State Bar of Arizona Ethics Opinions
90-09: Communications Regarding Services; Advertising
Participation in "Bankruptcy Attorneys Trust", a nationwide cooperative television advertising service; misleading title of the service.
An Arizona lawyer wishes to participate in a cooperative advertising program through a nationwide lawyer referral service named Bankruptcy Attorneys Trust. Bankruptcy Attorneys Trust is described in its promotional material as "a cooperative of experienced lawyers who are presently seeking a higher client base. By utilizing large-scale cooperative buying power for promotional mass media advertising, the Bankruptcy Attorneys Trust provides quality referrals to member attorneys without individual high cost or exposure." The referral service is based in Louisiana.
The inquiring lawyer would enter into a contract with a corporation which produces television commercials that are aired locally, regionally and nationally. The commercials would depict a variety of common situations in which a bankruptcy attorney might be of assistance. A voice-over would urge the viewer to call an 800 number for the "Bankruptcy Attorneys Trust." An operator would then "qualify" the caller. The names of those persons who were determined to be "bona fide" would be passed on to an attorney in the caller's geographical area, using a rotating list of attorneys' names.1 If the attorney is willing to accept the case, the caller is then given the attorney's name.
While the specific content of the commercials is not available, the referral service has assured the inquiring attorney that the name of a local lawyer responsible for the content of the advertisements can be displayed if required. The referral service has also assured the inquiring attorney that all steps necessary to comply with local ethical requirements will be taken. The corporation also offers other services such as brochures, direct mailers, and other forms of advertising.
Is it ethically permissible for an Arizona attorney to participate in a nationwide cooperative television advertising service for the purpose of obtaining client referrals?
ETHICAL RULES INVOLVED
ER 7.1. Communications Concerning a Lawyer's Services
ER 7.2. Advertising
ER 7.3. Direct Contact with Prospective Clients
ER 7.4. Communication of Fields of Practice
ER 7.5. Firm Names and Letterheads
ER 7.2(a) provides that "a lawyer may advertise services through public media, such as ... radio or television,” The official comment to ER 7.2 notes that television is now one of the most powerful media for reaching persons of low and moderate income, or those most in need of information about legal services. The official comment to ER 7.3, which relates to direct contact with prospective clients, notes that the use of indirect advertising, such as television, makes it possible for prospective clients to be provided with information about legal services without being subjected to direct personal persuasion. In other words, under the Rules of Professional Conduct, the use of television to advertise is permissible. However, in this case, the lawyer wishes not only to advertise but to use a lawyer referral service.
The Rules of Professional Conduct authorize participation in a lawyer referral service under certain conditions. ER 7.2(c) provides that “[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... and may pay the usual charges of a not-for-profit lawyer referral service or other legal service organization." It appears that the Bankruptcy Attorneys Trust is a for-profit lawyer referral service,2 and therefore does not meet the threshold requirement of this rule. ER 7.2(g) is also relevant to this inquiry:
"A lawyer ... may be recommended ... by, or may cooperate with, one of the following offices or organizations that promote the use of his services...if there is no interference with the exercise of independent professional judgment in behalf of his client:
(3) A lawyer referral service operated, sponsored, or approved by a bar association;
In this case, the information available to this committee indicates that the Bankruptcy Attorneys Trust is not operated, sponsored or approved by a bar association. Therefore, it does not meet the requirements of this rule, either. See our Opinion No. 85-8 (November 1, 1985).
Other states which have considered lawyer referral services have concluded, under similar circumstances, that membership in such a lawyer referral service was not permitted. See, for example, Bar Association of Nassau County, New York, Committee on Professional Ethics, Opinion 84-1 (1984) (a "divorce resource center" was a lawyer referral service and a lawyer could not participate unless the referral service first obtained bar association approval); South Carolina Bar Ethics Advisory Committee, Opinion 88-20 (1988) (an attorney may not ethically participate in a referral service which is for-profit and not approved by the bar association). Also see Michigan State Bar Committee on Professional and Judicial Ethics, Opinion RI-17 (1989} and Alabama State Bar Disciplinary Commission, Opinion 89-18 (1989).
Even if the referral service were to obtain bar association approval or sponsorship, it would also have to satisfy the requirements of other Ethical Rules. For example, ER 7.2(d) requires that any advertisement by an attorney "shall include the name of at least one lawyer responsible for its content." While the corporation has agreed to put the name of a local attorney on the advertisements broadcast in this state, it appears that the inquiring attorney would have no actual input into or control over the content of the commercials. This committee believes that, not only would a local attorney's name have to be listed, but the attorney would have to review all of the commercials to be broadcast in this state and assure that they comply with the Rules of Professional Conduct. Otherwise, the mere listing of an attorney's name on an advertisement would be meaningless.
ER 7.1 requires that a lawyer "shall not make a false or misleading communication about the lawyer or the lawyer's services." A communication is false or misleading if it contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement, considered as a whole, not materially misleading, or if it is likely to create an unjustified expectation about results the lawyer can achieve. In this case, the lawyer referral service uses the name "Bankruptcy Attorneys Trust." This name may be misleading because there is no “trust.” Moreover, under ER 7.4, attorneys may not hold themselves out as specialists except under certain circumstances. However, it appears that any attorney can sign up for referrals through the Bankruptcy Attorneys Trust, thereby leading members of the public to believe that they are being referred to attorneys who are specialists in bankruptcy law. See Nebraska State Bar Association Advisory Committee, Opinion 89-5 (1989) (a lawyer may not participate in a for-profit referral service whose name falsely implies that the participating attorneys are specialists in a particular area of law). Furthermore, under ER 7.5, firm names may not be misleading. See Virginia State Bar Standing Committee on Legal Ethics, Opinion 1029 (1988) (the use of the name "The Litigation Group" was a misleading and deceptive name for cooperative advertising by attorneys; the name implied the existence of a law firm when, in fact, the "Group" was simply a lawyer referral service). Also see our Opinion No. 85-8 (November 1, 1985) (such an advertisement "may imply some sort of relationship between them [the attorneys] that is probably impermissible under ER 7.5").
In summary, the use of the name "Bankruptcy Attorneys Trust" may be misleading because it falsely implies the existence of a trust, falsely implies that participating attorneys are certified bankruptcy specialists, and may imply a relationship that really does not exist among the attorneys who subscribe to the service.
Inasmuch as the lawyer referral service involved here does not meet the requirements of our Rules of Professional Conduct, and since we have not been provided with any proposed brochures, direct mailers, or other forms of advertising, we express no opinion with respect to the other forms of advertising offered by the Bankruptcy Attorneys Trust.
It is, accordingly, our conclusion that, under the Arizona Rules of Professional Conduct, it would be unethical for an attorney to participate in the lawyer referral service described in the "Facts" above.
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 1990
An attorney can purchase a single "slot" on the rotation list by paying a set fee. An attorney may buy more than one slot in order to increase the total percentage of referrals that he or she receives.
Among the fees which a member agrees to pay are the following:
7. MEMBER agrees to pay a one-time enrollment fee of $95.00.
8. MEMBER agrees to pay a one-time production fee of $400.00 per position.
9. MEMBER agrees to pay a monthly administrative fee of $50.00 per position.
10. MEMBER agrees to pay a monthly advertising fee of $500.00 per position.
11. MEMBER agrees to pay the initial term expense in advance for a total of $2,145.00 per position.
In Informal Opinion 85-1510 (1985), the American Bar Association's Committee on Ethics and Professional Responsibility concluded that a for-profit lawyer referral service did not violate the Model Rules of Professional Conduct as long as the attorney did not pay a fee to participate.