The Dark Side of Referrals

A few days ago, Seth Godin wrot about referrals and their true meaning in a profession. When they work well, a referral comes with it a high degree of trust. When you refer a client to another person, you stake some of your reputation on the person to whom you made the

referral. In addition, the person to whom you made the referral will hold you at least somewhat responsible if the client turns into a pain in the neck or is a waste of time.

My best clients come from referrals. Good clients have found me through Avvo, this blog, or someplace on the internet, but most of my good clients have come from other lawyers, from judges, or from former clients. Where does my internet presence come in handiest? It helps the most when clients who have been referred to me start doing research.

But there is a dark side to referrals. Sometimes, a lawyer refers a potential client because the two lawyers have a special arrangement worked out as in “send me all of your personal injury cases, and I will send you all of my criminal defense calls.” Even worse, lawyers have arrangement to along the lines of “I’ll refer you every criminal case, but I expect you to send me 10% of every fee you get.”

At worst, those sorts of arrangements violate ethics rules. When a client pays a fee, the client should know if a portion of that money is going to a third party. And those funds should go to a person who is working on the case.

But even at best, referrals based upon an agreement between counsel shortchanges the client. After all, a referral is a lawyer’s way of saying that, while I am not the particular person for the particular matter and client right now, my colleague may well be the perfect person. The focus should be on getting the client the right lawyer, not just on securing business for a buddy and particularly not on securing a kickback.

When referrals work well, they are a wonderful thing. Referrals get a client access to the right professional and the professional a client who is a good fit for the practice. Referrals are  about trust. When they are solely about money, they do not work well at all. There is much to think about when it comes to referrals.