State Bar of Arizona Ethics Opinions

92-11: Advertising; Referrals; Solicitation
11/1992

Personal injury lawyer wishes to obtain customer lists from his company/client, so he can send solicitation letters to the customers.



November 25, 1992

 

FACTS AND QUESTIONS

 

One of the inquiring attorney's current clients is a towing and salvage business. As such, it typically deals with people who have recently been involved in automobile accidents.

 

The inquiring attorney presents the following ethics questions:

 

1. Whether the client may provide to him, without compensation, and whether he may ethically accept from the client, the name, address, telephone number, and description of the vehicle of a person involved in a traffic accident whose damaged or wrecked vehicle is towed to the client's salvage yard; and

 

2. Whether he may ethically pay the client reasonable compensation for providing such information.

 

If it is held ethically proper for the attorney to accept this information from his client, he plans to send letters and/or advertising videotapes to the persons whose names have been provided to him. The inquiring attorney's third question is whether these letters and videotapes would be regarded as solicitations for purposes of ER 7.3, or whether they need only comply with the less stringent provisions of ER 7.2(e).

 

We are told that the client would not advertise or recommend the lawyer personally to any of its customers. It would do nothing more than provide a list of names (and the other information mentioned above) to the inquiring attorney.

 

ETHICAL RULES INVOLVED

 

ER 1.8(a).      Conflict of Interest: Prohibited Transactions

 

ER 5.3.           Responsibilities Rewarding Non-lawyer Assistants

 

ER 7.2(c,e,g).            Advertising

 

ER 7.3.           Direct Contact with Prospective Clients

 

OPINION

 

The first question the committee must resolve is whether it is ethically permissible, under any circumstances, for a non-lawyer business client to provide lists of customers to its attorneys for their advertising purposes. The answer to this question hinges upon whether the non-lawyer business constitutes a "lawyer referral service" within the meaning of this term as used in ER 7.2(g)(3). If the business is a lawyer referral service, it must be operated, sponsored or approved by a bar association before an attorney may ethically cooperate with it.

 

Although most lawyer referral services considered in ethics opinions in Arizona and elsewhere are formal organizations which systematically channel potential clients to lawyers affiliated with the services (see, e.g,., our Opinions Nos. 81-4 ( February 23, 1981) and 82-12 (May 28, 1982 )), many less formally structured arrangements have been deemed lawyer referral services. See Michigan State Bar Informal Opinion CI-801 (6/25/82) (ABA/BNA Lawyers' Manual on Professional Conduct at p. 801:4847) (law firm may not solicit recommendations from the medical community, because members of the medical community are not bar-approved lawyer referral services); and New Jersey Advisory Committee Opinion 481 (5/7/81) (ABA/BNA Lawyers' Manual, supra, at p. 801:5805) (a listing of attorneys provided by a real estate agency to its customers is not an approved lawyer referral service).

 

In our Opinion No. 84-13 (October 3, 1984), we discussed whether the "Talking Yellow Pages" constituted a lawyer referral service under DR 2-103 (D)(3) of the Code of Professional Responsibility, the predecessor to current ER 7.2 (g) (3). The Talking Yellow Pages was described in that opinion as a service which stores the names of subscribing businesses in a computer data base. When a potential customer contacts the Talking Yellow Pages, he is referred to four names on a rotating list of businesses providing the service requested by the caller. This committee contrasted this type of business with a lawyer referral service:

 

"...[C]ertain factors also effectively distinguish the Talking Yellow Pages from a traditional referral service. Specific recommendations are not made through the Talking Yellow Pages and there is no attempt to ascertain if a consumer has a legal problem. The attorney pays a fee to the service independent of the number of times his or her name is provided and independent of whether any client relationships are established. Distinctions from our Opinions Nos. 73-7, 76-24 and 82-1 are also made since the service at issue does not charge the consumer a fee, is not limited to lawyers, and has no inference of Bar Association sanction. The proposed service is generic in nature and is applicable to any and all types of businesses and professions." Opinion No. 84-13 at 3.

