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Ethics Opinion

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CI-1058

February 11, 1985

SYLLABUS

    It is improper for a lawyer to enter into an arrangement with a debt consolidation corporation whereby employees of the debt consolidation corporation would interview prospective clients, determine the interviewee's possible need for legal services, and then, if services were requested, refer the prospective client to the lawyer.

    References: MCPR DR 2-103(A), (B), (C), and (D), DR 2-104(A); C-218; CI-422, CI-446, CI-505, CI-570, CI-862, CI-958.

TEXT

A debt consolidation corporation interviews approximately 150 people per month. It is proposed that during the course of the initial interview, employees of the corporation would make a determination of the interviewee's possible need for legal services. If legal services were requested, the employee would then refer the interviewee to a panel of lawyers. A lawyer asks whether participation on the panel is ethically permitted.

MCPR DR 2-103(A) states in relevant part:

    "A lawyer shall not recommend employment, as a private practitioner, of himself, his partner, or associate to a nonlawyer who has not sought his advice regarding employment of a lawyer."

The proposed system clearly contemplates the recommendation of a lawyer's employment to prospective clients who have not sought the lawyer's advice regarding employment of a lawyer. Under the proposed arrangement, the employees of the corporation in effect act as the lawyer's agent for recommending the lawyer's employment to prospective clients.

An analogous arrangement was found to be improper in CI-446. In that case, it was held that a lawyer could not contract with and pay a fee to "W W" organization to promote the lawyer's business to newcomers in a community by the distribution of lawyer-prepared literature. The proposed arrangement was considered improper solicitation, in part because:

    "There is no suggestion in the inquiry that W W has the expertise to screen the qualifications of a lawyer who wishes to have materials distributed by that organization similar to the evaluation process the Court assumed the agent would undertake before recommending Jacques to the union members. There is also the substantial possibility that the person or persons to whom the W W would deliver the lawyers advertising material might naturally assume the organization was endorsing the lawyer's abilities when, in fact, it is most likely unqualified to do so. Under the facts presented, W W is, in essence, acting as the agent for the lawyer and cannot be regarded as a 'buffer' between the lawyer and the prospective client."

Similar principles were applied in CI-570, where it was resolved that a lawyer may not ask a third party to recommend the lawyer's services to prospective clients where the third party is not able to serve as an impartial buffer between the client and the lawyer's solicitation.

The present type of arrangement was also disapproved in CI-958, where the Committee resolved that a private practitioner could not accept wholesale referrals from an insurance company for the preparation of wills and trusts. Part of that decision's rationale was that "the customers have not sought the lawyer's advice. The customers are not aware if the lawyer is experienced or able to properly furnish legal service."

Under the present scheme, the corporation would act as the lawyer's agent and, therefore, cannot be a proper objective buffer between the lawyer and the prospective client. It is highly probable that those who seek the corporation's services are under considerable stress and will relay heavily on the corporation's advice and recommendations. When faced with the corporation's recommendation that the client seek legal counsel, the client would probably acquiesce in both the corporation's determination and its inadequate buffer between the lawyer and the prospective client, since the prior arrangement between the lawyer and the corporation improperly taints the recommendation without any assurance that the corporation is qualified to evaluate the lawyer's expertise.

The proposed system is also improper because it embraces a communication directed toward laypersons with an identified present need for legal services. See e.g., C-218, which unequivocally states that:

    "Communications directed to targeted potential clients with an identified need for particular legal services, framed to elicit a direct response to the lawyer-sender, constitutes improper solicitation."

The purpose of the proposed referral scheme is to identify the client's present need for legal services under stressed, potentially coercive circumstances. It is readily apparent that the proposed referral scheme is structured to elicit a direct response to the lawyer. Once the need for legal services is identified, the corporation would communicate its recommendation of the lawyer's employment to the targeted clients. The fact that the recommendation would be given "if such services were requested" is not an adequate safeguard since the corporation acts as the lawyer's agent and, therefore, is not an adequate buffer between the lawyer and the prospective client. Thus, the lawyer would be improperly soliciting potential clients with an identified present need for legal services in violation of MCPR DR 2-103(A).

The proposed referral scheme may also violate DR 2-103(B), which states:

    "A lawyer shall not compensate or give anything of value to a person or organization to recommend or secure this employment by a client, or as a reward for having made a recommendation resulting in his employment by a client."

