‘Tis the season for a friendly reminder that, before you or your firm send holiday gifts out this year, you should refer to the Rules of Professional Conduct. Under the current version of Rule 7.2, as interpreted by the CBA Standing Committee on Professional Ethics in Informal Opinion 18-05, lawyers may send a nominal value gift as a thank you to a client or other person who refers a client. Gifts that are mere tokens of gratitude or professional courtesy are permitted, where gifts that are closer to compensation or inducement to make a referral are not. Gifts with a firm’s name and logo may, in certain circumstances, be deemed advertisements, which would fall under other sections of the Rules of Professional Conduct. Regardless, lawyers should be cognizant that their gifts should be exactly that, gifts, and not an attempt to compensate or induce another for a referral.
Starting in the new year, the new version of Rule 7.2 will be effective, which provides a bit of clarity on lawyer gifting. The new rule provides that:
“A lawyer shall not compensate, give or promise anything of value to a person for recommending the lawyer’s services, except that a lawyer may . . . (5) give a nominal gift as an expression of appreciation, provided that such a gift is neither intended nor reasonably expected to be a form of compensation for recommending a lawyer’s services, and such gifts are limited to no more than two per year to any recipient.”
Rule 7.2(c). The new commentary explains that:
"Subsection (c)(5) permits lawyers to give nominal gifts as an expression of appreciation to a person for recommending the lawyer’s services or referring a prospective client. The gift may not be more than a token item as might be given for holidays, or other ordinary social hospitality. A gift is prohibited if the value of the gift is more than $50 or otherwise indicates a sharing of either legal fees or the ultimate recovery in the referred case, or if the gift is offered or given in consideration of any promise, agreement or understanding that such a gift would be forthcoming or that referral would be made or encouraged in the future.”
Rule 7.2, Commentary.
The revised version of 7.2 was enacted to conform with the 2018 amendments to the ABA’s Model Rules of Professional Conduct. Therefore, beginning in the new year, lawyers should ask: Is this gift an expression of appreciation and not an attempt to compensate or induce a referral? Is the value of this gift less than $50? Have I sent a similar gift to the intended recipient more than twice this year? Does this gift represent a sharing of legal fees? Is this gift being made in consideration of a promise, agreement or understanding that such gift would be forthcoming? Is this gift being made in consideration of a promise, agreement or understanding that in exchange for such gift a referral would be made or encouraged in the future? If the answer to any of those questions is yes, do not give the gift.