November 20, 1989
A law firm may not participate as the sole recipient of telephone calls to a Chamber of Commerce hotline designed to provide labor and employment information to Chamber members and potential members where the law firm would share with the Chamber legal fees from callers subsequently employing the firm on legal matters.
References: MRPC 5.4(a), 7.2(c); RI-7, RI-24, RI-32.
A law firm is labor counsel for a Chamber of Commerce, a non-profit organization. The Chamber wishes to establish an "800" telephone number "hotline" service for its members and potential members who have questions regarding labor and employment matters. The proposed hotline would serve as a clearinghouse for labor and employment information. Callers would obtain available wage surveys, copies of published articles, copies of court or agency decisions, statistics, or other types of information relating to labor and employment matters. Chamber members would be informed that the call for information is free. Callers who are not Chamber members would be informed that the call for information would have a charge of $25, payable to the Chamber, which could be applied to Chamber membership fees. The requested information would then be provided to the callers.
The hotline would ring in the law offices of the firm and be answered as follows:
"You have reached the [location] Chamber ALERT hotline. Your call will be answered by an attorney of [the firm]. May we help you please?"
The caller would then be referred to one of the lawyers in the firm who would then take down the name of the caller, the company, address, telephone number and the specific purpose of the call. All callers will be informed when, in the lawyer's judgment, their inquiries require legal advice, considered beyond the scope of the hotline service. In such cases, callers would be told that subsequent calls or other further consultation on such matters would trigger a professional fee based on the lawyer's hourly rate. At that point, it would be the decision of the caller to retain the law firm or to seek professional services elsewhere. Lawyers of the law firm would not attempt in any way to solicit professional employment as a result of the hotline inquiries.
When calls to the hotline would result in the law firm being retained to perform legal services, ten percent (10%) of the amounts billed and collected by the firm (up to a maximum of $500 per business) would be turned over to the Chamber, to reimburse it for hotline expenses only. The law firm contends that there would be no payment by the law firm to the Chamber for the privilege of being selected to receive hotline calls and that there would be no explicit Chamber recommendation of the firm. The Chamber would simply designate the firm to answer the questions of those who call the hotline.
The hotline would be publicized to Chamber members and potential members through print advertisements paid for by the Chamber. All advertisements would identify the firm as the recipient of hotline calls. The advertisement would also state that if the caller's inquiry required legal advice, any such services would be performed solely at the option of the caller and would be billed to the caller as a result of the law firm being retained, based upon the lawyer's hourly rate.
As presently constituted, the hotline's proposed financial structure runs afoul of the Michigan Rules of Professional Conduct at the point where the firm would share with the Chamber a percentage of fees received for services rendered. 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 pay the reasonable cost of advertising or written communication permitted by this rule and may pay the usual charges of a not-for-profit lawyer referral service or other legal services organization."
Although the Chamber is not expressly recommending the law firm by designating it as the recipient of the hotline calls, such a recommendation is certainly implied from the arrangement. Further, except for the participation of the law firm in the hotline, the law firm would not share its fees with the Chamber. There is the definite appearance of a quid pro quo. Therefore, the shared fees arrangement constitutes "giving value" for a recommendation within the meaning of the rule. The arrangement does not qualify for the exceptions listed in MRPC 7.2(c) because the shared payment with the Chamber is not limited to the "reasonable cost of advertising." Further, the Chamber, although a "not-for-profit" organization, is certainly not a "lawyer referral service or other legal services organization" with "usual charges" in the lawyer referral context.
The shared fee arrangement also violates MRPC 5.4(a), which prohibits a lawyer or law firm from sharing legal fees with a nonlawyer. Under this rule, the firm may not participate in a plan under which the firm collects a fee from a hotline-generated client and then pays a portion of that fee to the entity sponsoring the hotline. The exceptions listed in MRPC 5.4(a) are plainly inapplicable to this situation.