File Referrals and File Brokering

Toronto Personal Injury Lawyer Albert Conforzi: An eyebrow raising piece of litigation is unfolding in the Toronto courts. It brings squarely into focus the practice of file referrals.

There are two types of file referrals amongst lawyers. One happens when a client with a problem comes to see you about a problem that you don't cover. For example, if someone came to me with a matrimonial dispute, I would refer them to an expert in family law. I do not ask for, nor do I receive, a fee of any sort for referring the client to the family lawyer. My only desire is that the lawyer take good care of the client. Similarly, I am frequently asked by other lawyers to represent their clients in a personal injury matter, and those lawyers expect the same from me: to serve the client's best interests and to treat the client well.

Paying a referral fee for a file referral is not illegal, but the issue may be whether the public is being misled into believing that they are retaining experts, when they are really hiring a broker.

The second type of file referral could be called "file brokering." This happens when a firm advertises heavily that they handle certain kinds of cases, for example personal injury. The file broker then "sells" incoming files to a law firm that actually practices law in that field. In return, the file broker gets a percentage of the fee upon settlement of the case.

This is exactly the practice that is described in the article here. Note that this lawsuit is ongoing and any and all allegations are unproven until adjudicated upon, but it does give some insight into how some of these arrangements work.

Paying a referral fee for a file referral is not illegal, but the issue may be whether the public is being misled into believing that they are retaining experts, when they are really hiring a broker.

The Law Society of Upper Canada is the regulatory organization for lawyers, and I expect they will be following the proceedings very closely. Our firm and many others do advertise as part of a marketing plan, but the difference is we are also the people who provide the legal services you need.

Albert Conforzi is a personal injury lawyer with Pace Law Firm in Toronto. His posts generally appear on Mondays.