When dealing with referral fees, which statement is correct?

• A. Referral fees must be reasonable, cannot increase the total fee, require client consent, and consider conflicts of interest.
• B. Referral fees can be increased without client consent if the referral came from another licensee.
• C. Fees may be shared with non-licensees without client notice.
• D. Referral fees must be disclosed only if the client asks.

Answer: (A)

Referral fees must be handled with integrity and transparency. When a licensee refers a client to another professional, the arrangement should be fair and aligned with the client’s best interests. Specifically, any referral fee should be reasonable in relation to the services provided, and it must not push up the total amount the client pays for legal services. The client must be informed about the referral arrangement and must give informed consent, so they can understand how the referral affects charges and any potential conflicts of interest. Because referrals can influence how a client is steered or billed, it’s essential to assess conflicts of interest and manage them so the client’s needs come first.

The option that states all of these elements—that the referral fee must be reasonable, cannot increase the total fee, requires client consent, and considers conflicts of interest—best reflects proper practice. Other options fail because they allow increasing fees without consent, sharing fees with non-licensees without notifying the client, or only disclosing if the client asks—options that undermine transparency, consent, and the protection of the client’s interests.