MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 2007-1
Re: Attorney Advertising – On-line Attorney Listing
Your client has approached you about the propriety of its proposed internet-based listing service for individual attorneys and law firms (the “Directory”). For the reasons set forth herein, we believe your client’s specific proposal would violate the Maryland Rules of Professional Conduct.
Your letter sets forth a comprehensive outline of salient factors about this “Directory”, whose stated purposes are to help the general public identify and contact providers of legal services in their local areas who may provide services at reduced rates, and to enable attorneys to easily identify themselves and provide basic contact information through a web-based and telephone accessed directory.
Attorneys will “apply” for a listing with your client. If that application meets certain criteria, your client will list the attorney in the Directory. The user of this Directory will access it either on-line or through a 24-hour telephone service. Attorneys can be located by zip code and/or practice area. Attorneys identified by that process will be identified in random order for each “search.” The user of the Directory will select the attorney she/he wishes to contact without any assistance from your client; no qualitative information about listed attorneys will be provided by your client and it will answer no legal questions and make no recommendations or give any legal advice.
In addition to the above, the listed attorney will adhere to certain, specified requirements:
- have at least 3 years of legal experience
- list only current practice areas
- be a member in good standing of the bar of the jurisdiction in which he/she practices
- carry certain minimum amount of malpractice insurance
- identify only the locations from which they will perform the work
- be completely independent from your client
- be responsible for the content of his/her Directory listing
- provide a written fee agreement to each client obtained through the Directory
- charge Directory user clients no more than non-user clients for the same services
In addition, your client will, among other things, do the following:
- not charge any fee to the users of the Directory
- collect a fixed annual fee from attorneys listed in the Directory, and not permit any attorney to pay a per-referral fee. The fee will vary depending on the population of the area in which the attorney practices. In an area where the population exceeds 1,000 persons per square mile the contemplated fee is $1,050; in an area with less than 1,000 persons per square mile the contemplated fee is $550.
- not share in any legal fees collected from the users by the listed attorneys
- not endorse or recommend any listed attorney, nor compare any listed attorney with any other listed or non-listed attorney
- investigate any complaints made about listed attorneys by users, and retain the right to delist any attorney, with or without cause
- include only the attorney’s name, address, contact information, languages the attorney fluently speaks and areas of practice
- not allow any attorney to identify her/himself as a specialist in any practice area
- not allow any listed attorney to advertise or claim they are endorsed by your client
- grant each listed attorney a “restricted and conditional” license to use your client’s logos to describe the Directory in which they are listed
There has recently been a debate across the country about whether on-line attorney matching services are a “referral service”, which can run afoul of the prohibition on fee-splitting with non-lawyers (see, Rule 5.4, Md. Rules of Professional Conduct), or merely advertising, which is permitted (see, Rule 7.2 (c)(1), Md. Rules of Professional Conduct). [1]
Fee Sharing
Rule 5.4, Md. Rules of Professional Conduct, provides, in pertinent part that “(a) A lawyer or law firm shall not share legal fees with a non-lawyer …” except in certain enumerated circumstances, none of which are applicable here.
Referral Fee or Advertising Fee
Rule 7.1, Md. Rules of Professional Conduct, states that “A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services.” It further provides that a statement is misleading if it “… omits a fact necessary to make the statement considered as a whole, not materially misleading …”
Rule 7.2, Md. Rules of Professional Conduct, sets out the rules for advertising and specifies, among other things, that:
“… (c) A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may
(1) pay the reasonable cost of advertising or written communication permitted by this Rule;
(2) pay the usual charges of a legal service plan or a not-for-profit lawyer referral service;
· · · · ·
While the Committee has recently, in Ethics Docket 2004-21, had occasion to consider a proposal to set up a legal directory, in that matter the operators of the directory proposed that the participating lawyers would only pay a fee when actually retained by a client who learned of the lawyer through the directory ($250 for each “referral”). We held that because the “case acceptance” fee was contingent upon the client retaining the lawyer, the fee really comes from the client, through the lawyer, to the operator of the referral service. Regardless of how that operator tried to structure the payment, i.e., by requiring it come from the lawyer’s operating account, it was nevertheless directly tied to the fee earned by the lawyer and amounted to a sharing of the fee.
