areas of practice. They screen for practice area and geographic location and pass the lead onto the local attorney by email, text and/or telephone call. The attorney pays for a qualified lead, not a successful conversion of lead to client.
Qualified leads are considered to be leads from the proper location, practice area, etc. Whether or not a case comes from that lead is irrelevant, and the marketing reality is that only a small percentage of the leads do turn into a case. (An attorney must decide for himself or herself if the Return on Investment (ROI) is worth it.) This is a critical part of the reason these Pay for Lead companies can provide these services and attorneys may benefit from them. The Pay for Lead companies do not refer cases to attorneys and attorneys do not pay them for cases. They refer all qualified potential leads to attorneys and attorneys pay for the leads regardless of whether or not they turn into cases or are even likely to. The leads need only satisfy the agreed upon criteria for “valid” leads and that is what the attorneys pay for.
However, this Pay for Lead model was initially met with substantial resistance. A Connecticut attorney took exception to the Pay for Lead model pioneered by TA and in April 2009, he filed an ethics complaint with state bar disciplinary counsels in 47 states. The complaint alleged that Total Attorneys violated several advertising ethics rules by, among other things, serving as a “for-profit referral service” which he asserted was unethical and not permitted. Some state disciplinary counsel took the position that the TA’s business model violated Model Rule 7.2 in that it involved an attorney paying a non-attorney for the recommendation of his or her services. Total Attorneys maintained that the payments were payments for the reasonable cost of advertising and not a payment for a recommendation of the lawyers’ services and ultimately prevailed.
It is important to note that although the ABA Model Rules explicitly permit Pay for Lead and the ethics behind that decision seems sound, the Pay for Lead model still may not be permitted in any particular state unless the state adopted the ABA Model Rules or amended their own rules in a similar fashion. Proceed with caution and be sure to verify that your own state rules allow you to participate in Pay for Lead programs before you contract with one of the Pay for Lead companies to see if this is a model that works for you.
Carl P. DeLuca, Esq