How should licensees manage referrals and cooperation with other licensees?

• A. Refer clients without disclosure of referral fees.
• B. Be transparent about referral fees, follow fair dealing practices, and disclose terms to clients as applicable.
• C. Avoid disclosing terms to clients.
• D. Referral fees are prohibited.

Answer: (B)

Handling referrals and cooperation with other licensees centers on transparency and fair dealing. Licensees should disclose any referral fees or financial arrangements when connecting a client with another licensee, and explain how those fees relate to the client’s representation and costs. This allows clients to understand who benefits financially and what, if any, charges might affect their decision or the services they receive, which builds trust and supports informed consent. Adhering to fair dealing means representing the client’s interests honestly and avoiding incentives that could steer choices or create conflicts of interest. Providing disclosure of terms in writing when applicable helps meet professional requirements and ensures clients know the details that could influence their engagement. Referral fees aren’t inherently prohibited, but they must be disclosed and handled ethically. This makes transparency about referral fees, fair dealing, and client disclosures the best practice, while non-disclosure or prohibition would undermine client trust and ethical obligations.