Reciprocal referrals vs paid referral fees: which model fits a CPA firm?

The short verdict

Reciprocal referrals trade introductions between firms with no cash changing hands; a referral fee pays the person who made the introduction. For CPA firms, both need care. The AICPA Code requires permitted referral fees and commissions to be disclosed to the client and bars commissions where the firm performs attest work for that client, and state boards can go further. Reciprocal arrangements with law firms also carry conditions on the lawyer's side.

For SourceX introductions the choice is narrower. SourceX does not refer work back to partners, so a referral swap is not on offer. The options are a disclosed reward paid by SourceX from its own fee, never deducted from the client's proceeds, or an introduction with no reward at all.

How each model works

• Reciprocal referral: two firms agree, formally or informally, to send each other suitable clients. The value flows as future work, not cash.
• Paid referral fee: the business receiving the client pays the introducer, either a fixed amount or a share of the fee it earns from that client.
• No-fee introduction: the introducer passes on a contact and takes nothing, which is often the fallback when rules or firm policy bar a fee.

Side by side

What the rules actually say

The AICPA Code. The Commissions and Referral Fees Rule (ET 1.520) bars a member in public practice from accepting a commission for recommending a product or service to a client when the member or the firm also performs an audit, a review, certain compilations or an examination of prospective financial information for that client. Commissions and referral fees that are permitted must be disclosed to the client. The rule text appears in the AICPA Code of Professional Conduct; the AICPA's online Code is the authoritative current version.

State boards. Each state adopts its own rules, and some are stricter than the AICPA. The New Jersey Society of CPAs' resource on commissions and contingent fees shows how a state's requirements can differ from the Code. Your own state board's rule is the one that controls.

Lawyers you trade referrals with. Rule 7.2 generally stops a lawyer from giving anything of value for a recommendation, with listed exceptions. New Hampshire's version, for example, allows non-exclusive reciprocal referral agreements where the client is informed. An Illinois State Bar Association opinion adds that a lawyer may join reciprocal referrals with nonlawyer professionals in a networking group only if the arrangement is non-exclusive, the client is informed and the lawyer's independent judgment is unaffected, and that the lawyer needs client consent before passing on a client's name (ISBA Advisory Opinion 12-03).

This is general information, not legal, tax or financial advice. Confirm with your state board of accountancy, your firm's ethics counsel or your professional body before acting.

How the rules apply in common CPA-firm situations

Why SourceX uses a disclosed reward rather than a referral swap

SourceX manages data licensing between companies and AI labs and data buyers. It does not provide accounting, tax, legal or advisory services, so it has no client work of that kind to send back. The program pays a reward instead.

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company, and the reward becomes payable only after the buyer pays and SourceX receives its fee. The reward is a share of SourceX's fee and is never deducted from what the company receives, which keeps the disclosure to your client simple. Rewards are not guaranteed: nothing is paid unless a license closes and the buyer pays.

If your rules or firm policy rule out any fee, you can still help. Point the client to apply directly at sourcex.si/apply without your referral code. No partner reward arises in that case, and the client's terms are the same either way. For how this reward differs from deal-based success fees, see Lehman formula vs referral fee.

Disclosure good practice

• Tell the client in writing, before the introduction, that you are a registered SourceX partner.
• Explain what the reward is: a share of SourceX's collected fee, capped per referred company, payable only if a deal closes and the buyer pays.
• State that the reward does not reduce the client's price or proceeds.
• Make clear the client may decline, or apply without your referral code.
• Say whether you are advising on the license itself, and if not, say so plainly.
• Keep the disclosure and the client's acknowledgement in the engagement file.

Questions to ask your state board or ethics counsel

1. Is a reward for introducing a client to a data licensing service a commission or a referral fee under our state's rules?
2. Does the answer change if the firm performs any attest service for that client, including compilations?
3. What form and timing of disclosure does our state require?
4. Does our independence policy treat a reward paid by a third party differently from a fee paid by the client?
5. Under our firm's policies, should any reward be paid to the firm or to an individual partner?

To build introductions into the firm's routine once the answers are in, the quarterly referral planning process for professional advisors sets out a calendar.

Next step

Check client fit with the company fit checker against the baseline on who qualifies. Once your rules are confirmed, register as a partner. The accountants' partner page covers which clients tend to fit.