February 14, 1994
A lawyer may not establish a business employing a nonlawyer agent to sell will and trust forms where the agent will most likely provide consultation and/or advice to the clients.
A lawyer may not employ legal assistants under circumstances where the lawyer has no effective control over the assistant's communications regarding the lawyer, is not involved in the decision whether to form a lawyer-client relationship, has no conflict screening mechanism, and may be unaware of the client's confidences and secrets as well as the very existence of the lawyer-client relationship.
A lawyer may not delegate to a legal assistant the lawyer's obligation to exercise independent professional judgment on behalf of a client.
A lawyer may not give anything of value to a person for recommending the lawyer's services other than paying the reasonable cost of advertising or communication, or by participating in a not-for-profit referral service.
A lawyer may not employ another to engage in solicitation activity which the lawyer could not ethically do directly.
References: MRPC 1.1, 1.5(b), 1.6(a), (b) and (d), 1.7, 1.9(a) and (b), 1.10(a) and (b), 5.1, 5.3, 5.4(c), 5.5(b), 7.1, 7.2(c), 7.3(a), 8.4(a); R-1, R-6, R-8; RI-123, RI-128, RI-125; ABA Op 90-358; State Bar v. Cramer, 399 Mich 116 (1976); Shapero v. Kentucky Bar Ass'n, 486 US 466; 108 S Ct 1916; 100 L Ed 2d 475 (1988); Ohralik v. Ohio St Bar Ass'n, 436 US 447 (1978).
A lawyer proposes to establish a "nonlaw" business under the lawyer's direction and control which will employ nonlawyer agents to travel door-to-door selling will and trust forms. The lawyer will review and select the forms. The agent will carry business cards bearing the name "ABC Document Service," the name of the agent and the agent's telephone number. If the customer wishes changes in the forms, the agent will take down the relevant information and forward it to the lawyer. The customer will pay one fee for the forms and the agent's consultation, and may be charged additional amounts by the lawyer if the changes, in the lawyer's judgment, warrant an additional charge. The address of ABC Document Service would be the same as the lawyer's office. The lawyer asks whether there are ethical problems with this business proposal.
There are several ethical concerns raised by the lawyer's business proposition. MRPC 5.5(b) states:
The sale of legal forms with related textual instruction does not itself constitute the practice of law. State Bar v. Cramer, 399 Mich 116 (1976). However, the lawyer's business proposal as stated contemplates the customer paying "one fee for the forms and the agent's consultation." Any advice or guidance given in reference to the will and trust forms would constitute the practice of law, Cramer, and when performed by the lawyer's agent, would constitute the unauthorized practice of law. As a practical matter, it seems unlikely that the agent could avoid giving such advice or guidance. This "realworld" concern was a thematic underpinning of R-1, which noted that the proposal addressed in that opinion would constitute the unauthorized practice of law due to the "distinct possibility, and in all likelihood, a probability that [unsupervised legal assistants] will be engaged in advising clients of their legal rights." See also Michigan Guidelines for the Utilization of Legal Assistants, Vol 72 MBJ 563 (June, 1993), Guideline 2(b), legal assistants may not "convey to persons outside the law firm the legal assistant's opinion regarding the applicability of laws to the particular legal situation of another, the legal effect of acts or omissions of another, or the legal rights, responsibilities, or obligations of another person regarding their particular matter."
The lawyer's proposal states that the "nonlaw" business will be under the lawyer's direction and control. MRPC 5.3 states:
"With respect to a nonlawyer employed by, retained by, or associated with a lawyer:
"(a) a partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer;
"(b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer; and
"(c) a lawyer shall be responsible for conduct of such a person that would be a violation of the rules of professional conduct if engaged in by a lawyer if:
"(1) the lawyer orders or, with knowledge of the relevant facts and the specific conduct, ratifies the conduct involved; or
"(2) the lawyer is a partner in the law firm in which the person is employed or has direct supervisory authority over the person and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action."
MRPC 5.3, which discusses a lawyer's obligations regarding nonlawyer assistants, is different from MRPC 5.1, which addresses a lawyer's obligations in respect of the lawyer's subordinate lawyers. The differences appreciate the fact that not every rule is applicable to the nonlawyer assistant. Because nonlawyers may not be disciplined under the rules, it may be appropriate for lawyers to employ even stricter oversight and control over their nonlawyer employees. See Hazard & Hodes, The Law of Lawyering, 784-85 (2d ed 1990). Part of a lawyer's oversight obligation regarding legal assistants is to prevent the unauthorized practice of law. In re Schelly, 446 NE2d 236 (Ill, 1983).