Here there is no fee tied to payment by the client to the lawyer; the lawyer simply pays an annual fee to be on the list. For that reason we do not think that your client’s proposal would violate Rule 5.4.[2]
Nevertheless, your client’s proposal needs to be viewed in the context of Rule 7.2. The Committee believes that the Rhode Island, North Carolina and South Carolina ethics opinions (See footnote 1) have correctly determined that the payment of an annual listing fee, not linked to the participating attorney’s legal fees, represents the reasonable cost of advertising permitted by Rule 7.2(c), and is not a referral fee. We have recently noted in Ethics Docket 2006-14 that the plain text of Rule 7.2 permits an attorney to pay the usual costs of advertising.
We also have frequently noted, most recently in Ethics Docket 2006-14, that a Maryland attorney participating in such a legal directory has an obligation to assure that the advertising complies with Rules 7.1 through 7.5. As such, among other things, no false or misleading statements may be made in the listings (Rule 7.1) and the listing must include the name of the lawyer responsible for its content (Rule 7.2(d)). The Committee has reviewed the extensive factual narrative about this proposal and is not unmindful that your client has given much thought to the ethical issues. To that end, requirements have been stated to assure that the individual attorneys are responsible for the accuracy of the information going into the Directory, to assure that there is no fee-splitting (because the users pay nothing and the attorneys pay only an annual listing fee), to assure that your client has no interaction with the users and plays no role in assessing the nature of their legal needs or the selection of an attorney to help them. There are also other precautions your clients have taken to avoid conflict with the Rules, such as the ban on attorneys calling themselves specialists, listing themselves as practicing in a location where they do not have an office, and the prohibition on paying any referral fees to your client.
Despite those precautions, however, the committee has concerns relating to Rule 7.1’s prohibition against misleading advertisements. Those concerns arise from the grant by your client of the “non-exclusive, restricted, and conditional licenses to use your client’s logos to describe the Directory in which they are listed….” While the listed attorneys are specifically not permitted to claim that your client or its affiliates have endorsed them, permitting the use of their well-known logo in other forms of advertising seems to do just that. Indeed it might well be the most attractive part of the package to an attorney considering the listing.
This Committee has long cautioned attorneys about the prohibitions on misleading advertisements contained in Rule 7.1.
In Ethics Docket 94-11, we noted that a group of attorneys who wanted to initiate a lawyer referral service and who proposed to indicate in their advertising that this was “not a legal services organization”, could nevertheless be violating 7.1 unless they included in their ads that this was just a group of unassociated lawyers who were advertising jointly. We felt that a member of the public could reasonably conclude, without that descriptive statement, that this was a single entity providing legal service.
In Ethics Docket 97-28, we noted that an attorney who wanted to advertise a recent Circuit Court victory might well violate the Rule if he failed to mention that the matter was on appeal. In Ethics Docket 91-35 we noted that a solicitation by a law firm with some specific examples of other similar cases where they had a successful result would lead the recipient of that solicitation to believe similar results would be obtained in their case. Absent the specific details of each case, such a solicitation would be misleading.
In short, despite the stated requirement that the listed attorney not advertise that they are endorsed by your client, licensing them to use your client’s universally known and distinct logo, allows them to do just that. We think it would be misleading to members of the public who see any “advertisements” or communications using your client’s logo.
[1] In Texas in 2005, the Professional Ethics Committee for the State Bar said that lawyers may not pay a fee to participate in such referral services. Opinion No. 561 (August 2005). The panel found that a “defining characteristic of soliciting or referring prospective clients is to ascertain information about a person’s legal needs and then match or connect such person with a lawyer who has experience in the law appropriate to the legal problem. They felt that because the internet sites were using information about the lawyers to select and match for the consumers, the process violated the prohibition against fee-splitting (since the attorney pays for the listing with the service).
On the other hand, three states have come to the opposite conclusion, holding that the annual fee was equivalent to an advertising flat fee, and the Rules permit an attorney to pay the reasonable cost of advertising services. In all three cases there was no direction of the user to a specific attorney, the requests for attorneys were all initiated by the prospective client, and the attorney-client relationships were formed off-line and independent of the referred service. See Rhode Island Supreme Court Ethics Advisory Panel, Opinion No. 2005-01. See also, North Carolina State Bar 2004 Ethics Opinion No. 1 (April 23, 2004) and South Carolina Bar Ethics Advisory Opinion 01-03.
[2] As to the fee-splitting issue, the Committee is not rejecting the reasoning of the Texas Committee in its August 1, 2005 Opinion No. 561. In that case it was not the payment of the listing fee that troubled the Committee, rather, it was the fact that the internet site itself, and not the potential client, selected the attorney to be contacted. That factor, as we understand it, is not present here.