Are you a generous referrer?

I‘ve been having an ongoing conversation over the past week with an attorney about attorneys referring business to one another, and here’s what she told me today:

My experience is most attorneys will do whatever walks in the door regardless of experience or expertise and also will only refer if they get a referral fee even if they do nothing to earn it.

I was actually floored when I read this. I know that there are some attorneys out there who think this way, and my first thought was that she needs to associate with a different group of attorneys. But I have to wonder whether these ideas are more widespread than I thought.

Some reasons why the above is an exceedingly poor and short-sighted way to run your practice:

1. Malpractice. No lawyer can or should handle everything that walks through the door; there are some areas of practice that are extremely specialized and contain numerous malpractice traps for the unwary. It is far easier to screw up even a ‘simple’ case if you’re unfamiliar with the rules and procedures (not to mention the substantive law) involved.

2. Scarcity. This way of doing business represents a scarcity mentality. Lawyers who insist that they can handle anything that walks through the door do so more out of fear that they won’t have enough work if they turn away clients than out of a conviction that they can actually handle anything competently.

3. Ethics. Many jurisdictions prohibit lawyers from taking a referral fee if the lawyer does nothing but refer the case out to someone else. If you aren’t providing value for the client, you can’t collect a fee – including a referral fee.

4. Concern for your clients. If you truly want to provide a service for your clients and potential clients, sometimes the best advice that you can give them is that they should find another lawyer who is more well-versed in that practice area or industry. Taking on a matter for which you are unprepared or ill-equipped does a disservice not only to that new client, but to your existing clients, whose matters may be neglected while you try to learn a new practice area.

5. Economics. If you’re working on too many different practice areas at once or taking on matters which are entirely unfamiliar to you, it’s likely that you’ll be spending more time getting up to speed than an experienced practitioner would. If you’re billing hourly, that means that you’ll either be cutting your hours or charging a reduced rate due to your lack of experience, since most clients aren’t willing to pay for your time to learn something they expect you to know already. It’s much more productive to focus on what you do (and know) best.

6. Relationships. If you practice this way, you’re likely to alienate other lawyers, potential referral sources and clients. Since relationships are the foundation of any law practice, you’re playing with fire if this is your attitude.  What goes around comes around — if you don’t refer out, chances are others aren’t referring to you, either. Referrals strengthen your relationships with those to whom you refer and with your clients – sometimes the client is so appreciative that they ask you to stay involved in the matter even after you referred it – so both you and the new attorney get paid!

7. Hypocrisy. Lawyers will constantly tell their clients that they shouldn’t proceed without competent legal representation, because the consequences can be devastating. Lawyers often rail about the prolifiertation of ‘do it yourself’ forms, websites, and lay advice that you can do your own will or negotiate your own real estate contract or represent yourself in court. But lawyers that take on matters they are not equipped to handle are making the same mistake for their clients.

If you want to take on a new practice area or learn something about a new area of the law, by all means do so – but go about it in a purposeful way, by setting aside the time to educate yourself and to get help from experienced practitioners in the field.