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Paying for legal leads: advertising costs, referral fees and what the rules allow

Consumer firms buy marketing every day, and most of it is fine. The line the ethics rules draw is between paying for advertising and paying someone to recommend you. Lead generation sits close to that line, so the details of how a vendor works matter. This guide summarizes the ABA Model Rules and several state opinions at a general level. Your state's rules control, and they differ, so confirm with your state bar's rules and opinions before you sign with any vendor.

Advertising costs versus paying for a recommendation

ABA Model Rule 7.2(b) bars a lawyer from giving anything of value to a person for recommending the lawyer's services, with listed exceptions. The first exception, Rule 7.2(b)(1), lets a lawyer pay the reasonable costs of advertisements or communications the rule permits.

Another exception, Rule 7.2(b)(2), covers the usual charges of a legal service plan or a not for profit or qualified lawyer referral service, where qualified means approved by an appropriate regulatory authority. Many states adopt their own versions of these rules, and some are stricter.

What the ABA says about lead generators

The ABA's guidance on lead generators is in Comment 5 to Rule 7.2. It allows a lawyer to pay a lead generator only if the generator does not recommend the lawyer, the payment complies with Rules 1.5(e) and 5.4, and the generator's communications comply with Rule 7.1, which bars false or misleading communications.

Rule 5.4(a) says a lawyer or law firm shall not share legal fees with a nonlawyer, with a few narrow exceptions. That is why pricing tied to a case's outcome or to the fee is the first thing to look for in a lead agreement.

Solicitation through others

ABA Formal Opinion 501, issued in April 2022, concludes that a lawyer may not use others to do what Rule 7.3 forbids the lawyer to do directly. A lead generator that solicits prospects live, in person or by phone, on the lawyer's behalf can put the lawyer in violation of Rules 7.3, 8.4(a) and 5.3.

In practice, ask how a vendor's conversations with consumers happen and what is said about lawyers in them. A vendor that pitches a specific firm on a live call is a very different risk from one that tells a consumer participating firms pay to advertise and connects them to a firm in their state.

What state ethics opinions have required

State bars have addressed lead generation and online matching directly. The common thread is that payment is for advertising, not for a recommendation, and it cannot depend on whether the consumer hires the lawyer or on the fee.

Questions to ask any lead vendor

Where Telgrow fits

We talk with homeowners every week whose solar contract went wrong. Homeowners who ask to speak with a lawyer are told participating firms pay to advertise, then connected with a participating firm licensed in their state. You choose your states and topics, and contact details and state are confirmed before you get the lead.

Telgrow is not a law firm. We do not evaluate claims or recommend a firm to homeowners. Firms pay for advertising only, price never depends on whether a homeowner hires you, and we take no part of your fees.

Questions

Can a law firm pay for leads?

Under the ABA Model Rules, a lawyer may pay the reasonable costs of advertising, and Comment 5 to Rule 7.2 allows paying a lead generator if it does not recommend the lawyer, the payment complies with Rules 1.5(e) and 5.4, and its communications are not false or misleading. State rules differ, so check yours.

Can a lead vendor's price depend on whether the client hires the firm?

That is the kind of pricing state ethics opinions have warned against. New York Opinion 1131 and Florida Opinion 18-1, for example, accept fixed or per lead pricing that does not depend on the outcome or the fee. Confirm with your state's rules.

Is this legal advice?

No. It is a general summary of the ABA Model Rules and several state opinions. Your state's rules and opinions control.

Homeowners with solar contract problems, sent to your intake team

We talk with homeowners every week whose solar contract went wrong: savings that never showed up, financing they did not understand, or a cancellation that was refused. Homeowners who ask to speak with a lawyer are told participating firms pay to advertise, then connected with a participating firm licensed in their state.

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