2001-01

QUESTION:

The Office of General Counsel has received several
inquiries concerning the ethical propriety of attorneys
participating in bartering clubs. There are at least two
such clubs presently operating in this state. One operates
under the name Business Network International (BNI) and the
other is called Trade Bank International (TBI).

The Disciplinary Commission has reviewed the membership
agreement and other information pertaining to the services
offered by these clubs. Based upon this information, it
is the understanding of the Disciplinary Commission that
BNI and TBI provide administrative services for a number
of chapters or clubs which operate throughout the nation
and in other countries. Each club or chapter is comprised
of one or more individuals from each of the various
professions who are associated for the purpose of bartering
their services among themselves and also for the purpose
of referring clients, customers or patients, etc., to each
other. For example, if a medical doctor who is a member of
one of these clubs needs the services of a lawyer to draft
a will, he may contact a lawyer who is a fellow member of
the club and the lawyer will prepare the will without cost
to the doctor. In exchange, the doctor will provide the
lawyer medical services of a comparable value at no cost to
the lawyer. Additionally, if the doctor has a patient who
needs legal services, he would refer that patient to a
lawyer who is a member of the club, and in return, if the
lawyer has a client who needs medical services, he would
refer that client to the medical doctor.

Professionals, other than lawyers, would be given the name
of the individual referred and would then contact the
individual to make an appointment or otherwise discuss
their needs. In the case of lawyers, face-to-face or
telephone solicitation of clients is prohibited and,
therefore, the referring professional would give the
lawyer’s name to the potential client and it would then
be up to the potential client to make contact with, or
set up an appointment with, the lawyer.

Each professional pays an annual fee of $250 to the club
which, according to the information reviewed, is used
to pay administrative costs. No fees are paid by any
professional to another professional nor is there is any
compensation received for any referral.

ANSWER:

It is the opinion of the Disciplinary Commission that
participation by a lawyer in bartering clubs such as BNI
and TBI is not inconsistent with the lawyer’s ethical
obligations under the Rules of Professional Conduct of the
Alabama State Bar, provided that referrals ancillary to the
lawyer’s representation of a client are made to another
club member only after the lawyer has reached a good faith
determination that referral to a member, as opposed to a
nonmember, is in the best interest of the client and best
suited to meet the client’s needs.

DISCUSSION:

The first of the Rules of Professional Conduct which
would appear to be pertinent to the issues presented
is Rule 7.2(c), which prohibits a lawyer from giving
anything of value to a person for recommending the
lawyer’s services. However, it would not appear that
the proposed arrangement constitutes a violation of this
section in that the only fees paid are to the organization
itself, which does not make the referrals, and nothing of
value is given to the professionals who actually make the
referrals. Additionally, the prohibition in Rule 7.3
against face-to-face or telephonic solicitation would not
appear to be a problem in that the lawyer would not make
the initial contact with the client; rather, the client
must take the affirmative step of first contacting the
lawyer.

However, there is an additional ethical consideration
which is of some concern and which, in the opinion of
the Commission, could constitute a potential conflict
of interest for participating lawyers. In representing
clients, lawyers are ethically obligated to act at all
times in the client’s best interest. Furthermore, Rule
1.7(b) provides that a lawyer shall not represent a client
if that representation is materially limited by the
lawyer’s own interests.

Participation in an organization in which clients,
customers or patients are referred back and forth between
professionals could place a lawyer in a situation where the
lawyer’s own interest is in conflict with the best interest
of the lawyer’s client. If, for example, a lawyer has a
client who needs the services of a financial planner, it
would be in the lawyer’s own best interest to refer the
client to a financial planner who is a member out of the
bartering club. In so doing, the lawyer not only obtains
access to free financial planning services for himself,
but also obligates the financial planner to make a
reciprocal referral. However, in actual fact, the best
interest of the lawyer’s client may well be served by a
financial planner who, although not a member of the club,
may be better qualified to meet the client’s needs.

The information reviewed by the Commission indicates
that club members are not necessarily obligated to make
referrals only to other club members. Each club member
has the latitude to make referrals to nonmembers if, in
the member’s professional judgment, referral to a nonmember
would best suit the interest or needs of the client,
patient, or customer.

It is the opinion of the Disciplinary Commission that
any lawyer participating in a bartering and referral
club or organization must always remain free to exercise
independent professional judgment in representing a client,
including decisions relating to further professional
services for a client. Therefore, before a lawyer may
refer a client to a fellow member of a bartering club, the
lawyer must make a good faith determination in the case of
each referral as to whether or not the client’s interests
and needs would be best served by a club member, or by some
other professional. Only if the lawyer can make such a
good faith determination in every case would the lawyer’s
participation in such a bartering and referral organization
be ethically permissible.

Finally, lawyers participating in a bartering club should
be aware of the tax ramifications of obtaining goods and
services by barter. Since such concerns present legal
issues involving construction and application of the tax
code, the Commission obviously expresses no opinion with
regard thereto. However, participating lawyers are
encouraged to carefully research these issues or to
consult an accountant or other tax professional.

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