State Bar of Arizona Ethics Opinions
92-05: Advertising; Recommendation of Employment; Seminars
Under facts presented, ethically proper for an attorney to be listed in a labor union's "preferred provider guide", to offer a discount rate, and to give seminar presentations to union members.
March 26, 1992
A labor union communicated with the inquiring attorney regarding the union’s preparation of a preferred provider guide (the "Guide"). The purpose of the Guide is to provide union members with names of professionals who are willing to provide services to them at a discounted rate. The Guide would list attorneys and other professionals. The union would select five attorneys in each of five areas of law, including personal injury law, family law, criminal law and two other areas not identified by the inquiring attorney, whose names and addresses would be included in the Guide.
As a condition of being listed in the Guide, an attorney would be required to indicate to the union that he would provide legal services to union members at a reduced rate. For example, a personal injury attorney would be asked to limit contingency fees to 25% of the recovery. Additionally, an attorney listed in the Guide would be required to pay a one-time fee for his or her share of the cost of printing the Guide. The listing in the Guide would extend for fourteen months.
Copies of the Guide would be placed with the union manager at the union office. When a union member sought advice regarding legal matters, the union manager would provide the member with a copy of the Guide. The union member would then be free to select one of the five attorneys in the relevant field of law. The union manager would not provide the member with any recommendation regarding any one of the attorneys listed. Additionally, the union member would not be required to use an attorney on the list, being free to seek the services of an attorney not listed in the Guide on any fee basis that could be agreed upon between them.
The union manager would solicit recommendations from union members in selecting the attorneys to be contacted regarding listings in the Guide. Attorneys would not initiate contact with the union, nor would the union advertise for proposals from members of the Bar.
Occasionally, the union would invite attorneys listed in the Guide to come to the union office to meet with union members. The attorney would discuss with them various aspects of the area of law in which they practice. The visits would be designed to enable interested union members to learn more about their legal rights.
Would an attorney violate any of the Arizona Rules of Professional Conduct by being listed in the Guide and by making the mentioned visits to the union office?
ETHICAL RULES INVOLVED
ER 7.1. Communications Concerning a Lawyer’s Services
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:
(a) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading;
(b) is likely to create an unjustified expectation about results the lawyer can achieve, or states or implies that the lawyer can achieve results by means that violate the rules of professional conduct or other law; or
(c) compares the lawyer’s services with other lawyers' services, unless the comparison can be factually substantiated.
ER 7.2. Advertising
(a) Subject to the requirements of ER 7.1 and ER 7.3, a lawyer may advertise services through public media, such as a telephone directory, legal directory, newspaper or other periodical, outdoor, radio or television, or through written communication.
(c) 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 communication permitted by this rule and may pay the usual charges of a not-for-profit lawyer referral service or other legal service organization.
(e) Written communications to prospective clients for the purpose of obtaining professional employment are subject to the following requirements:
(1) Such written communications shall be plainly marked "Advertisement" on the face of the envelope and at the top of each page of the written communication in type no smaller than the largest type used in the written communication; and
(2) A copy of each such written communication shall be retained by the lawyer for three years. If written communications identical in content are sent to two or more prospective clients, the lawyer may comply with this requirement by retaining a single copy together with a list of the names and addresses of persons to whom the written communication was sent.
(g) A lawyer or his partner or associate or any other lawyer affiliated with him or his firm may be recommended, employed or paid by, or may cooperate with, one of the following offices or organizations that promote the use of his services or those of his partner or associate or any other lawyer affiliated with him or his firm if there is no interference with the exercise of independent professional judgment in behalf of his client:
(4) Any bona fide organization that recommends, furnishes or pays for legal services to its members or beneficiaries, provided the following conditions are satisfied:
(A) Such organization, including any affiliate, is so organized and operated that no profit is derived by it from the rendition of legal services by lawyers, and that, if the organization is organized for profit, the legal services are not rendered by lawyers employed, directed, supervised or selected by it, except in connection with matters where such organization bears ultimate liability of its members or beneficiary;
(B) Neither the lawyer, nor his partner or associate, nor any other lawyer affiliated with him or his firm, nor any non-lawyer, shall have initiated or promoted such organization for the primary purpose of providing financial or other benefit to such lawyer, partner, associate or affiliated lawyer;
(C) Such organization is not operated for the purpose of procuring legal work or financial benefit for any lawyer as a private practitioner outside of the legal services program of the organization;
(D) The member or beneficiary to whom the legal services are furnished, and not such organization, is recognized as the client of the lawyer in the matter;
(E) Any member or beneficiary who is entitled to have legal services furnished or paid for by the organization may, if such member or beneficiary so desires, select counsel other than that furnished, selected or approved by the organization for the particular matter involved; and the legal service plan of such organization provides appropriate relief for any member or beneficiary who asserts a claim that representation by counsel furnished, selected or approved would be unethical, improper or inadequate under the circumstances of the matter involved and the plan provides an appropriate procedure for seeking such relief;
(F). The lawyer does not know or have cause to know that such organization is in violation of applicable laws, rules of court and other legal requirements that govern its legal service operations; and
(G) Such organization has filed with the appropriate disciplinary authority at least annually a report with respect to its legal service plan, if any, showing its terms, schedule of benefits, subscription charges, agreements with counsel, and financial results of its legal service activities, or if it has failed to do so, the lawyer does not know or have cause to know of such failure.
