The Lead-Gen Deal That Can End Your License

“We only charge you for signed cases.”

It sounds like the perfect arrangement. No risk. Pay only for results. A lead generation company delivers policyholders who have already agreed to hire you, and you pay a fee for each one. Many attorneys and public adjusters have signed these deals. Some of them are no longer attorneys or public adjusters.

Why it’s a problem

For attorneys, bar rules prohibit paying anyone for a referral and prohibit sharing legal fees with non-lawyers. A per-signed-case fee to a lead generator is, in the view of most bar regulators, exactly that: a payment for a referral, and if it’s calculated as a percentage of the fee, a fee split. State statutes in many jurisdictions criminalize “running” and “capping,” the solicitation of clients for attorneys in exchange for compensation.

For public adjusters, state insurance statutes prohibit paying or receiving compensation for referrals and prohibit using unlicensed persons to solicit. A lead generator that contacts homeowners after a storm and steers them to a specific adjuster for a fee is soliciting without a license, and the adjuster who pays for it is participating.

The lead generator’s contract will say the fee is for “marketing services.” Regulators look at the substance: if payment depends on the client signing, it’s a referral fee.

How these deals are structured

The common versions: a flat fee per signed client; a percentage of the fee when the claim resolves; a “marketing fee” that happens to be invoiced only for cases that sign; or a “co-counsel” or “consulting” arrangement with an entity that does no legal or adjusting work.

All of them tie payment to outcome. All of them carry the same risk.

What works legally

Advertising the firm pays for regardless of results. A search campaign, a television spot, a direct mail piece, or a digital lead program billed on impressions, clicks, or a flat monthly fee, delivered in the firm’s name, with the firm’s required disclosures, and with no steering by the vendor. The vendor is paid whether or not anyone signs.

Some states permit registered lawyer referral services or “qualifying providers” under specific rules, with limits on how they operate and how they are paid. These are narrow exceptions with their own compliance requirements, not a loophole.

Questions to ask any vendor

Is the fee the same whether or not the prospect signs? Who contacts the prospect, and what do they say? Is the firm’s name and required disclosure on every communication? Does the vendor sell the same lead to multiple firms? Does the vendor contact prospects by phone or text, and if so, with what consent? Who owns the data? Has the vendor’s model been reviewed by a regulator in your state?

If the vendor can’t answer these clearly, or the answers change depending on who’s asking, walk away.

The cost of being wrong

A disciplinary complaint. Disgorgement of fees. Suspension or revocation. In some states, criminal exposure. And every client the vendor delivered becomes a potential problem, because the engagement was tainted from the start.

The lead was never worth it.

Give it to Qore and get back to the claim. Qore runs the business side of claims law firms and public adjusting firms under one agreement, from intake and marketing to case operations, people and strategy. Apply to join.