Can Attorneys Pay Referral Fees?

Q: I am speaking with a business attorney about joining our barter exchange network. He wants to investigate the ethical aspects of “paying a fee for a referral” which is what happens if we bring him business and he pays us. I once saw a post you made about attorneys and barter… Any thoughts on attorneys paying a transaction fee?

A: Attorneys and doctors may have an ethical issue about paying referral fees, as it has the potential to be looked at as a conflict of interest. In addition, for attorneys there could also be issues with their Bar Association. I have heard this question many times from many attorneys that have a concern about referral fees and being in violation of the Bar.

Factually, barter exchanges do not charge or collect referral fees. A barter exchange is a business network with a payment platform much like the credit card industry. Members of a barter exchange business network pay a cash transaction fee each time they make a sale and earn barter dollars in the exchange that are deposited to their barter account. They provided a service to a member, they were paid in barter dollars, and the exchange charged a transaction fee, which is no different than if they were paid by Visa, Master Card or American Express, which charges a 2.2% to 3.8% fee + transaction and monthly fees for processing their charge.

The added benefit of being a member of a barter exchange, as compared to just accepting credit cards, is that the exchange also provides marketing, networking and advertising to a member at no additional charge, so that members end up getting new business from new customers that they ordinarily would never have had.

Members also pay a transaction fee when they spend their trade dollars, which is paid to an exchange for the service the exchange provides to help business reduce their cash requirements for purchasing, so they can pay for the products or services they need at the cost of their own products or services.

Customer Service Advice

Published 7/20/2009 in Florida Small Business SMALL BUSINESS ADVICE

Never Ignore Customers’ Calls
by Dr. Jerry Osteryoung

If a customer calls to inquire about a product that you are servicing for them, and you do not have the information, you must tell the customer that you will find the information for them and when you will be getting back to them. Not calling them until you have the information — which might take several days or longer — is terrible customer service insurance news.

So many times, salesmen and service technicians think that it is okay to delay returning the customer’s call until they have some information to pass on. However, this is an awful policy because the customer does not know that you are looking for the answer. How would they know that you have not just forgotten about them or neglected to relay a message?

We had a kitchen stove go out on us, and cooking without a stove is tough. The local dealer did not carry the part that was needed for the repair, and it had to be ordered. When the dealer discovered the part was on backorder, they said they would get back with me and update me on the status of the order when they heard something.

I did not hear from them the next day, so I called the dealer’s service department and was told in a very negative tone, “We said we would call you when we hear when your part will be in!” I explained how important it was for me to have a rough idea of when the part would arrive, but was told that they would call when they knew.

I continued to call each day. It was not that I wanted to harass the dealer, but I just wanted to know when we would no longer have to think about going out for dinner. Was I trying to get the part sooner? No, not really. I just wanted to know when our lives would return to normal.

What should the dealer have done differently? All they had to do was call me each day and update me on the progress. It would have even been okay to call and tell me that they did not know anything new. Then, at the very least, I would have known that I had not been lost or forgotten.

A standard script would be helpful in cases like these. A technician could say something like, “I apologize, but we still have not heard from our supplier. If we do not hear from them by tomorrow, we will call them back.”

This all goes back to great communications. Each and every business must ensure that its communications with its customers are done in such a way that each one feels good about the interaction. Look at it this way, not communicating with a customer is still communicating, but the message being sent is all negative.

Now go out and make sure that you have a system in place to ensure customers receive periodic reports about the status of their orders or repairs.

As this also pertains to your barter exchange business, keep your members informed with a “touch system” and always let them know that you are working on bringing in new members that should be able to provide what they need.

Jerry Osteryoung is the Director of Outreach of the Jim Moran Institute for Global Entrepreneurship in the College of Business at Florida State University, the Jim Moran Professor of Entrepreneurship; and Professor of Finance. He was the founding Executive Director of the Jim Moran Institute and served in that position from 1995 through 2008. He can be reached by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.

Switching Barter Software Could Cost You $100,000

Take heed about certain barter software companies that have egregious software use and license agreements. Some companies, such as DoBarter actually impose a $100,000 financial obligation if you use other barter software, switch to a different barter software, allow your programmer or web developer to access their barter software, or decide you want to use your own barter software within one year of using DoBarter software. Do all three and you could accrue a $300,000 financial obligation to DoBarter.

Following is an excerpt of the DoBarter online Exchange Membership Agreement that can be found at: http://dobarter.com/Membership_Agreement.asp?

Member Exchange agrees not to use another on-line software provider relating to DarnFast Software Inc. (DoBarter/IBA) while using DarnFast Software Inc. (DoBarter/IBA) software and for a period one (1) day less than one (1) year after termination of use of DarnFast Software Inc. (DoBarter/IBA) software. Member Exchange agrees that violation of this creates a financial obligation of $100,000.00 USD from Member Exchange to DarnFast Software Inc. (DoBarter/IBA).

Member Exchange agrees that giving software providers or developers access to DarnFast Software Inc. (DoBarter/IBA) system software Site Manager creates a financial obligation of $100,000.00 USD from Member Exchange to DarnFast Software Inc. (DoBarter/IBA).

Member Exchange agrees use of DarnFast Software Inc. (DoBarter/IBA) system software gives Member Exchange valuable information into the software requirements of DarnFast Software Inc. (DoBarter/IBA) system software. Member Exchange agrees not create, participate in the creation of software relating to DarnFast Software Inc. (DoBarter/IBA) while using DarnFast Software Inc. (DoBarter/IBA) software and for a period one (1) day less than one (1) year after termination of use of DarnFast Software Inc. (DoBarter/IBA) software. Member Exchange agrees that violation of this creates a financial obligation of $100,000.00 USD from Member Exchange to DarnFast Software Inc. (DoBarter/IBA).