 

The proposed arrangement is similar to the Talking Yellow Pages in that no specific recommendations are made to the potential client, no attempt is made to ascertain if the potential client has a legal problem, and there apparently is no relationship between the compensation paid by the attorney to his towing company client and the number of persons whose names are furnished to the attorney by his client who actually retain the inquiring attorney. Moreover, potential clients pay no fee for the referral, and there is no indication of any bar association approval. Under these circumstances, we believe that the inquiring attorney's receipt of customer lists from a towing company client does not render the towing company a "lawyer referral service" for purposes of ER 7.2 (g) (3), and is therefore ethically permissible.

 

Having concluded that the inquiring attorney may ethically accept lists of customers from his towing company client free of charge, the second question to be resolved is whether he may ethically pay the towing company reasonable compensation for the customer lists. This question is controlled by ER 7.2(c), which prohibits a lawyer from giving anything of value to a person for recommending the lawyer's services, except for the reasonable costs of advertising or permissible written communication or the usual charges of a not-for-profit lawyer referral service or other legal service organization. This rule has been interpreted to prohibit payment by an attorney for an actual "recommendation" of him or her, thus preventing an attorney's use of “touts,” “shills,” or “runners,” who actively direct potential clients to him or her. See 2 Hazard & Hodes, The Law of Lawyering (2d Ed. 1990), § 7.2:401. This interpretation is reinforced by the Comment to ER 7.2, which states that ER 7.2(c) is designed to prevent the "channeling [of] professional work." Additionally, two ethics opinions in other jurisdictions have determined that it is permissible to purchase mailing lists from a private party in situations very similar to that presented here. In Virginia State Bar Opinion 984 (10/27/87) (ABA/BNA Lawyers' Manual, supra, at p. 901:8728), the Virginia Committee concluded that it was ethically permissible for an attorney to purchase mailing lists from a tow truck operator. Similarly, Maryland State Bar Opinion 88-57 (2/1/88) (ABA/BNA Lawyers' Manual, supra, at p. 901:4317) held that it was ethically proper for an attorney to purchase mailing lists, as long as the lists were not drawn from groups whose members fit within the then-existing prohibition against direct mail solicitations.1

 

The inquiring attorney states that the towing company would not advertise on his behalf or personally recommend clients to him.2 We therefore conclude that ER 7.2(c) is not applicable to the inquiring attorney's purchase of a mailing list from a towing company. As a result, the inquiring attorney may ethically pay the towing company client reasonable compensation for the names, addresses, etc., of its customers, although he is not ethically obligated to do so.

 

The remaining issue to be decided is whether the letters which the inquiring attorney proposes to send to his client's customers must comply with the provisions of ER 7.3(b) and (c). Those provisions apply if the letters are sent to "persons known to need legal services of the kind provided by the lawyer in a particular matter, for the purpose of obtaining professional employment." ER 7.3(b). According to the Comment to ER 7.3, that Ethical Rule (particularly the provisions of ER 7.3(a) prohibiting direct personal or telephonic solicitation of professional employment from a prospective client with whom the lawyer has no family or prior professional relationship) is triggered when the attorney knows that the prospective client is in need of legal services.

 

Ethics opinions in Arizona and other jurisdictions have determined that ER 7.3 applies when the lawyer knows that the prospective clients may potentially be in need of the legal services he provides. For example, in our Opinion No. 83-5 (January 19, 1983) (determined under DR 2-101(B) of the former Code of Professional Responsibility), we determined that a former bankruptcy court clerk could not properly send letters to an identified segment of the general public which, in the attorney's opinion, might be contemplating filing for bankruptcy. Similarly, in Michigan, the solicitation rule applies where the attorney is sending letters to those with an “identified specific legal need.” Michigan State Bar Formal Opinion C-236 (Nov. 1985) (ABA/BNA Lawyers' Manual, supra, at p. 801:4754); see also Indiana State Bar Opinion 1984-U2 (ABA/BNA Lawyers' Manual, supra, at p. 801:3307) (that pre-Shapero opinion holding that the attorney may not properly send solicitation letters to persons listed in the files of the Unclaimed Properties Division of the State Attorney General's office).

