On February 18, 2025, the New Jersey Supreme Court issued a unanimous opinion in the case of In re Opinion No. 745 of the Supreme Court Advisory Committee on Professional Ethics, __ N.J. __ (2025) holding the Court Rules allow certified attorneys to pay referral fees to lawyers in other states even if they are not licensed in New Jersey, that the payment of referral fees does not raise concerns about the unauthorized practice of law, and vacating Opinion 745 which reached the opposite conclusion.
Background
On March 7, 2024, the Advisory Committee on Professional Ethics (“ACPE” or “the Committee”) issued Opinion 745 in response to inquiries received by the attorney ethics research hotline “about out-of-state lawyers seeking payment of referral fees from New Jersey certified attorneys.” The Committee determined that certified attorneys are not permitted to pay referral fees to out-of-state referring attorneys under Rule 1:39-6(d) unless the latter “is licensed and eligible to practice law in New Jersey.” Opinion 745 rested on the principle that referral fees are a division of the legal fee, paid for legal services rendered. The New Jersey State Bar Association (“NJSBA”), joined by other state bar associations and interested entities, filed a petition for review and requested that the Court stay enforcement of Opinion 745.
On Petition for Review
Bressler Attorneys Diana C. Manning and Kyle A. Valente submitted a petition for review and supporting brief on behalf of the NJSBA, with Diana C. Manning arguing before the Supreme Court. They contended that Opinion 745 misinterpreted the plain language of Rule 1:39-6(d) and conflated the payment of a referral fee under that Rule with the division of a legal fee under RPC 1.5(e). Among other things, the team argued that Rule 1:39-6(d) uses the word “attorney,” but not qualifying phrases like “out-of-state attorney” or “New Jersey attorney,” which reveals that the Rule applies to both groups of lawyers. They also contended that Opinion 745 threatens to undermine New Jersey’s attorney certification program and harm clients by removing the incentive for out-of-state lawyers to refer cases to vetted certified attorneys. In addition, they noted that Opinion 745 potentially exposes certified lawyers to liability for breach of contract if they do not pay referral fees they promised to pay. The Supreme Court heard oral argument on the matter, with Bressler Attorney Diana C. Manning arguing on behalf the NJSBA.
The Court’s Position
In its opinion vacating Opinion 745, the Supreme Court acknowledged and agreed with the position advanced by the Bressler team that Rule 1:39-6(d) directly authorizes certified attorneys to pay referral fees including to out-of-state lawyers, that those fees are not for legal services but are for recommendations to retain a particular lawyer, and that the plain language of the Rule makes that clear.
A copy of the published opinion by the New Jersey Supreme Court can be accessed online here.
For more information about the legal ethics, compliance, and professional responsibility work by Diana C. Manning and Kyle A. Valente, visit their firm bios or e-mail them directly at: dmanning@bressler.com; kvalente@bressler.com.