Q: In general, can lawyers pay for "qualified referrals" within an affiliate relationship with another company?
Part of our business model is to determine the financial condition of our clients. If they are in a poor financial state and should consider a bankruptcy, we would like to refer them to a lawyer and receive a pay-per-lead fee (some commission) from the lawyer based on agreed upon terms if this is legal and a standard practice. How does the industry handle these sorts of circumstances?
A:
The Bankruptcy Code expressly prohibits lawyers from representing a debtor is the attorney has in any shared his retainer or bankruptcy fee, or agreed to do so, and every debtor's lawyer must sign a prescribed form of Affidavit regarding fee-sharing and file it with the court.
It might pass muster if the debtor's lawyer files an application to engage your professional services/business consulting with the court, upon specific terms for compensation and how it is to be earned, and the court approves the application.
The US Trustee's office will surely scrutinize any such fee agreements, as will the court.
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