A lawyer may not delegate to the lawyer's assistant "[r]esponsibility for establishing a lawyer-client relationship." Michigan Guidelines for the Utilization of Legal Assistants, Vol 72 MBJ 563 (June, 1993), Guideline 3(a). See also RI-125, "[s]ubstantive decisions concerning whether representation may be ethically undertaken . . . must be made by the lawyer, not the legal assistant." Whether or not the giving of sufficient information to complete a form gives rise to a lawyer-client relationship is a question of fact which itself depends upon other facts, including the specificity of the information revealed, compare RI-123 with RI-154, and the client's reasonable expectations. Pacific Dunlop Holdings Inc v. Barosh, 1992 US Dist Lexis 10171 (ED Ill, 1992); Rosman v. Shapiro, 653 F Supp 1441 (SDNY, 1987). Where, as proposed here, the nonlawyer assistant will advise each "customer" that, should they desire changes in the form, the information will be forwarded to the lawyer, the "customer" may legitimately expect that they are clients of the lawyer, and the lawyer's obligations in respect of the client will be triggered regardless of whether the lawyer is later required to amend the form or undertake representation.
MRPC 1.1 states:
"A lawyer shall provide competent representation to a client. A lawyer shall not:
"(a) handle a legal matter which the lawyer knows or should know that the lawyer is not competent to handle, without associating with a lawyer who is competent to handle it;
"(b) handle a legal matter without preparation adequate in the circumstances; or
"(c) neglect a legal matter entrusted to the lawyer."
It is unlikely that any one lawyer could handle any and every will and/or trust situation. Yet, under the lawyer's proposal, the lawyer invites creation of a lawyer-client relationship and invites receipt of confidential information even before deciding whether the lawyer is competent to handle the matter. The ex post facto nature of the lawyer's involvement under this proposal also foretells violations of the requirement in MRPC 1.5(b) that the basis or rate of the lawyer's fee "be communicated to the client preferably in writing, before or within a reasonable time after commencing the representation."
MRPC 1.6(a), (b) and (d) state:
"(a) 'Confidence' refers to information protected by the client-lawyer privilege under applicable law, and secret refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client.
"(b) Except when permitted under paragraph (c), a lawyer shall not knowingly:
"(1) reveal a confidence or secret of a client;
"(2) use a confidence or secret of a client to the disadvantage of the client; or
"(3) use a confidence or secret of a client for the advantage of the lawyer or of a third person, unless the client consents after full disclosure.
". . .
"(d) A lawyer shall exercise reasonable care to prevent employees, associates, and others whose services are utilized by the lawyer from disclosing or using confidences or secrets of a client, except that a lawyer may reveal the information allowed by paragraph (c) through an employee."
The lawyer's obligation to preserve the client's confidences and secrets is not dependent upon whether the lawyer ultimately undertakes representation or whether the lawyer is paid. RI-123; ABA Op 90-358. This obligation survives the termination of the lawyer-client relationship, and is in no way reduced or limited by reason of the fact that it was the lawyer's assistant who acquired the information. RI-123. Under the business proposal, the lawyer's lack of involvement with clients invites the lawyer's inability to be in a position to determine just what information may be embarrassing or detrimental to the client if it were revealed. The lawyer's lack of involvement, unless changes to the form are necessary, also prevents the lawyer from knowing what information the assistant possesses, let alone who the lawyer's clients are, and renders impossible the lawyer's obligation to ensure that the assistant maintains client confidences and secrets. So, too, client confidences and secrets given over to the assistant may result in conflicts of interest, even if uncommunicated to the lawyer. MRPC 1.7, 1.9. "Nor does it matter for conflicts purposes whether or not the legal assistant actually conveyed the confidential information to the lawyer." RI-123.
This brings us to the business proposal's next ethical infirmity. MRPC 1.7 states:
"(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:
"(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
"(2) each client consents after consultation.
"(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
"(1) the lawyer reasonably believes the representation will not be adversely affected; and
"(2) the client consents after consultation. When the representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved."
MRPC 1.9(a) and (b) state:
"(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation.
"(b) Unless the former client consents after consultation, a lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated has previously represented a client
"(1) whose interests are materially adverse to that person, and
"(2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter."
MRPC 1.10(a) and (b) state:
"(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8(c), 1.9(a) or (c), or 2.2.
"(b) When a lawyer becomes associated with a firm, the firm may not knowingly represent a person in the same or a substantially related matter in which that lawyer, or a firm with which the lawyer was associated, is disqualified under Rule 1.9(b), unless:
"(1) the disqualified lawyer is screened from any participation in the matter and is apportioned no part of the fee therefrom; and
"(2) written notice is promptly given to the appropriate tribunal to enable it to ascertain compliance with the provisions of this rule."
"In employing a legal assistant, or assigning a legal assistant to any particular client matter, a lawyer should take reasonable measures to ensure that no conflict of interest is presented arising out of the legal assistant's current or prior employment or from the legal assistant's other business or personal interests." Guideline 5.