 

In the facts before us, the inquiring attorney, a personal injury attorney, proposes to mail letters to persons whom he knows have recently been involved in automobile accidents. We believe that this category of persons has an "identified specific legal need" for purposes of ER 7.3, and that letters sent to these persons must comply with ER 7.3(b) and (c), in addition to ER 7.1 and ER 7.2.

 

We also refer the reader to the new Arizona "advertising rules" (amended ERs 7.1, 7.2, 7.3 and 7.4) which are to become effective on December 1, 1992. These amended rules are more extensive than their current counterparts and, in some cases, impose additional restrictions. In particular, we note that new rule ER 7.3(j) mandates that “[a]ny written communication prompted by a specific occurrence involving or affecting the intended recipient of the communication or a family member shall disclose how the lawyer obtained the information prompting the communication. If the information prompting the communication is a public document obtained from a commercial service or subscription, the disclosure shall identify the fact and role of the commercial service or subscription." This rule would seem to require that the inquiring attorney disclose to the recipient of the communication that he purchased the recipient's name from the towing company. Of course, on and after December 1, 1992, attorneys desiring to obtain mailing lists of customer names for the purpose of sending solicitation letters to them must comply with this rule and all other provisions of the new rules.

 

Finally, we note that, since the inquiring attorney wishes to pay compensation to one of his current clients for a list of names of the client's customers, he must comply with the provisions of ER 1.8(a). This rule provides that a lawyer shall not enter into a business transaction with a client unless:

 

"(1) the transaction .... (is) fair and reasonable to the client and.... (is) fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client;

 

"(2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and

 

"(3) the client consents in writing thereto."

 

In conclusion, we hold that the inquiring attorney may ethically acquire from his towing company client a list of the names, addresses, telephone numbers and vehicle descriptions of individuals recently involved in automobile accidents who have come into contact with the towing company, and may pay the client reasonable compensation therefor (although he is not obligated to do so), as long as he complies with the provisions of ER 1.8(a). Any letters which the inquiring attorney thereafter sends (prior to December 1, 1992) to persons shown on the list must comply with ER 7.3(b) and (c) as well as ER 7.1 and ER 7.2 (in their pre-December 1, 1992, forms). Any letters which the inquiring attorney desires to send to such persons (whose names, addresses, etc., he has obtained from his client in the manner herein described) on or after December 1, 1992, must comply with the applicable provisions of ERs 7.1, 7.2 and 7.3 as they have been amended effective on that date.

 

Editor's Note

 

One committee member, dissenting from the initial draft of the proposed opinion, wrote, in part:

 

"***I believe that the proposed arrangement, by which a towing and salvage operator intends to provide a list of towed vehicles involved in traffic accidents to the attorney, whether with or without charge, is inherently violative of the intent, if not the letter, of ER 7.2(c) and ER 7.3(a), which are designed to prevent the type of channeling of professional work to which this situation could lead.

 

"I further do not believe that it is appropriate to compare the furnishing of a list of only those vehicles involved in traffic accidents to the situation presented by the Talking Yellow Pages, in which the consumer at least initiates the contact. In this respect, I feel that the statement on page 2 of the proposed opinion that 'The proposed arrangement is similar to the Talking Yellow Pages in that..., no attempt is made to ascertain if the potential client has a legal problem,..' is not correct. The fact that someone has been involved in a traffic accident and has had their vehicle towed indicates the very real existence of a potential legal problem, which could be either civil or criminal in nature.

 

"Had the inquiring attorney's client been an ambulance company rather than a tow truck company, I cannot think that the Committee would release a draft opinion which reaches the same result. This proposed arrangement simply smacks of impropriety, and should not be countenanced by this Committee under ER 7.2 and ER 7.3.

 

"The fact that the towing company would not actively solicit clients on behalf of the attorney does not, in my mind, lessen the impact of the fact that the attorney would utilize the information received from the towing company for the explicit purpose of initiating correspondence with potential clients. Effectively, this arrangement would give the inquiring attorney a 'leg up' on the competition and would, in any event, lead to the conclusion in the minds of the public that the towing company is acting as a front for the attorney.

