Seven Rules of the Road for Managing Referrals To/From Other Attorneys – Part II

Rule No. 5: Referring attorneys should receive credit for “next generation” client matters that came from their referrals

The adage that law firms’ best marketing is the work they do for their clients has become an adage because it’s true (despite what some legal marketing consultants would tell you). Happy law firm clients refer their family, friends, and acquaintances to the law firm that put a smile on their face.

But what happens when Law Firm A refers Client 1 to Law Firm B, Law Firm B provides great service to Client 1, and then Client 1 refers Client 2 to Law Firm B?

Is Client 2 technically a referral from Law Firm A?

In our view, yes.

Client 2 is a “next generation” legal matter stemming from Law Firm A’s referral of Client 1 to Law Firm B.

Therefore, Law Firm A is entitled to a referral fee (if applicable) from Client 2’s matter and any other matters that come in the door at Law Firm B from referrals from Client 1.

Some attorneys and firm administrators might think that because Law Firm B’s good work compelled Client 1 to refer Client 2 to the firm, it shouldn’t be on the hook for a referral fee to Law Firm A.

From our perspective, if it wasn’t for Law Firm A referring Client 1 to Law Firm B, Client 2 and other clients wouldn’t have retained Law Firm B.

Thus, when your firm receives a referred client from another firm, and that referred client refers your firm additional clients, we believe the other firm is entitled to referral fees from all clients who that original referred client referred to your firm.

Rule No. 6: Don’t assume your firm will handle all claims relating to a referred client’s legal or business issues

When a referred client has multiple claims your firm can handle for them, don’t assume the referring attorney wants you to do so. There’s a good chance they intended for you to only handle one of those claims.

We often refer a client to multiple attorneys/firms when that client has potentially multiple legal claims or matters stemming from a single event or situation.

For example, when a personal injury client has both a workers’ compensation claim and a possible third-party injury claim, we tend to refer those claims to different attorneys. Similarly, when a client is the co-owner of a large business whose fellow co-owners are deadlocked and want to dissolve the company, we would likely refer that client to both a “business divorce” attorney and a tax attorney. We do this to ensure that our referred clients are getting access to the most qualified attorneys, and that we are engaging as many attorneys in our referral network as possible.

Though we make it clear to our referral attorneys which particular aspect of a client’s legal or business issues we’re referring them, occasionally a referral attorney will take it upon themselves to handle other aspects of a client’s issues without consulting with us first, including by referring the client to a colleague or friend. That’s not a best practice.

Despite how related a client’s various potential claims might be, an attorney receiving a referred client should always check with the referring attorney before confirming with the client that they will handle their additional legal matter(s). The referring attorney might have already referred that matter out.

If they have, and the referee attorney also referred that matter out or had begun work on it, the situation could get messy and lead, at the very least, to damaged egos and relationships.

Rule No. 7: Don’t take it personally when you’re not referred a particular client matter

When you’re not referred a particular matter from a referring attorney, it’s most likely an “It’s not you, it’s me” situation. In other words, the referring attorney likely has strategic reasons why they’re not referring a particular client matter to you based on them having to manage their referral network.

Perhaps the referring attorney knows you are an excellent attorney, but there is another attorney who is an excellent attorney who happens to specialize in handling matters with particular sets of facts or parties, and the matter you didn’t receive has those facts or parties. (See Rule No. 1 from Part I.)

Perhaps the referring attorney wanted to give a new attorney an opportunity to handle a matter after the latter demonstrated excellent results for clients in that same legal vertical. (See Rule No. 2 from Part I.)

When you’re not referred a matter you believe you should have been referred, I recommend you ask the would-be referring attorney why they did not send you the referral. If the reason is not one of the above or a similar “It’s not you, it’s me” reason, take their feedback to heart and do what you need to do to move into pole position for a referral the next time the attorney has a similar matter they plan on referring out.

When in doubt, act in the best interests of the primary beneficiaries of referral relationships

The seven rules I’ve laid out in Parts I and II are focused on attorneys’ referral relationships with other attorneys. But in any discussion about referral fees, it’s easy to lose sight of the primary beneficiaries of referral relationships: our clients.

While I hope these seven rules smooth out—and help you avoid in the first place—rough patches in your referral relationships with other attorneys, whenever there is any doubt about how to handle an issue that arises within such a relationship, the answer is usually the one that is most consistent with the best interests of our clients.

Adam Goldstein is the Chief Strategy Officer for Pond Lehocky Giordano Inc, the largest workers’ compensation and Social Security disability law firm in Pennsylvania, and one of the largest in the United States. He can be contacted at agoldstein@pondlehocky.com.

Reprinted with permission from the January 21, 2025 edition of The Legal Intelligencer © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.