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Ethics Opinion

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May 9, 1986


    A prepaid legal services referral lawyer may not accept paid employment from a legal service plan member when the applicant does not qualify for the services under the plan.

    The prepaid legal service plan may include guidelines with respect to the categories of cases or kinds of referral clients that its referral lawyers may handle. Such guidelines may contain a provision that an estate is eligible only if the personal representative is a covered plan member.

    In a prepaid legal service plan the relationship between the referral lawyer and the beneficiary is that of lawyer-client, with all of the obligations and duties that the relationship implies.

    The governing body of a prepaid legal service plan has a right to establish and enforce policies for handling cases. A policy setting fees is permissible so long as the scheduled fees are not unreasonable fees within the context of ethics rules. There must not be any interference with the handling of the cases and the professional judgement of the referral lawyer who is rendering the legal service to the plan members.

    References: MCPR DR 2-103(C) & (D); C-233 C-324; CI-973, CI-1237.


An unmarried decedent is survived by several children, one of whom is a covered member of a labor union's legal service plan. Under a plan payment rule estate work is prepaid only if the personal representative appointed by the court is a covered member, regardless of the member's qualifications or the preference of the heirs-at-law; if someone other than the plan member is appointed personal representative, the plan provides only for a three hour "monitoring" charge. In this case, the heirs-at-law are willing to pay the lawyer's normal charges for the estate work.

The lawyer with the legal service plan who is contacted by the member asks whether the payment rule is an unethical restriction on a plan lawyer's independent professional judgment, and whether the plan lawyer may ethically refuse to accept the representation if the lawyer believes that the covered member is not qualified to serve as personal representative.

MCPR DR 2-103(C)(2)(a) and (b) state:

    "(C) 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:

      "(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) and may perform legal services for those to whom he was recommended by it to do such work if:

        "(a) the person to whom the recommendation is made is a member or beneficiary of such office or organization, or

        "(b) the lawyer remains free to exercise his independent professional judgment on behalf of his client."

MCPR DR 2-103(D)(4)(c) and (d) state:

    "(D) A lawyer shall not knowingly assist a person or organization that furnishes or pays for legal services to others to promote the use of his services or those of his partner or associate or any other lawyer affiliated with him or his firm except as permitted in DR 2-101(B). However, this does not prohibit a lawyer or his partner or associate or any other lawyer affiliated with him or his firm from being recommended, employed or paid by, or cooperating with, one of the following offices or organizations that promote the use of his service or those of his partner or associate or any other lawyer affiliated with him or his firm if there is not interference with the exercise of independent professional judgment on 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.

        ". . .

        "(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 of beneficiary to whom the legal services are furnished, and not such organization, is recognized as the client of the lawyer in the matter."

The plan in this inquiry is an approved plan in accordance with MCPR DR 2-103(D)(4).

It is clear from the ethics rules cited that the referral lawyer of the group legal services plan represents the beneficiary of the plan and not the plan itself. See also C-233. Nonlawyer plan administrators may not interfere with the referral lawyer's independent professional judgment on behalf of the beneficiary client. Where the plan requires a referral lawyer to take action contrary to that which the lawyer believes is in the best interest of the client, the lawyer must make a full disclosure of that fact to the client, and if the conflict cannot be resolved, must withdraw from the representation.

The mere fact, in and of itself, that a lawyer' s compensation may be paid by a third party does not make the relationship improper from an ethical standpoint. CI-973 held that it was not unethical for a lawyer to accept compensation for legal services from one other than a client provided that the client has consented to such arrangement after a full disclosure and the third party does not attempt to direct, regulate or otherwise interfere with the professional judgement of the lawyer who is rendering the legal services to the client. Therefore, there must be a strong safeguard against any interference with the professional judgment of the lawyer who is rendering the legal services to the client.

In ABA CI-1237, the board of a labor union which would govern, would (1) enlist lawyers to serve on the panel; (2) make recommendations to union members from amongst said lawyers to provide professional services to assist them with specific personnel employment problems; (3) set fee schedules; and (4) review the program from time to time. Each lawyer would agree to accept union members as clients at the set fee schedules; accept official union business; refuse corporate business to the extent that it may compromise the union; inform the board of potential conflicts of interest and abide by its rulings. There would be no requirement that the union or its members use the enlisted lawyer, nor that the lawyer refrain from representing outside clients other than that set forth above. Each lawyer would be permitted to withdraw or could be stricken from the list upon thirty (30) day written notice without reasons, notice or hearing.

In considering the propriety of such a plan, the ABA Committee determined that the arrangement would be tenable as long as: the fee schedules were set with due regard for the ethical concerns; there was a right in the plan for the lawyer to refuse to accept or continue employment if there is an impairment of the independent judgment of the lawyer; the lawyer did not solicit or obtain business from promoting personal services.

ABA Op 324 indicates that the governing board or body of a legal aid society has the right and obligation to establish and enforce broad policy regarding the operation to establish and enforce broad policy regarding the operation of the agency, but beyond this function the board must scrupulously guard against unreasonable interference with the handling of specific cases where the representation of specific clients is by staff lawyers.

The concerns expressed in the ABA opinions are pertinent to the present inquiry. It appears that the payment rule is consistent with establishing a guideline concerning the categories or kinds of clients and types of cases that the instant referral lawyers may represent and handle, as long as the fees do not constitute "excessive fees" prohibited by ethics rules. The lawyer must guard against interference with independent professional judgment by the person who may pay the lawyer's fee. In the event that the plan beneficiary does not qualify as the personal representative of the estate, then the lawyer must decline the employment.

If the lawyer were to represent other persons in cases where the lawyer determines that the plan member is not eligible for benefits under the plan, a conflict of interest would arise between the lawyer's duties to the plan and plan members, and the lawyer's personal interest in taking a fee-generating case. See

Missouri Op 82, a legal aid bureau volunteer lawyer may not accept paid employment from an applicant for legal aid where the applicant does not qualify for assistance of the bureau.

For the lawyer to volunteer to represent other estate heirs if the plan member does not qualify as personal representation would be improper solicitation.



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