MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 2000-39
PRE-PAID LEGAL SERVICES
You have indicated that you are considering the possibility of entering into a general retainer agreement with clients and prospective clients pursuant to which you would be paid a monthly or annual amount to assist them with specific legal matters. You have been considering forming a "corporation/prepaid legal plan" of which you would be the sole owner. Work would be performed by you, your partner or associates of your firm. Clients' membership in the plan would continue so long as annual or monthly membership fees are kept current, but membership could be canceled by either you or a client upon thirty days' written notice. The plan would provide for the rendition of legal services in specified areas, including, for example, the free preparation of a simple will and one free change thereof per year, "discounted" contingency fees for personal injury cases, two free one-hour consultations per year, and subsequent additional consultations at the rate of $50 per hour. You then indicate that solicitations of individual clients to participate in the plan would occur through an advertising brochure and/or newsletter and on your website. Corporate clients would not be solicited. You conclude by asking for the Committee's "ethical opinion as to the formation and administration of this proposed prepaid legal plan."
Over the past ten years, the Committee has been asked on numerous occasions to opine regarding the ethical considerations arising from prepaid legal services plans. Some of the Committee's prior opinions are more pertinent to your inquiry than others, and we have enclosed several for your general review (Ethics Dockets 97-38, 96-5, 95-35, 94-7, 93-14 and 92-45).
Unfortunately, you have provided limited facts in connection with a very broad inquiry, which effectively precludes the Committee from framing a specific response. Typically, the ethical considerations involved in such a pre-paid legal services plan include Maryland Rules of Professional Conduct, Rule 1.5, dealing inter alia, with the requirements that fees be reasonable, that the basis for fees be communicated to new clients (preferably in writing) and that contingent fee agreements be in writing, along with the parameters for division and sharing of fees; Rule 5.4, dealing with the preservation of a lawyer's professional independence; Rule 7.2, dealing with advertising; and Rule 7.3, dealing with contact with prospective clients.
On its face, your inquiry indicates that the entity which will provide legal services will be entirely owned by you; consequently, the Committee does not perceive any obvious problems relating to Rule 5.4 and 7.2. The facts presented do not suggest that your contemplated fees are unreasonable, and while your inquiry does not explicitly so state, presumably you contemplate that the terms of your legal services plan would be disclosed in writing as recommended and/or required by Rule 1.5. Finally, you have not provided the Committee with the text of any advertisements.
In short, while the Committee does not perceive any ethical improprieties in the prepaid legal services plan you have generally described, the devil is in the details. For this reason the Committee has forewarned previous inquiries regarding this subject.
You … must perform your own analysis of the detailed contractual relationship and interplay between the Corporation, clients and lawyers involved, and determine whether there are any specific Rules of Professional Conduct which might be compromised by virtue of the relationships and operative documents. …
If, after performing a detailed analysis, you have a specific ethical issue about which you are concerned, you might raise that concern in another inquiry to this Committee. [Ethics Docket 96-5]