 

"....I agree with (the draftman's) analysis that ER 7.3 would apply to any communication from the attorney to the potential clients in the event the majority of the committee feels that the proposed arrangement is ethically permissible. ***"

 

 

DIGEST OF ETHICS OPINION

 

Prepared by

Willard N. Van Slyck

Professor of Law Emeritus

University of Arizona

 

93-01 - February 18, 1993  Inquiring attorney advised that proposed association with nonlawyer-operated business representing itself as a "complete eviction service" for the purpose of providing "attorney representation" for service's landlord customers would be ethically improper as violative of several Ethical Rules. (ER 5.3, 5.4, 5.5., 7.1)

 

 

DIGESTS OF ETHICS OPINIONS

 

Prepared by

Willard N. Van Slyck

Professor of Law Emeritus

University of Arizona

 

93-02 - March 17, 1993 Where, following conviction of attorney's former client of first degree murder several .years before, former client asserted to author of book concerning the murder and subsequent trial that attorney had acted incompetently, refused to follow instructions, failed to call certain witnesses, and engaged in a conspiracy with the prosecution to ensure his conviction, attorney is held ethically entitled, under ER 1.6(d), to divulge to the author, to the extent the attorney reasonably believes necessary, the substance of discussions between himself and his former client so as to refute the former client's allegations against him. (ER 1.6(a,d), 1.9(b))

 

93-03 - March 17, 1993 Where attorney, at the conclusion of representation, returns to the client all original documents and any other documents from the file which belong to the client, it is not ethically improper for the attorney to charge the client for the expense of making additional copies, of the file at the client's request. (ER 1.15(b), 1.16(d))

 

93-04 - March. 17, 1993 Supplanting its former Opinion No. 91-20 of June 17, 1991 (which it withdrew on September 10, 1992), Committee issues this new opinion clarifying its views as to the scope of ER 1.5(d): (1) An attorney may ethically charge a contingent fee for the collection of arrearages in child support or spousal maintenance payments after the entry of the decree in a marriage dissolution proceeding. (2) Where a contingent fee arrangement is entered into for the enforcement of a current child support or spousal maintenance order, the length of time that the contingency fee will apply to future payments must be spelled out in the agreement, and the agreement must be fair and equitable to the client. (3) Where a current order for support and/or maintenance is in existence and a contingent fee agreement is entered into for the collection of an arrearage in such payments, the legal rules applicable to allocation of monies paid upon a debt must be applied in determining whether and to what extent monies collected are to be credited to current support and/or maintenance or to the arrearage. (ER 1.5 (a,c,d))

 

93-05 - March 17. 1993 An attorney may, with ethical propriety, engage a non-testifying trial consultant under an arrangement whereby the consultant would be paid a base fee plus a prearranged bonus fee if the case results in a settlement or is won at trial (the bonus fee being a flat fee unrelated to the dollar amount of the settlement or verdict), provided: (a) the attorney's client is a party to the contract with the consultant and has been fully advised as to the terms of the consulting contract and the client's ultimate financial responsibility thereunder; (b) the attorney ensures that the consultant does not infringe upon the attorney's ethical duty to retain full control of the litigation; (c) the consulting contract should specify that the consultant will not testify as an expert witness; (d) the consulting agreement is not used as a subterfuge for fee-splitting between the attorney and the consultant; (e) the consultant may not engage in activity constituting the unauthorized practice of law; and (f) there is no partnership or improper referral of business as between the attorney and the consultant. (ER 1.4, 1.5(a), 1.8(e), 2.1, 3.4(b) and Comment, 5.4, 5.5(b), 7.1(j))

 

 

DIGEST OF ETHICS OPINION

 

Prepared by

Willard N. Van Slyck

Professor of Law Emeritus

University of Arizona

 

93-06 - May 17, 1993 Public Defender, whose office includes a Juvenile Division, may not ethically establish and maintain a separate component of the Juvenile Division to provide representation for co-defendants and other juveniles having a conflict of interest with other clients represented by the Public Defender (where the new component would be administered through the Defender's Office, including management of personnel matters, training, supplies and general services), despite the proposed use of safeguards to prevent dissemination of confidential information between the separate components of the Juvenile Division and the Public Defender administrators. Committee suggests that the County might accomplish its objective by establishing a separate-office, having no ties to the Public Defender, to handle conflict cases, such an office not running afoul of ER 1.10 if it were sufficiently separate, both in operation and management, that it would constitute a separate "firm" within the meaning of that Ethical Rule. (ER 1.7, 1.10(a))