Under the business proposal, the lawyer's lack of involvement in many, if not most of the client matters, and the lawyer's ex post facto involvement as to the remaining matters, disables the lawyer from ensuring that the lawyer does not undertake conflicted representation, just as surely as it prevents the lawyer from being able to identify and protect the client confidences and secrets.
Imputed disqualification frequently arises based upon conflicts relating to nonlawyers employed by lawyers. See, e.g., Kapco Mfg Co v. C & O Enterprises, 637 F Supp 1231 (ND Ill, 1985); Herron v. Jones, 637 SW2d 569 (Ark, 1982); In re Complex Asbestor Litigation, No. A047921 (Cal App, 1991), 7 Law Man Pro Conduct 212 (July 31, 1991); Alabama Op 89-81 (1989); Tennessee Op 87-F-110 (1987). The lawyer's lack of involvement also renders impossible the obligation to ensure that assistant-related conflicts are avoided.
Overall, the proposed scheme deprives the clients of the benefit of the lawyer's involvement and the lawyer's independent professional judgment. This introduces the next ethical infirmity with the scheme proposed. MRPC 5.4(c) states:
"(c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services."
It seems highly likely that, under the business proposed, the question of whether the form is sufficient, and whether the lawyer need be involved to amend it, is one which will be addressed in the first instance by the legal assistant. This is unethical. As was opined in RI-128, it is the "lawyers expertise and professional judgment [which] are an integral part of the service provided to a client. While legal assistants may behave in a very professional manner while interacting with clients and carrying out the multitude of other duties they perform on a regular basis, the fact of the matter is that a legal assistant has not received the extensive, in depth legal training which is required of a lawyer. Without such training, it is possible, perhaps even likely, that a legal assistant, having the only interaction with the client, may not spot an issue or issues that could make a difference in the drafting or representation provided."
MRPC 7.2(c) states:
"(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."
A "lawyer referral service" which makes referrals only to one lawyer or law firm is certainly not a "lawyer referral service or other legal service organization" with "usual charges" in the lawyer referral context. RI-135. The business is also proposed to be for profit. Even were the business proposed to be not-for-profit, referrals given over only to one lawyer cannot help but generate "the definite appearance of a quid pro quo . . . [which] constitutes 'giving value' for a recommendation within the meaning of the rule." RI-135. While the details of the assistant's compensation system is not given, many such systems run afoul of the prohibition against giving anything of value for the recommendation. R-6, R-8; RI-15; RI-19, RI-24, RI-36.
MRPC 7.3(a) states:
"(a) A lawyer shall not solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain. The term "solicit" includes contact in person, by telephone or telegraph, by letter or other writing, or by other communication directed to a specific recipient, but does not include letters addressed or advertising circulars distributed generally to persons not known to need legal services of the kind provided by the lawyer in a particular matter, but who are so situated that they might in general find such services useful, nor does the term "solicit" include "sending truthful and nondeceptive letters to potential clients known to face particular legal problems" as elucidated in Shapero v. Kentucky Bar Ass'n, 486 US 466; 108 S Ct 1916; 100 L Ed 2d 475 (1988)"
MRPC 8.4(a) states it is professional misconduct for a lawyer to "violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another." Door-to door sales of legal forms with a "referral" to a lawyer for "customers" needing modification of the forms or having other needs, is not much different from outright door-to door solicitation. See e.g., Office of Disciplinary Counsel v. Heard, 475 NE2d 784 (1985), lawyer's "Foreclosure Fighters" company, supposedly a financial counseling service, was sham corporation to attract legal clients; compare In re Jaques, 407 Mich 26 (1979), lawyer could contact union business representative to recommend the lawyer's employment to injured union workers; representative was sufficient "buffer".
Communications about a lawyer's services may not be fraudulent, misleading, deceptive, or make comparisons with other lawyers' services unless the comparison can be factually substantiated. MRPC 7.1. The lawyer's obligation is to make sure that others' representations about the lawyer's service comply with the rule. In-person solicitation, especially when conducted in the client's home, is just as difficult for the lawyer to oversee as it is for bar associations to regulate. This difficulty supports a prophylactic approach and the rule's ban on such solicitation. Ohralik v. Ohio St Bar Ass'n, 436 US 447 (1978).
Under the business as proposed, the risk is intolerably high that the agent/legal assistant will give advice constituting the unauthorized practice of law. There is a probability of a client reasonably expecting that a lawyer-client relationship has been formed under circumstances where the lawyer is simply unable to discharge the lawyer's ethical obligations to these clients, as well as the lawyer's related but distinct obligation to ensure that the conduct of those acting under the lawyer is compatible with the lawyer's ethical obligations. The proposal violates the ban on in person solicitation and, under the circumstances, would probably violate the prohibition against giving anything of value to a person for recommending a lawyer's services. The lawyer may not ethically participate in the business proposed.