State Bar of Arizona Ethics Opinions

01-94: Advertising
2/1994

This is a formal opinion of the Advertising Committee of the State Bar of Arizona. This is not an opinion of the Committee on the Rules of Professional Conduct.  However, this opinion should be filed with the Formal Opinions of the Ethics Committee because the Advertising Committee was disbanded in January of 1994 and issued only three opinions.

Solicitation letter with proposed attorney contract that would be sent to a “target audience,” reviewed for compliance with rules regarding solicitations sent to individuals with known legal needs. [ER 7.1(a, b, g), ER 7.3(b) and (g)]



FACTS

The inquiring law firm, (hereinafter "firm #1") intends to work with or act as co-counsel to a Texas law firm, (hereinafter "firm #2").  Firm #2 has previously acted as counsel to various plaintiffs outside of the State of Arizona, representing them against manufacturers, sellers and suppliers of polybutylene plumbing systems.  The firm proposes to provide written communication to mobile home owners, who may have polybutylene plumbing systems incorporated into their mobile home units.

The inquiring law firm has presented a solicitation letter to potential clients, which incorporates a "Polybutylene Client Data Sheet and Attorneys' Contract" (sample).

The inquiring firm seeks guidance regarding the propriety of the proposed solicitation letter.

QUESTION PRESENTED

The ethical propriety of participating in the proposed communication/solicitation of prospective clients under the facts presented here, involves the following issues which will be addressed in the order reflected:

  1. Does the advertising program constitute a "...communication about the lawyer or the lawyer's services," as that phrase is used in ER 7.1(a)?  Is the proposed communication "predominantly informational, and therefore in compliance with ER 7.1(b)?; If so, is the proposed letter permissible?
  2. Does the proposed communication satisfy the requirements of Rule 7.1(g), which requires that all advertisements disclose the location of the lawyers who will actually perform the services advertised;
  3. Is the communication specifically directed to persons known to need legal services of the kind provided in a particular matter, i.e., does ER 7.3(b) apply?

DISCUSSION

1.  Does the advertising program constitute a "...communication about the lawyer or the lawyer's services," as that phrase is used in ER 7.1(a)?  Is the proposed communication "predominantly informational, and therefore in compliance with ER 7.1(b)?; If so, is the proposed letter permissible?

We believe that the proposed letter to clients would be considered as a "...communication about the lawyer or the lawyer's services."  Accordingly, communication made to a potential client must be neither false nor misleading, nor may it create an "...unjustified expectation about results the lawyer can achieve..."  Additionally, ER 7.1(b) specifically requires that all communications be "predominantly informational."

Based upon our review of the proposed letter submitted by the firm, it appears that the requirements of Rule 7.1(b) have been satisfied, assuming that all factual statements set forth in the communication can be factually substantiated (see ER 7.1(a)(4)).[1]

2.  Does the proposed communication satisfy the requirements of Rule 7.1(g), which requires that all advertisements disclose the location of the lawyers who will actually perform the services advertised;Is the communication specifically directed to persons known to need legal services of the kind provided in a particular matter, i.e., does ER 7.3(b) apply?

Rule 7.1(g) requires:

All advertisements and written communications provided for under these rules shall disclose the cities, towns or counties in which the lawyer or lawyers who will actually perform the services advertised maintain an office or principally practice law.

Based upon our review of the proposed letter, it appears that these requirements have been satisfied.

3.  Is the communication specifically directed to persons known to need legal services of the kind provided in a particular matter, i.e., does ER 7.3(b) apply?

A.  ER 7.3(b) permits the initiation of written communication, with persons known to need legal services of the kind provided by the inquiring firm, in a particular matter.  inasmuch as it appears that the inquiring firm will be forwarding correspondence to persons known to need legal services of the kind provided in a  particular matter, i.e. owners of manufactured homes, we believe that ER 7.3(b) does apply.  As such, it is our opinion that it will be necessary for the inquiring firm to follow the prescribed course set forth in the Rules, and clearly mark on the envelope and the first page of the communication, in red ink, etc., the fact that the envelope contains advertising material and that it is a commercial solicitation.  (See, Rule 7.3(b) for specific requirements.)  Additionally, the remainder of the rule must also be complied with.  Certain additional aspects of the subparts of Rule 7.3 will be discussed below.

B.  Association With Out-of-State Law Firm:  Although the rules do not specifically go to this issue, several subsection s of the rules are applicable, notably ER 7.1(g), 7.2 (requiring an information statement for the inquiring firm, and, in view of his association with out-of-state counsel, the out-of-state firm)[2], and 7.3(i).  Additionally, the inquiring firm is referred to Ethics Opinion No. 85-9 dated November 15, 1985.

C.  "Attorney's Contract"/Fee Agreement:  In the penultimate paragraph of the proposed letter to prospective clients, it is stated: "What this means is that the law firms would take 40% of the gross recoveries which are obtained, if, and only if, there is a recovery, plus actual litigation expenses or costs.  While the client remains ultimately responsible for his/her pro rata share of litigation expenses and costs, firm #2 has never sought reimbursement of expenses unless there was a recovery in a Polybutylene case."  We note that the Polybutylene Client Data  Sheet and Attorney Contract does not contain similar language.  Instead, it states:  "You will reimburse firm #1 and firm #2 for the case expenses from you (sic) portion of your settlement if, and only if, you receive a settlement.

It appears to us that the language set forth in the proposed Attorney Contract is improper and not in compliance with ER 1.8(e)(1) which provides:

* * *

A lawyer may advance court costs and expenses of litigation, provided the client remains ultimately liable for such costs and expenses;

* * *

Additionally, the contract that is being forwarded must be marked "sample" in red ink and the words "Do Not Sign" should be included on the client's signature line (See, ER 7.3(g)).

Is the communication specifically directed to persons known to need legal services of the kind provided in a particular matter, i.e., does ER 7.3(b) apply?

CONCLUSION

For the above reasons, we conclude that Arizona attorneys are not precluded by ER 7.1 from participating in communication with prospective clients as described herein.  Subject to the specific comments set forth above, it is our opinion that the inquiring firm and out-of-state co-counsel may properly utilize solicitation letter to obtain clients under the circumstances presented.  The "Attorneys Contract" requires redrafting.

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[1] In the proposed letter to clients, the firm indicates that firm #2 has "...represented thousands of homeowners who have suffered or will suffer from the polybutylene plumbing system."  If this is a hyperbole, a more accurate representation should be considered.

[2] A proposed information statement has been considered by the Advertising Committee and will soon be available.  Note:  Although the rules certainly apply to Arizona attorneys, our view would be that they also apply to out-of-state firms associating with Arizona firms.



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