 

 

DIGESTS OF ETHICS OPINIONS

 

Digest Prepared By

Willard N. Van Slyck

Professor of Law Emeritus

University of Arizona

 

93-07 - June 24, 1993 Deputy Public Defender in rural Arizona County, assigned to try cases in several of the Justice Courts of the county, who is appointed to fill a vacancy on the city council of a city located in one of the justice precincts where the attorney is assigned to try cases, may not ethically represent a criminal defendant in Justice Court who was arrested by a police officer of the city on whose council the attorney serves, such disqualification applying as well to the representation of such a defendant in all stages of the case short of trial, including working out plea agreements. (ER 1.7(b), 1.10 (a,d), 1.11)

 

 

DIGESTS OF ETHICS OPINIONS

 

Prepared by

Willard N. Van Slyck

Professor of Law Emeritus

University of Arizona

 

93-07 (Supplemental) - October 26,1993 Following issuance of Committee's Opinion No. 93-07 of June 24, 1993, inquiring attorney requested reconsideration, submitting additional facts for Committee's consideration. After reconsideration, Committee voted to issue this Supplemental Opinion essentially affirming its original view that, despite the additional facts submitted, under both the present Rules of Professional Conduct and the earlier Code of Professional Responsibility, the inquiring attorney-city council member (a deputy public defender in a rural Arizona county) may not ethically represent criminal defendants in justice and superior courts when the defendant has been arrested by a police officer of the city on whose council the attorney serves who will testify for the prosecution at trial. Gomez v. Superior Court distinguished. (ER 1.7(b), 1.10(a, d), 1.11(a, d))

 

 

DIGESTS OF ETHICS OPINIONS

 

Prepared by

Willard N. Van Slyck

Professor of Law Emeritus

University of Arizona

 

93-08 - July 2. 1993 Committee concludes that, assuming the requirements of A.R.S. § 41-191(ID (2) (a) - (10 are satisfied, attorneys employed in the Arizona Attorney General's Office may ethically participate, on a pro bono basis, in the Maricopa County Bar Association's Volunteer Lawyers Program ("Vol Law"), both in staffing the program's Intake Clinic and in the representation of clients referred to them by Vol Law, provided reasonable precautions are taken to detect and avoid conflicts of interest for such assistant attorneys general, such as: prescreening potential clients for conflicts of interest; limiting themselves to areas of the law determined to be unlikely to create conflicts with the State; avoiding potential violations of ER 8.4(e); and making clear to their pro bono clients, the clients' adversaries, and any tribunals before which they appear that they are acting in their individual capacities and not on behalf of the State of Arizona. (ER 1.6, 1.7, 6.1, 8.4 (e))

 

 

FORMAL OPINION NO. 93-09

July 20, 1993

 

BOARD OF GOVERNORS' NOTE: On October 22, 1993, the Board of Governors of the State Bar voted to reject Formal Opinion No. 93-09 as an expression of the State Bar's position on the issues presented, especially with respect to the second issue. On December 17, 1993, the Board voted to publish the following opinion in place of the formal opinion by the state Bar Committee on the Rules of Professional Conduct (Ethics Committee). Like all opinions of the Ethics Committee, what follows is a non-binding, advisory opinion.

 

 

DIGEST OF ETHICS OPINIONS

 

Prepared by

Willard N. Van Slyck

Professor of Law Emeritus

University of Arizona

 

93-10 - July 20, 1993 Where inquiring law firm's client has given conflicting testimony in two independent proceedings (in one of which the firm does not represent the client): (1) the firm would be under a duty to disclose to the Court in the case in which it represents the client the fact that the client had given conflicting testimony in the other proceeding in another Court only if the firm knows (has actual knowledge) of the falsity of the client's material testimony (something which is not clear on the facts submitted), although it would be prudent for the firm to make further inquiry to resolve its doubts on this point; but (2) since the firm does not represent the client in the other proceeding, it is not in the position of potentially assisting the client in a criminal or fraudulent act through the offering of false evidence in the other proceeding, and thus has no duty to make a disclosure to the Court in the other case (whether it would be permitted to make such a disclosure depending on whether it would be a crime for the client to leave the testimony uncorrected and upon the firm's knowledge of the client's intent, both issues being beyond the committee's jurisdiction). (ER 1.6(a, c), 3.3(a, b))