The corporation clearly recommends the lawyer's employment by distributing the lawyer's name to clients after an initial determination of client's need for legal services. In return, the corporation receives the benefit of the use of the lawyer's name and professional status, which implicitly enhances the corporation's reputation and range of services in the eyes of their potential clients.

In CI-505, the Committee found that it was improper for a lawyer to allow his name and professional status to appear as a reference in a promotional brochure for an insurance agent where there had been, or it was anticipated there would be, referrals of clients from the agent to the lawyer. In that case, there was no agreement concerning the referral of clients. The Opinion found that use of the lawyer's name and professional status as a reference must be considered something of value within the meaning of DR 2-103(B). Under the present scheme, the corporation would likewise utilize the value of the lawyer's name and professional status to enhance its own ability to service clients. The proposed scheme is, however, more egregious since it intentionally encompasses the referral of clients to the lawyer.

Thus, a lawyer's participation in the proposed referral scheme would be improper under DR 2-103(B).

CI-422 demonstrates the application of the principles discussed above. In that Opinion, the issue was whether a lawyer could properly accept clients referred to the lawyer by a sister-in-law, a hospital social worker, who dealt frequently with people who needed legal services. The Committee found:

    "A lawyer may accept a client referred by a third party layman so long as the referral is not made at the lawyer's request, and so long as the lawyer has not given any compensation or anything of value to said third party layman for such referral.

"A lawyer may not accept a client referred by a third party layman when the lawyer knows or should know that the client has been solicited by the third party layman."

In this case, the proposed referral scheme necessarily includes the lawyer's request that the corporation refer prospective clients to the lawyer. As discussed above, the lawyer is giving something of value to the corporation for such referrals. In addition, the lawyer would know that the client was improperly solicited on the lawyer's behalf by the corporation. Thus, participation in the proposed arrangement would be improper.

Further, participation in the proposed referral scheme would be improper under DR 2-103(C), which states in relevant part:

    "A lawyer shall not request a person or organization to recommend or promote the use of his services or those of his partner or associate, or any other lawyer affiliated with him or his firm, as a private practitioner, except that:

      "(1) he may request referrals from a lawyer referral service operated, sponsored, or approved by a bar association and may pay its fees incident thereto; and

      "(2) he may cooperate with the legal service activities of any of the offices or organizations enumerated in DR 2-103(D)(1) through (4) . . . ."

By entering into the referral arrangement with the corporation, the lawyer is, in essence, requesting the corporation to recommend or promote the use ofthe lawyer's services to the corporation's clients. The lawyer's contact with the corporation is not simply to inform them of the lawyer's availability but to persuasively request them to recommend the lawyer's services. See CI-570. The corporation is not a lawyer referral service operated, sponsored, or approved by a bar association. See CI-862. In addition, the corporation is not a "qualified legal assistance organization" under DR 2-103(D)(1) through (4). Participation in the proposed referral scheme would, therefore, be improper under DR 2-103(C).

MCPR DR 2-104(A) states in relevant part:

    "A lawyer who has given unsolicited advice to a layman that he should obtain counsel or take legal action shall not accept employment resulting from that advice, except that:

      ". . .

      "(2) a lawyer may accept employment that results from his participation in activities designed to educate laymen to recognize legal problems, to make intelligent selection of counsel, or to utilize available legal services if such activities are conducted or sponsored by a qualified legal assistance organization.

      "(3) a lawyer who is recommended, furnished, or paid by a qualified legal assistance organization enumerated in DR 2-103 (D)(1) through (4) may represent a member or beneficiary thereof, to the extent and under the conditions prescribed therein;

      ". . .

    "The term 'bar association' includes a bar association of specialists as referred to in DR 2-105(A)(1) or (4), and 'qualified legal assistance organization' means an office or organization of one of the four types listed in the DR 2-103(D)(1) through (4) inclusive that meets all the requirements thereof."

Under the proposed arrangement, the employees of the corporation would make an assessment of the interviewee's need for legal services and then recommend the interviewee's to the lawyer if legal services were requested. The interviewee does not seek the corporation's services in order to assess his/her need for legal services; thus, any advice regarding legal services is unsolicited. Since the corporation is essentially the lawyer's agent in this transaction, the lawyer may be considered to have given unsolicited advice to a layman to obtain counsel. Since the corporation is not a "qualified legal assistance organization" within the meaning of DR 2-103(D)(1) through (4), the lawyer may not accept employment resulting from the unsolicited advice given on the lawyer's behalf.

 
     

 

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