Ethics for Solos and Small Firms:

Advertising and Solicitation

By

Eric T. Cooperstein

PLEASE NOTE:

THIS ARTICLE IS BASED ON THE MINNESOTA RULES OF PROFESSIONAL RESPONSIBILTY

I.                   Advertising and Solicitation

A.                Rule change:  Amended Rule 7.3(c) now requires written solicitations to prospective clients to “clearly and conspicuously” include the words “Advertising Material” on the outside envelope and within the writing.

1.                  Does not apply to solicitations sent to other lawyers.

2.                  Does not apply to solicitations sent to family, “close personal” relationships, or “prior professional relationships.”

B.                 Referrals. Lawyers cannot pay others for referring cases to them, either at the beginning or end of the case.  In the words of Rule 7.2(b), a lawyer cannot “give anything of value” for recommending the lawyer’s services.

1.                  Fees can only be shared amongst lawyers in the same law firm, or between lawyers who are not in the same law firm but have complied with all of the fee-splitting requirements of Rule 1.5(e).

2.                  Legal fees cannot be shared with nonlawyers, except as part of a law firm’s compensation or retirement plan. Rule 5.4(a).  This presumes that the nonlawyer is an employee of the lawyer’s firm.

3.                  A lawyer may:

a)                  Pay for advertisements and for the costs of written solicitations;

b)                 Pay the usual charges of a “legal service plan” or a nonprofit lawyer referral service;

c)                  Buy a law practice, following Rule 1.17.

4.                  Lawyers may receive referrals from both lawyers and nonlawyers, and make referrals, as long as there is no quid pro quo.

a)                  A lawyer may even have a referral agreement with someone else (lawyer, financial planner, chiropractor), but the agreement cannot be exclusive and the client must be informed that the agreement exists.

b)                 Purpose is to protect the client’s interest in knowing the lawyer’s motivation in making the referral.

C.                 Internet Matching Services. In recent years, online services have cropped up that purport to connect prospective clients with lawyers.  These sites, such as “legalmatch.com,” ask the prospective client to identify the area in which they live and to describe their legal problem.  On the other end, the services contract with attorneys, who pay a fixed fee to receive referrals. States have been mixed in their willingness to accept these services.

1.                  Ethical concerns include:

a)                  Paying for clients / cases (Rule 7.2(b));

b)                 Improper comparison of the lawyers services or fees with other lawyers (Rule 7.1, cmt. 3); and

c)                  Protection of confidential client information and conflicts of interest (See Rule 1.18).  Because the lawyer does not conduct the initial screening of the client’s legal matter, the client may provide confidential information that will be shared with the lawyer before the lawyer has the opportunity to conduct a conflicts check.

2.                  Ohio, Rhode Island, and South Carolina all have concluded that the Service in question was not a prohibited referral service.

a)                  Ohio said it is not a referral service if it just performs a ministerial function. Ohio Sup. Ct., Op. 2001-02. Ohio provides two excellent definitions:

(1)               Payments for advertisements:  an attorney pays a fixed amount for a fixed period of time during which the attorney’s information is available for public viewing.  The attorney’s or law firm’s information is provided to potential clients in a ministerial fashion.  The provider makes clear to the public that it is viewing an advertisement and not receiving a recommendation or referral.

(2)               Payments for referrals: an attorney pays an amount of money based upon the actual number of people who contact or hire the attorney or an amount based upon a percentage of the fee obtained for rendering legal services.  The company provides services that go beyond the ministerial function of placing the attorney’s or law firm’s information into the public view.  The company does not clarify that the information is an advertisement, but rather makes the information regarding the attorney appear as if the company is referring and recommending the attorney or that the attorney is part of the company’s services to its Users.

b)                 Rhode Island emphasized that the lawyers only pay a flat fee unrelated to the lawyer’s legal fee. Rhode Island Sup. Ct. Ethics Advisory Panel, Op. 2005-01 (Feb. 24, 2005).

c)                  South Carolina found the Service acceptable as long as prospective clients were not steered to a particular attorney. South Carolina Ethics Advisory Op. 01-03.

d)                 Utah has hired LegalMatch to replace its state bar referral service.  See www.legalmatch.com/content/attorneys/usb-letter.pdf (Utah State Bar letter on LegalMatch website).

3.                  Texas (Opinion 573, July 2006) recently found such services (unidentified service, but LegalMatch’s website says Texas approved their service) permissible if they met several criteria:

a)                  The selection of lawyers must be an automated process;

b)                 The Service must communicate to the prospective client that only lawyers who have paid a fee to the Service will have the opportunity to respond to the client’s inquiry and that the Service makes no representations about the quality of the lawyers in the Service;

c)                  The fee the Service charges lawyers must be reasonable for the advertising and public relations services provided;

d)                 The Service cannot use its own form of geographic redlining to restrict the lawyers to whom cases are referred;

e)                  Every written communication from a lawyer to a prospective client identified by the Service is treated as advertising and must comply with the rules for written solicitations; and

f)                   The lawyer may not communicate in-person with the prospective client until the client requests that type of communication.

Texas places the burden on the lawyer to determine in advance whether criteria (a) through (d) can be met by the Service.

4.                  Arizona and Washington recently prohibited these services.

a)                  Arizona found that the referral service (which it did not identify, but one can figure out that it is LegalMatch) was impermissible because

(1)               It is a for-profit enterprise that has not been approved by an Arizona regulatory authority; and

(2)               It makes direct referrals to lawyers who it claims are qualified to meet the client’s needs. Az. State Bar Comm. on the Rules of Prof. Conduct, Op. 06-06 (Sept. 2006).

b)                 Washington also found that the unidentified service (but reference to other bar opinions suggests that it is LegalMatch) is a referral service rather than just a “matching” service.  Washington took issue with

(1)                the Service’s ability to restrict the pool of lawyers in a particular subject or geographic area;

(2)               the opportunity for lawyers to submit additional information and professional references to become “verified,” which Washington suggests may violate the rule against holding oneself out as a “specialist” (which in Washington extends to “certified,” “expert,” and similar terms); and

(3)               The ability for prospective clients to upgrade to a fee-based service through which the Service’s in-house lawyer will talk directly to the prospective client and draft a more detailed description of their legal issue. Wash. State Bar Ass’n Rule of Prof. Conduct Comm., Informal Op. 2106 (2006).

II.                Resources.

A.                Resources on the Lawyers Board Web Page (www.mncourts.gov/lprb):

1)                  Formal Opinions of the Lawyers Professional Responsibility Board.

2)                  Index and full text of the monthly Bench & Bar and Minnesota Lawyer columns.

B.                 Telephone Advisory Opinion Service Offered by the Director’s Office.

1)                  651-296-3952

2)                  Licensed MN attorneys only.

3)                  Prospective conduct only.

4)                  No immunity against future complaints.

C.                 Contact private ethics counsel to address:

1.                  Disqualification motions.

2.                  Ethics complaints.

3.                  Independent review of retainer agreements and conflict waivers.

4.                  Opinion letters regarding past conduct.

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