The New Jersey Supreme Court recently ruled that state-certified attorneys are allowed to pay referral fees to attorneys in other states, even if those attorneys are not licensed to practice law in New Jersey.

Jon L. Gelman

The ruling came in response to Opinion 745 of the Supreme Court Advisory Committee on Professional Ethics, which had concluded that certified lawyers "generally may not pay referral fees to out-of-state lawyers” who are not licensed in New Jersey.

The Supreme Court reviewed the ACPE opinion and disagreed. The court stated that the payment of referral fees to out-of-state attorneys does not raise concerns about the unauthorized practice of law.

The court’s ruling clarifies Rule 1:39-6(d), which allows certified attorneys to pay referral fees. 

Key points of the ruling

• Referral fees are payments made for a recommendation to hire an attorney.   
• The New Jersey Rules of Professional Conduct generally bars attorneys from paying referral fees, with limited exceptions.   
• Rule 1:39-6(d) creates an exception to the general rule for certified attorneys.   
• The plain language of Rule 1:39-6(d) makes clear that:
  • Certified attorneys can pay referral fees.   
  • Referral fees can be paid without regard to any legal work performed.
  • The referral fee can be paid out of, but cannot exceed, the certified attorney’s reasonable fee for legal services rendered. 
• The court applies basic principles of statutory construction to interpret court rules.   
• When interpreting a court rule, the court begins with the rules' plain language and gives the words their ordinary meaning.   

If a court rule's text is ambiguous, the court can use extrinsic evidence, including committee reports, for guidance. 

Claimants' attorney Jon L. Gelman is the author of "New Jersey Workers’ Compensation Law" and co-author of the national treatise "Modern Workers’ Compensation Law." He is based in Wayne, New Jersey. This blog post is republished with permission.