Many attorneys spend their days in transit, in meetings, and in court representing clients and their interests, leaving little time for answering questions from leads and prospective clients over the phone. To add to the frustration, sometimes a client isn’t a good fit for their firm, and requires a referral to another attorney who can best fulfill the needs of their case.
Referral fees represent another source of income for a law firm outside of the normal fees that the attorney charges for serving a client. Sometimes, though, these “bad” leads can fall through the cracks, leading to a lost opportunity for additional income.
Have you considered engaging a virtual receptionist that will not only capture and qualify your good leads, but also can monetize your bad leads – those callers who are not good clients for you, but from whom you can still earn referral fees?
How attorney referrals work
U.S. federal law requires an attorney to act in the best interest of their client when representing them, according to the American Bar Association. This sometimes requires an attorney to refer a client to another attorney better qualified to meet the specific needs of the client. Why not make something from this exchange?
The reason for a referral ranges from an attorney practicing law in another country or different area, to an attorney charging a higher fee than the client is willing or able to pay. A family law firm referring a criminal case to a criminal defense lawyer represents just one example of a typical referral.
How much should an attorney expect in the form of a referral fee?
Most of the time, the amount of a referral fee depends on the state the attorney practices law in. For example, in California, attorney referral fees range from 10 to 50 percent of whatever fee the representing attorney receives. As a rule of thumb, in many personal injury cases across the U.S., referring attorneys typically receive one-third of the amount that the representing law firm receives. In other cases, the referring attorney receives a percentage of the flat fee or initial retainer received by the representing law firm.
How to use virtual receptionists to earn referral revenue
Virtual receptionists help ensure you capture all of the referral fees you can. They take down the lists of all of your referrals along with your specific instructions for which clients to send to them. When a lead is ill-fitting to your law firm but a good fit for someone on your referral list, virtual receptionists will reference your referral list, and make recommendations based on who you’ve indicated represents the best fit, depending on your client’s needs. So, if you practice family law and a caller needs a criminal attorney, they’ll refer them to the criminal attorney on your list. Best of all, assuming the virtual receptionist company places no limit on the number of attorneys you can have on your referral list, you can maximize the monetization of these “bad” leads.
A virtual receptionist can also make referrals for other business types, including IT consultants, financial planners, and others that seek to service their clientele by referencing them to experts who can best help them in their unique situations. This even goes for members of business networking groups, such as Business Networking International (BNI), local merchant associations, and others.
Rules, regulations, and requirements relating to referral fees
By offering this valuable service, your virtual receptionist is able to not only capture, qualify, and intake your good leads, but also helps you to monetize your “bad” leads though referral fees. However, as with any revenue-generating opportunity, be sure to review all rules, regulations, and requirements applicable to your jurisdiction relating to referral fees before instituting a referral fee program at your firm. One of the most helpful resources for attorneys is the Illinois State Bar Association’s article on Referral Fee Dos and Don’ts. Also, be sure to check with your state bar association.
Referrals as a service
One final consideration when you’re contemplating starting a referral fee program at your law practice is how this can be a source of future business to you, and not just an immediate passive revenue stream. By offering a referral to a “bad lead,” you’re not the only one reaping a benefit, and it’s not only a one-time benefit.
The person receiving the referral is getting major value here, because you’re saving them the time and guesswork of going back to the drawing board (often, this means going back to their Google search results page), and trying yet again to find a better-fitting attorney for their needs. You’re also generating goodwill. That goodwill typically comes back in two forms: 1) They better understand your law practice and the types of clients you serve, so when a friend, family member, or coworker needs legal services that match yours, they’re likely to refer them to you. 2) If and when they have a legal need that does match your practice area(s) in the future, they’re likely to come to you instead of another attorney. So, even if you decide earning referral fees is not something you can or wish to pursue, making the referrals anyway is just a good business practice and an investment in your future revenue.
Maddy Martin is the head of marketing and partnerships for Smith.ai, which provides law firm communication services, including their virtual receptionist & intake service, web chat, and Keypad cloud phone system. She has spent the last decade growing tech startups from New York to California, and has expertise in digital marketing, small business communications, lead conversion, email marketing, SEO & content marketing, social media, comarketing, and event marketing. Maddy can be reached at maddy@smith.ai.