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.
(b) Subject to the requirements of ER 7.1 and ER 7.2, and paragraph (c) herein, a lawyer may initiate written communication, not involving personal or telephone contact, with persons known to need legal services of the kind provided by the lawyer in a particular matter, for the purpose of obtaining professional employment. Such written communication shall be clearly marked on the envelope and on the first page of the communication contained in the envelope, as follows:
THIS COMMERCIAL SOLICITATION HAS NOT BEEN APPROVED BY
THE STATE BAR OF ARIZONA.
Said notification shall be printed in red ink, in all capital letters, in type size at least double that used in the body of the communication. If the solicitation advertises representation on a contingent or “no recovery, no fee” basis, it shall also state that the client may be liable for costs and expenses.
(c) At the time of dissemination of such written communication, a copy shall be forwarded to the Clerk of the Arizona Supreme Court and the State Bar of Arizona at its Phoenix office. If a written communication identical in content is sent to two or more prospective clients, the lawyer may comply with this requirement by forwarding a single copy together with a list of the names and addresses of persons to whom the written communication was sent.
Nothing submitted to us suggests that the Guide would provide any false or misleading information violative of ER 7.1. The inquiring attorney should be careful that the Guide does not create an unjustified expectation in the union member about results the listed attorney can achieve because of the wording and any other features of the attorney’s listing in the Guide. Additionally, the attorney should exercise care that the listings in the Guide do not make any comparisons among the five attorneys in each area of law, or with other attorneys who are not listed, unless the comparisons can be factually substantiated.
If an attorney initiates written communication with persons known to need legal services for the purpose of obtaining professional employment, ER 7.3(b) requires that the written communication be labeled in the manner provided in the rule. In the situation presented, an attorney listed in the Guide is not initiating the contact. The labor union will prepare the Guide and provide it to the union members. Therefore, the Guide does not need to be labeled in the manner specified in ER 7.3(b).
The union’s proposal contemplates visits to the union office by attorneys listed in the Guide. The purpose of the visits will not be to solicit professional employment from prospective clients known to need legal services. Rather, the visits are intended to educate union members regarding their various legal rights. The attorneys’ in-person visits to the union office are not prohibited by ER 7.3 (a). See our Opinion No. 88-07 (September 13, 1988) (law firm may properly conduct legal seminars which conform to guidelines promulgated in our opinion No. 87-23 (October 26, 1987; promotional brochures for the seminar need not be labeled as "advertisements").
The attorney’s inquiry is governed principally by ER 7.2.
The attorneys listed in the Guide will pay a one-time printing cost as a condition of being included therein. An attorney is prohibited by ER 7.2(c) from giving anything of value to a person for recommending his or her services. However, that rule allows an attorney to pay for the reasonable costs of advertising or written communication permitted under the rule. The payment of printing costs by the attorneys who are to be listed in the Guide would fall within this exception, and would not be considered giving something of value in exchange for recommending the attorneys’ services.
Under ER 7.2(e), written communications to prospective clients for the purpose of obtaining professional employment must bear the "Advertisement" label. Here, the attorney is not sending written communications to prospective clients. The union will make available to its members copies of the Guide listing several attorneys and other professionals. The Guide does not have to be labeled in the manner described in ER 7.2(e). Accord, our Opinion No. 88-07, supra, and our Opinion No. 90-05 (June 26, 1990) (law firm's bi-monthly publication on construction law sent to clients and non-clients need not contain the disclaimer required by ER 7.2(e)).
Pursuant to ER 7.2(g), an attorney may be recommended by an organization that promotes the use of his or her services provided there is no interference with the exercise of the attorney's independent professional judgment on behalf of his or her client. A bona fide organization may recommend legal services if it meets the criteria set forth in ER 7.2 (g) (4). In the facts presented, the union is a bona fide organization recommending legal services to its members. The union will derive no profit from the legal services rendered by attorneys listed in the Guide. ER 7.2 (g) (4) (A). The inquiring attorney did not initiate or promote the preparation of the Guide in order to gain a financial benefit for himself. ER 7.2(g) (4) (B). The union is not operated for the purpose of procuring legal work or financial benefit for any attorney. ER 7.2(g) (4) (C). The union member, and not the union itself, will be recognized as the client of the attorney. ER 7.2 (g) (4) (D). The union members are permitted to select one of the attorneys listed in the Guide, but are also free to select any attorney not so listed and to pay any fee agreed upon between them. ER 7.2(g) (4) (E). None of the facts submitted by the inquiring attorney indicate that the union is in violation of any applicable laws or rules governing its provision of the Guide. ER 7.2(g) (4) (F). And, under ER 7.2(g) (4) (G), the union must file annual reports on forms that are available at the State Bar offices.
Based upon the facts submitted, the committee is of the opinion that it will be permissible, under the Arizona Rules of Professional Conduct, for an attorney to be listed in the Guide and to visit the union office to give seminars to union members about their legal rights.
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 1992
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