In a unanimous decision, the New Jersey Supreme Court has struck down an advisory ruling that would have prohibited Certified New Jersey attorneys from paying referral fees to out-of-state lawyers. The ruling, which overturned Opinion 745 of the Supreme Court Advisory Committee on Professional Ethics (ACPE), preserves long-standing practices regarding attorney referrals and prevents undue restrictions on professional networking.
Win for Lawyers Certified by the Supreme Court as Civil Trial Attorneys
The ACPE issued Opinion 745 in March 2023, concluding that certified New Jersey lawyers could not pay referral fees to attorneys licensed outside of the state. This interpretation was met with strong opposition from the New Jersey State Bar Association (NJSBA) and other legal organizations, who argued that it unnecessarily created a new barrier to established referral agreements.
The New Jersey Supreme Court’s analysis focused on whether there was a conflict between two professional conduct rules:
- Rule of Professional Conduct (RPC) 1:39-6(d), which explicitly allows certified attorneys to pay referral fees.
- RPC 1.5(e), which governs the division of legal fees between attorneys.
The Supreme Court’s Rationale
Writing for the Court, Chief Justice Stuart Rabner clarified that while both rules address fees, they cover distinct aspects of attorney compensation. The Court held that:
"The text of the two rules does not present a conflict...Rule 1:39-6(d) governs referral fees, while RPC 1.5(e) addresses the division of fees for legal services. Viewed in that way, the rules can be read and applied as part of a unitary system."
Chief Justice Rabner emphasized that referral fees are not payments for legal services and, as such, do not implicate concerns about the unauthorized practice of law. He further noted that the state’s attorney certification program was designed to increase referrals to experienced attorneys, and barring referral fees to out-of-state attorneys would undermine this goal.
Legal Community’s Response to the Ruling
The New Jersey State Bar Association, along with multiple county bar associations and legal advocacy groups, played a pivotal role in challenging the ACPE opinion. The New Jersey State Bar Association argued that for 45 years New Jersey attorneys have understood that certified lawyers could pay referral fees to out-of-state attorneys. This ruling is the correct result. Certified Civil Trial Attorneys in New Jersey can continue to refer fees to out-of-state referring attorneys without risk of problems. Under the prior overturned ethics opinion if a Certified attorney already had an agreement with a referring out-of-state attorney, that Certified attorney had to breach the agreement and not send the referral fees. Now, that problem is solved, and the fees can be sent to the referring attorney.
Impact of the Decision
The Supreme Court’s decision ensures that New Jersey attorneys can continue longstanding referral arrangements without fear of disciplinary action or ethics complaints. The ruling also clarifies that:
- Certified attorneys may legally pay referral fees to out-of-state lawyers, even if those lawyers are not licensed in New Jersey.
- Referral fees do not constitute payment for legal services, and therefore, concerns over the unauthorized practice of law do not apply.
- The state’s attorney certification program is strengthened by maintaining financial incentives for referrals to experienced, vetted attorneys.
The decision is a significant win for the legal profession, preventing unnecessary disruption to attorney-client relationships and preserving New Jersey's established professional referral system. With the Supreme Court’s firm stance, the ruling settles what had become an unexpected and controversial issue in the legal community. Attorneys Certified by the Supreme Court of New Jersey must go through an involved vetting process, have the requisite trial experience to qualify and be recommended by Judges and other attorneys. Furthermore, passing of a written exam along with these qualifications is required. For the specific requirements to qualify in New Jersey, the Board on Attorney Certification publishes those rules. John J. Scura III in our firm is Certified by the Supreme Court of New Jersey as a Civil Trial Attorney and welcomes referrals from New Jersey and out-of-state attorneys and can pay referral fees pursuant to the N.J. Court Rules. Our firm provides a written agreement guaranteeing the referral fees and provides a case reporting system to referring attorneys on the status of the referred matter.
Judge Thomas F. Brogan, P. J. Civ. (ret.), now of counsel with our firm, was also Certified by the Supreme Court of New Jersey as a Civil Trial attorney before becoming the Presiding Civil Judge in Passaic County, and handles mediations, arbitrations and consults with our clients and attorneys on cases. Judge Brogan served on the bench in Passaic County for 23 years and adds a wealth of knowledge to our firm.
