Paralegals Cautioned About the
Referral of Clients from Third Parties
Apr 28, 2008
Recently licensed paralegals and paralegals who are currently in the Licensing Process are being approached by various groups to participate in referral fee, fee-splitting or fee-sharing arrangements that do not meet paralegals' obligations under subrules 5.01(11) and (12) of the Paralegal Rules of Conduct.
Proposed arrangements vary from those in which the referring third party requests payment for the referral and has no further relationship with the client, to those in which the referring third party asks for a percentage of the paralegal's fee and remains involved in the client's matter. In extreme cases, the paralegal does not meet with the client but accepts instructions and payment from the referring party on the client's behalf.
Subject to the obligation to avoid potential and actual conflicts of interest, paralegals may accept referrals from any source. However, they are not permitted to share or split fees with any person or group of persons that are not licensed by the Law Society to provide legal services or to practise law. Paralegals are also prohibited from giving any reward, financial or otherwise, for the referral of clients or client matters to any person who is not a licensee. When a non-licensee offers to refer a client to a paralegal in exchange for a referral fee or a share of fees, the paralegal must refuse the offer. Even if a client is aware of and consents to this arrangement, the paralegal must decline the arrangement or fee.
When a client is referred to a paralegal, the paralegal must ensure that the referring party understands that he or she may not continue to be involved with the client's matter. The paralegal must also ensure that the referring party does not interfere with his or her duty to the client. Unless the client instructs the paralegal otherwise, the paralegal cannot discuss the client's matter with or accept instructions regarding the client's matter from the referring party.
Paralegals who are unsure as to whether a proposed arrangement meets the requirements of the Paralegal Rules of Conduct are urged to contact the Law Society's Practice Management Helpline via the Resource Centre at 416-947-3315, or call toll-free in Ontario, 1-800-668-7380 ext. 3315.