June 6, 2018

SBM Solicits Member Comments on Proposed Ethics Advisory Opinion

The growth of online for-profit matching services raises questions about attorney ethics. A proposed advisory opinion by the State Bar of Michigan Professional Ethics Committee concludes that participation in a for-profit online matching service that matches prospective clients with lawyers for a fee is not ethically permissible if the attorney’s fee is paid to and controlled by a non-lawyer and the cost for the online matching service is based on a percentage of the attorney’s fee paid for the legal services provided by the lawyer.

The proposed advisory opinion says that a Michigan lawyer participating in this business model:

• Violates Rule 6.3(b), which prohibits a lawyer from participating in for-profit lawyer referral services;
• Violates Rule 5.4, which prohibits a lawyer from sharing fees with a non-lawyer;
• Violates Rule 7.2(c), which prohibits a lawyer from giving anything of value to recommend a lawyer’s services unless it is a reasonable payment for advertising the lawyer’s services, the usual charges for a not-for-profit lawyer referral service, or payment for the sale of a law practice;
• Subverts compliance with Rule 1.15, which requires a lawyer to safeguard legal fees and expenses paid in advance by depositing them into a client trust account until the fee is earned and the expense is incurred;
• Impedes compliance with Rule 1.16(d) and its requirement that any unearned prepaid fees and unexpended advances on costs must be refunded;
• Assists in the unauthorized practice of law in violation of Rule 5.5(a) to the extent the online service holds itself out as a provider of legal services and guarantees satisfaction; and
• Violates Rule 5.3 to the extent that the conduct of the matching service when performing administrative “back office” services traditionally done through the law firm does not comport with the professional obligations of the lawyer.

As the proposed opinion describes, a number of other states have addressed this issue.

Members of the State Bar of Michigan and the public are encouraged to submit comments on the proposed opinion and on whether the current rules should be modified by filling out an online form located at https://www.michbar.org/opinions/membercomments, submitting an email to r25ethics@michbar.org, or submitting regular mail to R-25 Ethics, State Bar of Michigan, 306 Townsend St, Lansing, MI 48933.

Comments should be submitted by July 16. After the period for comment has closed, the State Bar Board of Commissioners will consider whether to approve or modify the opinion.

Background

The Michigan Rules of Professional Conduct (MRPC) were adopted effective Oct. 1, 1988, by the Michigan Supreme Court. The MRPC comprise the Supreme Court’s authoritative statement of a Michigan lawyer’s ethical obligations.

Consistent with its jurisdictional mandate and rules, the SBM Professional Ethics Committee drafts ethics opinions when requested to do so by the SBM president, the Board of Commissioners, the Representative Assembly, the Attorney Discipline Board, the Attorney Grievance Commission, the SBM executive director, or individual members of the State Bar inquiring about their own contemplated conduct. The committee may also draft opinions on ethical matters its research indicates need clarification or resolution.

Informal advisory ethics opinions, designated with an “RI” before the opinion number, are issued by the committee without review and approval by the Board of Commissioners and are intended to provide informal guidance on the MRPC. Informal advisory opinions must be approved by at least two-thirds of the committee membership.

The committee may also draft proposed formal advisory ethics opinions, designated with an “R” before the opinion number, for consideration by the Board of Commissioners. These proposed formal opinions must be approved by at least two-thirds of the committee membership before they are presented to the Board of Commissioners. Formal advisory ethics opinions are intended to deal with matters of general and substantial interest to the public, address situations which affect a significant number of members of the Bar, or modify or reverse prior formal opinions. The Board of Commissioners may approve or modify the proposed formal opinion and direct its release as an informal or formal advisory ethics opinion, or it may reject the opinion and direct that no opinion be issued on the matter.

Neither informal opinions of the SBM Professional Ethics Committee nor formal advisory ethics opinions have the force and effect of law. They provide guidance only and may not be relied upon as an absolute defense to a charge of ethical misconduct.