 

93-11 - September 28. 1993 Attorney may not ethically instigate a criminal prosecution against a former client whose personal check for the remaining balance of the attorney's fees was returned due to insufficient funds. (ER 1.6(a, d))

 

 

DIGEST OF ADVERTISING OPINION

 

01-93 - December 17, 1993  NOTE: This is a formal opinion of the Advertising Committee of the State Bar of Arizona; this is not a formal opinion of the Committee on the Rules of Professional conduct. However, this opinion should be filed with the opinions of the Ethics Committee because the Advertising Committee was disbanded in January, 1994 and only issued three formal opinions.

 

This opinion analyzes whether a certain television advertisement for an "injury helpline" 1) is a lawyer referral service in violation of ER 7.1(r ); 2) provides for a fee arrangement in violation of ER 7.1(j); and 3) comports with the requirements of ER 7.1(a),(b) and (q). The Committee concluded that, based upon the specifics of this advertisement and answering service arrangement, the program 1) was not a lawyer referral service; 2) was not in violation of ER 7.1(j) because the participating attorneys only pay fixed advertising fees; and 3) complies with the requirements of 7.1(a),(b) and (q). (ER 7.1(a), (b), (j) and (q), and 7.1(r).

 

NOTE: Opinion No. 93-12 was renumbered. That opinion is now Opinion No. 01-93. Opinion No. 93-12 no longer exists.

 

 

93-13 - December 15, 1993 A Prosecutor's Office's policy requiring all of its Deputy Prosecutors to file blanket notices of change of judge (under Rule 10.2, Arizona Rules of Criminal Procedure) in criminal cases assigned to a particular judge -- prompted by the Prosecutor's perception of the particular judge's judicial philosophy as perceived from prior ruling on questions of law -- may constitute an abuse of Rule 10.2 and an attempt to influence the judge in violation of ER 3.5, depending on the policy's underlying motivation. However, if the decision to notice a particular judge is made on a case-by-case basis by each Deputy Prosecutor according to his or her professional judgment, such would not necessarily constitute an abuse of Rule 10.2 or a violation of ER 3.5. State v. City Court of City of Tucson cited and followed. (ER 1.7(b), 3.5, 5.1, 5.2)

 

 

DIGEST OF ETHICS OPINION

 

Prepared by

Willard N. Van Slyck

Professor of Law Emeritus

University of Arizona

 

93-14 - September 23, 1993 Inquiring attorney's client in dissolution proceeding, having exclusive possession of community residence under court order, finds and listens to cassette tape left behind by spouse (either inadvertently or by abandonment) containing recordings of telephone conversations between spouse and other individuals including spouse's previous attorney in spouse's divorce from earlier spouse. Client having asked inquiring attorney to listen to the tape, committee advises that: (1) since there is no suggestion of impropriety or illegal conduct by client in obtaining the tape, inquiring attorney may either listen to the tape or have client provide a summary of information contained in the tape, subject to the client's informed consent under ER 1.4(b); and (2) the inquiring attorney may not destroy the tape and may have a duty under applicable law and ER 1.15 to safeguard the tape against the client's request for its return and must advise the client of limitations on attorney's conduct under ER 1.2(d) and (e). One dissent. (ER 1.2(a,d,e), 1.4(b), 1.6(a), 1.15(a,b), 3.4(a), 4.4)

 

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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1 The Maryland opinion was issued prior to the United States Supreme Court's ruling in Shapero v. Kentucky Bar Association, 486 U.S. 466, 108 S. Ct. 1916, 100 L. Ed. 2d 475 (1988), which held that it was unconstitutional for a state to totally ban targeted direct mail solicitations.

2 We note that the inquiring attorney should take reasonable steps to ensure that the towing company does not engage in such conduct. See ER 5.3.



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