The main difference between a legal lead generation company and a lawyer referral service is that a referral service is always another law firm. That law firm is talking to the clients & potential clients, hearing what their situation is, listening to their legal needs, and then assessing that they or an affiliated law firm can help and actually getting that person to sign a retainer agreement on behalf of another law firm. Due to lawyer fee sharing rules that are in place pretty much nationwide, law firms aren’t allowed to share case fees with non-lawyers, so any referral services must be a law firm.
A legal lead generation company, on the other hand, does not have to be a law firm and it is not responsible in most cases for speaking to the clients, giving them any sort of information about the law firm or finding out anything about their specific legal problems. The main goal of legal lead generation company is to spark enough interest to generate people who want to speak to somebody to take an action, usually in the form of a phone call or filling out an online form, whereas a referral company or referral service is typically going to actually talk to the people once they take said action.
The lead generation company is simply going to be the conduit for the potential client to find the law firm, as opposed to a mechanism for vetting their case and signing them up law firm retainer agreement. In most instances, a lead is typically a request for a free consultation… in most cases has found a website while doing a search for information about their car accident or their workers compensation claim or whatever the legal matter is, and then found the website, read up a little bit about what they may be entitled to, what their situation may be, and decide they’d like to take it a step further and speak with an attorney to discuss their situation in more detail.
At that point they can usually either fill out a contact form on a website that’s going to gather their information, find out a little bit more about their legal issue and based on those two things route those people to the end user (the law firm), who’s then to speak to that person find out their situation and then if they need legal help sign them up as a client and help them out. For their part, the lead generation company that orientated the lead is typically paid a flat fee per qualified lead, phone call, etc. Prices tend to vary depending on practice area, location, and screening criteria. For example, a car accident lead in the heart of NYC is probably going to be more expensive to procure (and subsequently more expensive for a law firm to buy) than a general personal injury lead in the rural midwest.
Referral services can (and do) use lead generation businesses, in that case the lead generation company would send the lead over to the referral service, the referral service would sign the lead and then they would refer that signed case over to the end law firm that’s actually going to be doing the casework. In return the referral service gets their fee paid out as a percent of the law firm’s case fees.
Which transitions nicely into another main difference between lead generation companies and referral services – how they’re paid. With a lead generation company, they’re paid a flat, pre-arranged per lead… whether that turns into a case or not, whether that person decides they want to hire you, decides they want hire another lawyer, decides they want to handle the case themselves, if you decide that it’s not a case that you want to take… those are still going to be billable leads that the law firm pays for.
Think of it as an advertising collective… the lead generation business will take a certain amount of money, up front, per lead, from each of their clients, then take that money and use it towards pay-per-click advertising, content writing, social media marketing or whatever it is that they do to drive those leads, and then they take what comes out of that which is the lead itself and turns around and sent it to law firm.
With a referral company, a referral company takes an actual referral fee, which similarly to an attorney’s fee, is going to be a percentage of the total case fee. In most referral arrangements, the referral fee is a third of the total lawyer’s case fee. So whereas the lead generation company is going to get paid 100, 200, 300 dollars per lead that they send, the referral company is going to generate their own leads, do their own marketing, lay out all of the money and all of the resources to do that and then wait until the law firm that they’ve referred the case to settles to pay them back. So lead generation businesses are usually paid upfront and per lead, the referral services are usually paid on the back end as a percentage of the overall case fee. This means that the referral service is inherently taking more risk, and as a result the cost per case can be higher to factor in the riskier aspect of their business model.
While both can be very viable ways of building a law firm, practice particularly a personal injury practice where it’s contingency based and the cases can be bigger and more lucrative, it’s just a matter of what works best for your firm. Some firms have very good intake in place and they have a good system set up to follow up with leads when they come in, to sign leads up over the phone and do so in relatively high volume… those firms are probably going to find lead generation a more cost effective option than having the signed case sent to them by a referral company and taking a third of the fees.
However, there are some firms that are better set up to work on the cases themselves, only want to take bigger cases or a more niche subset of cases, and aren’t setup, willing, or able to take a high volume of “average” cases. For those firms usually it makes a lot more sense to use the referral service who can much more thoroughly vet that case, sign it up for them, leaving the firm more time working on the more complex cases and the litigation aspect of it, as opposed to constantly signing up leads and calling leads and leaving messages and handling the marketing and intake end of things. It’s just a matter of what works best for which firms, and finding reputable companies to work with.