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Ethics Opinion

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January 25, 1983


    A lawyer who forms a bona fide non-profit service organization and, while maintaining private law practice, cooperates with, assists or receives referrals or employment from that organization may not have initiated the organization, nor may he use the organization, as a subterfuge to enable him to seek out business for his own financial gain.

    References: MCPR Canon 2, DR 3-101(A), DR 2-103(D)(4); CI-102, CI-117, CI-246, CI-310, CI-525, CI-705 and CI-762.


A lawyer proposes to form a non-profit organization to be staffed by two full-time lawyers, a scientist, a research person, and two secretaries, to provide educational, informational and legal services to public organizations, civic organizations and citizens. In particular, you inquire:

  1. What limits, if any, are imposed on a staff of lawyers, working for such an organization; and
  2. What limits are imposed, or what guidelines must be followed, by the organization in providing the services described.

The ethical limitations on a staff of lawyers working for the organization are the same as those for any lawyer practicing law in the state. In regard to the second question, the organization is not governed by the MCPR since it is a code of conduct for members of the bar. However, since MCPR DR 3-101(A) prohibits a lawyer from aiding the unauthorized practice of law, the inquirer must consult state law to determine if the proposed conduct constitutes the unauthorized practice of law.

MCPR DR 2-103 provides:

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

    "(B) A lawyer shall not compensate or give anything of value to a person or organization to recommend or secure his employment by a client, or as a reward for having made a recommendation resulting in his employment by a client, except that he may pay the usual and reasonable fees or dues charged by any of the organizations listed in DR 2-103(D).

    "(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:

      "(1) he may request referrals from a lawyer referral service operated, sponsored, or approval 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) and may perform legal services for those to whom he was recommended by it 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.

    "(D) A lawyer shall knowingly assist a person or organization that furnishes or pays for a legal services to others to promote the use of his services or those of his partner or associate of any other lawyer affiliated with him or his firm except as permitted in DR 2-101(B). However, this does not prohibited 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 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:

      "(1) a legal aid office or public defender office:

        "(a) operated or sponsored by a duly accredited law school;

        "(b) operated or sponsored by a bona-fide non-profit community organization;

        "(c) operated or sponsored by a governmental agency; or

        "(d) operated, sponsored, or approved by a bar association;

      "(2) a military legal assistance office;

      "(3) a lawyer referral service operated, sponsored, or approved by a bar association;

      "(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 matter where such organization bears the ultimate liability of its member or beneficiary;

        "(b) neither the lawyer, nor his partner, nor 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 or 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 service 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 at the member's or beneficiary's own expense, and the legal service plan of such organization provides appropriate relief for any member or beneficiary who asserts a good faith claim that representation by counsel furnished, selected, or approved would be unethical, improper, or inadequate within the meaning of Canon 6 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, or other legal requirements that govern its legal service operations; and

        "(g) such organization has filed with the Michigan Supreme Court a copy of its legal services plan, if any, showing its terms, its schedule of benefits, its subscription charges, agreements thereto, or if it has failed to do so, the lawyer does not know or have cause to know of such failure.

    "(E) A lawyer shall not accept employment when he knows or it is obvious that the person who seeks his services does so as a result of conduct prohibited under this disciplinary rule.

Although the Code does not define "bona fide organization" in DR 2-103(D)(4), the words themselves reflect the concern about improper solicitation of legal business. In addition, ABA CI-1339 defines a bona fide organization as one which is not a "subterfuge to enable lawyers to seek out business for their own financial gain." In brief, a lawyer may not use a corporation organized by him to advertise his private law practice.

The facts do not indicate whether inquirer intends to be fully employed by the organization and maintain a private law practice. If the law practice is conducted concurrently, MCPR Canon 2 applies.

It is beyond the scope of this committee to set forth specific procedures for forming a bona-fide non-profit organization, therefore, in lieu of an inquiry as to particular conduct, we can only refer to other sources of information which may be helpful. See Legal Service Plans: Approaches to Regulation by Werner Pfennigstorf and Spencer L. Kimball; ABA Op 334; CI-102, CI-117, CI-246, CI-310, CI-525, CI-705, CI-762.



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