July 29, 1993
An organization which encourages inventors to utilize the services of registered patent lawyers and registered patent agents, to which end, at no cost to inventors, the organization refers inventors to registered patent lawyers in their geographical area by randomly selecting names from a registration list compiled on computer software by the United States Patent and Trademark Office, selection being made without regard to whether such lawyers in any way support the organization, which organization subsists on contributions and profits from advertising services furnished by the organization to registered patent lawyers, is not a lawyer referral service required to be registered in the state.
A lawyer, with suitable verification that all communications are accurate, may accept referrals from and place advertising through the organization regardless of whether the organization is registered as a lawyer referral service in the state.
References: MRPC 6.3, 7.1, 7.2, 7.3; Shapero v Kentucky Bar Ass'n, 486 US 466 (1988).
An out-of-state organization proposing to extend its services into Michigan contends that inventors, and specifically novice inventors, have often been victimized by fraudulent invention marketing firms, many of which are accused of taking an inventor's money on the pretext of marketing the invention, but which in reality provide no service. The organization's goal is to reach inventors who are potential victims of these fraudulent schemes before they have committed to utilize the services of invention marketing firms, in order to urge inventors to contact a registered patent lawyer or requested patent agent in the inventor's local area for legal guidance regarding protection of their innovations.
The organization charges no fees to the inventors, but derives its funding from registered patent lawyers and registered patent agents who pay for advertising. Besides placing lawyer advertisements in national print media, the organization advertises its own services, targeting them to publications that carry advertisements for invention marketing businesses.
The organization urges inventors with marketing questions to contact the organization for a referral to registered patent lawyers or registered patent agents in the inventor's vicinity. On receiving such telephone inquiries, the organization selects by an unspecified random method some number of registered patent lawyers in good standing from the software program provided by the U.S. Patent and Trademark Office [USPTO], which includes names, addresses, and telephone numbers. The organization makes no evaluation of the lawyers other than ensuring they are in good standing on the roster of the USPTO. No preference is accorded to patent lawyers who have contributed to the organization or who pay the organization for advertising. Registered patent lawyers are also urged to subscribe to the organization's quarterly newsletter, and the organization will place advertisements for its subscribing lawyers in selected national print media (magazines and newspapers), apparently targeting the promotional campaign geographically by postal zip codes.
The Committee is asked whether it is ethical for a Michigan lawyer to participate by accepting referrals from or placing advertisements with the organization.
MRPC 7.1 and 7.2 regulate lawyer advertising. MRPC 7.1 states:
"A lawyer may, on the lawyer's own behalf, on behalf of a partner or associate, or on behalf of any other lawyer affiliated with the lawyer or the lawyer's law firm, use or participate in the use of any form of public communication that is not false, fraudulent, misleading, or deceptive. A communication shall not:
"(a) contain a material misrepresentation of fact or law, or omit a fact necessary to make the statement considered as a whole not materially misleading;
"(b) be likely to create an unjustified expectation about results the lawyer can achieve, or state or imply that the lawyer can achieve results by means that violate the Rules of Professional Conduct or other law; or
"(c) compare the lawyers' services with other lawyers' services, unless the comparison can be factually substantiated."
MRPC 7.2 states:
"(a) Subject to the provisions of these rules, a lawyer may advertise.
"(b) A copy or recording of an advertisement or communication shall be kept for two years after its last dissemination along with a record of when and where it was used.
"(c) A lawyer shall not give anything of value to a person for recommending the lawyer's services, except that a lawyer may:
"(i) pay the reasonable cost of advertising or communication permitted by this rule;
"(ii) participate in, and pay the usual charges of, a not-for-profit lawyer referral service or other legal service organization that satisfies the requirements of Rule 6.3(b); and
"(iii) pay for a law practice in accordance with Rule 1.17."
Recognizing that media advertising generally is protected as First Amendment activity which is beyond the state's regulatory power, Shapero v Kentucky Bar Ass'n, 486 US 466; 108 S Ct 1916; 100 L Ed 2d 475 (1988), the rules merely require that copies or recordings of advertisements or communications be kept for two years after last dissemination, together with a record of when and where the material was used. MRPC 7.2(c) deals with advertising through lawyer referral services, and prohibits the giving of anything of value by a lawyer to a person for recommending the lawyer's services, except not-for-profit lawyer referral services or legal service organizations that satisfy the requirements of MRPC 6.3(b), although a lawyer may generally pay the reasonable cost of advertising or communication. MRPC 7.2(c)(1).
As described, the inventor protection organization is not a lawyer referral service. The only referrals in which it engages are unremunerated. Rather, it appears the organization is exercising its First Amendment right to disseminate information concerning the general advantages of relying on lawyers and agents who have the special qualifications necessary to be registered with the USPTO, and in answering inquiries, it provides names, addresses and telephone numbers of such registered lawyers and agents which it selects from computer software recorded listings provided by the USPTO.
Should it eventuate that the organization favors lawyers who have contributed, either by subscribing to advertising services or otherwise making a contribution to the philanthropic work of the organization, that would constitute the organization a lawyer referral service. If operated for profit, its services could not ethically be utilized by a lawyer licensed to practice law in Michigan. Nor could a Michigan lawyer participate unless and until the organization, if not-for-profit, complies with MRPC 6.3(b), by filing with the State Bar of Michigan a written plan disclosing the name under which it operates, identifying its chief operating officer, and setting forth the plan terms, conditions of eligibility, schedule of benefits, subscription charges and agreements with counsel.
From the perspective of registered patent lawyers who are licensed to practice law in Michigan and who are considering donating to the organization or subscribing to its advertising services, the matter appears to be akin to advertising in targeted media. A law firm specializing in labor matters might purchase advertising space in union publications, and so a registered patent lawyer might equally attempt to focus advertising resources in media which reach a narrow audience of inventors. Such efficient expenditures of monies set aside for advertising purposes is an economic, not an ethical, question. So long as the advertisement is not false, fraudulent, misleading or deceptive, or otherwise in violation of MRPC 7.1, the fact that it is aimed at a specific audience, except in cases involving direct contact with prospective clients subject to MRPC 7.3 is extraneous to its ethical propriety.
According to the organization's president, inventors who make inquiry of the organization seeking the names of registered patent lawyers will receive responses which depend solely on geography and the list of lawyers compiled by the USPTO, so that potential clients will be "referred" to registered patent lawyers whether or not such lawyers make use of the organization's services or otherwise support it in any way. So long as there is no favoritism shown to lawyers who support the organization, lawyers who pay the organization to place advertisements on their behalf in selected national media are simply using the organization as though it were an advertising consultant. Since advertising is generally permissible, and the use of consultants is not regulated by the Michigan Rules of Professional Conduct, the organization's activities will not cause lawyers who support or participate in utilizing its services to run afoul of the Michigan Rules of Professional Conduct.
Some caveats to the foregoing are required. It would be the responsibility of any lawyer wishing to support or participate in the work of the organization to ascertain that any advertisements are accurate. MRPC 7.1; see also R-6, R-8. In the same vein, a participating lawyer must assure that any referrals made by the organization to the lawyer are accomplished without misleading the caller. Thus, the organization must be careful to foster understanding that it is not a lawyer referral service, and that it identifies lawyers to callers solely on the basis of whether they are certified by and in good standing with the USPTO and by geographical location, and that no other imprimatur is intended or implied. MRPC 7.1.