State Bar of Arizona Ethics Opinions
96-10: Advertising; Marketing Director
A law firm ethically may employ, on a salary basis, a marketing director to engage in marketing activities that would otherwise be permissible for lawyer to do directly. [ERs 7.1, 7.3]
The inquiring attorney asks whether it is ethically permissible for a law firm to hire a marketing director to promote the firm within the community and, if so, whether such a marketing director may ask third parties (who are not in need of legal services themselves) to recommend the firm to others, provided the marketing director gives nothing of value to such third parties for such recommendations. We will assume for purposes of the first question that the activities of the marketing director would be permissible for a lawyer to do directly (e.g., there will be no impermissible direct solicitation from prospective clients contrary to ER 7.3(a) and that any advertising will comply with the applicable advertising rules), and that the marketing director is paid a salary rather than a commission based on fees earned.
RELEVANT ETHICAL RULES
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ER 7.1 Communications and Advertising Concerning a Lawyer's Services
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(b) All communications and advertising concerning a lawyer's services shall be predominantly informational. As used in this rule, "predominantly informational" shall mean that, in both quantity and quality, the communication of factual information rationally related to the need for selection of any attorney predominates.
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(j) A lawyer shall not give anything of value to a person for recommending the lawyer's services, except that a lawyer may pay the reasonable cost of advertising or written or recorded communications permitted by these rules and pay the usual charges of a lawyer referral service or other legal service organization.
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ER 7.3 Direct Contact with Prospective Clients
(a) A lawyer may not solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship in person or by telephone, when a motive for the lawyer's doing so is the lawyer's pecuniary gain.
RELEVANT PRIOR ARIZONA ETHICS OPINIONS
Opinion No. 90-14.
Opinion No. 96-09.
Conceivably an argument could be made that the salary a firm pays a marketing director would violate ER 7.1(j)'s prohibition on giving anything of value to someone for recommending the lawyer's services, since that is part of the job of a marketing director, to recommend the lawyer's services to the public. The evident principal target of that rule, however, appears to be referral fees rather than the cost of otherwise permissible marketing techniques. As we said in Opinion No. 96-09, "On its face, this prohibition is aimed at paid testimonials and referral fees." This intent is evident in the exception stated in ER 7.1(j) to permit the payment of "the reasonable cost of advertising or written or recorded communications permitted by these rules," which also could otherwise be construed as violative of the rule. Although not all of the marketing director's marketing efforts will consist of "advertising or written or recorded communications," because they probably will also include personal contacts and oral communications, there is no apparent reason why the ethical rules should permit payment of the costs of the former but not the cost of the latter to the extent such contacts are also otherwise "permitted by these rules.". Consequently it does not appear that ER 7.1(j) was intended to prohibit the payment of a salary to a law firm marketing director.
The permissibility of hiring (and, implicitly, paying) a marketing director was implicit in our prior Opinion No. 90-14, where we concluded that it is not ethically impermissible to compensate a firm's marketing director by a base monthly fee plus a quarterly bonus determined as a percentage of the increased revenues in those practice areas the marketing director was hired to develop. That opinion, however, addressed only the method of compensation, in light of ER 5.4's prohibition on sharing of legal fees with a nonlawyer, and did not specifically address ER 7.1(j).
A formal Florida ethics opinion, No. 89-4, concurs that "a nonlawyer hired to engaged in permissible marketing activities on behalf of a lawyer may be paid a straight salary," but that commissions based on fees earned would be an impermissible division of fees with a nonlawyer, contrary to ER 5.4(a).
A similar conclusion was reached by the ABA's Center for Professional Responsibility: "A lawyer is allowed to pay for advertising permitted by this Rule ... but otherwise is not permitted to pay another person for channeling professional work.... Paragraph (c) [ER 7.2(c), which reads identically to Arizona's ER 7.1(j)] does not prohibit paying regular compensation to an assistant, such as a secretary, to prepare communications permitted by this Rule." ABA Center for Professional Responsibility," Annotated Model Rules of Professional Conduct at 510 (2d. Ed. 1992).
The New York State Bar Ethics Committee has opined that a firm may not hire a public relations or marketing firm to solicit potential clients in person, and may not compensate such a firm based on business generated. Op. 565 (1988). The negative implication from that conclusion, however, is that employment of a marketing director is not per se impermissible so long as there is no direct solicitation of clients and the compensation is not a percentage of fees generated.
Consequently we conclude that employment of a marketing director on a salaried basis, to engage in marketing activities that would otherwise be permissible for a lawyer to do directly, is not ethically impermissible.
The second question almost answers itself, as ER 7.1(j) only prohibits the giving of something of value to someone who recommends the lawyer's services. Since the question presumes nothing of value will be given by the marketing director when he solicits third persons to recommend the firm's services, such requests do not violate ER 7.1(j).
Formal Opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceedings. © State Bar of Arizona 1996