MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 2007-16
Attorney participation in For-Profit Networking Group (Reconsideration of Ethics Docket 05-11)
Your inquiry concerns a for-profit national networking organization (the “Organization”) which was the subject of a prior opinion of this committee in docket 2005-11. The issuance of that opinion lead to an intense lobbying effort on the part of the Organization, to include multiple letters and e-mails from the Organization’s lawyers, who offered to come before a meeting of the committee to present its case.
The Organization in question was studied extensively in our earlier 05-11 opinion. We adopt here the description of the enterprise used in our earlier opinion:
This organization has multiple chapters around the world. Each chapter consists of various professionals and business people who seek to obtain referrals and learn marketing techniques. Only one person from any given profession or line of business can join any individual chapter. The particular chapter that has approached you includes, among others, a beauty consultant, heating and air conditioning contractor, investment advisor, and AFLAC insurance agent.
The chapters hold weekly meetings. At these meetings, there is usually a general presentation on how to better market your business. A chapter officer may also draw attention to other seminars that are taking place in the area that address marketing techniques. This is followed by a detailed presentation by one member ducating the others about his or her business. Finally, at the end of the meeting, members exchange referrals they have obtained for each other (if any) during the course of the past week.
The referral organization is a for profit entity. It earns its revenue through annual membership fees paid by each member. The members do not pay fees to each other and the organization does not make any referrals. You characterize the organization’s role as helping to bring people together to make “free referrals among themselves.”
You further state that there is no requirement that you provide referrals to other members, or that you obtain referrals from them. You write that it is “theoretically possible to join a chapter only for the various educational programs they provide.” The organization has no quotas and there are no “quid pro quo referrals.”
Our opinion went on to recite the Organization’s web site where the Organization advises that membership is desirable because:
Belonging to [our organization] is like having dozens of sales people working for you because all of them carry several copies of your business cards around with them.
When they meet someone who could use your products or services, they hand out your card and recommend you. It’s as simple as that! It’s simple because it’s based on a proven concept by [the organization’s founder . . . called “givers gain.” If I give you business you’ll give me business and we’ll both benefit as a result.
Your inquiry, revisiting our earlier opinion, raises many of the same issues which the Organization’s attorneys raised in their lobbying efforts before this committee in 2005 and 2006. The difference is that the specific question you now ask is:
May a Maryland attorney participate as a member in a business networking organization in Maryland wherein the attorney agrees to follow the organization’s Code of Ethics that he or she will live up to the ethical standards of the attorney’s profession including but not limited to the (Rules) by continuing to exercise independent judgment but not expecting or giving anything of value specifically in return for referrals or as a part of a quid pro quo basis?
Your carefully worded hypothetical question has been phrased so that the answer can only be “it depends” because you have not included the necessary facts about the Organization which would cause otherwise permissible participation to become a violation.
Given the details about the Organization that we are aware of, participating in that for-profit Organization would violate several of the Rules. Actively participating in that Organization for its stated purposes and goals and living up to the Rules governing a Maryland Lawyer’s conduct appear to be mutually exclusive. The Organization’s stated purpose is to serve primarily as an exclusive referral club operated for the profit of its founder, derived from the participatants’ dues. Rule 7.2 (c ) prohibits an attorney from paying what would be the membership dues of the group because the Organization is NOT a not-for- profit enterprise. It exists for the primary and stated purpose of generating referrals to its members1 who pay dues to participate.
There is a Maryland case on referrals to a lawyer made by, or through, a for-profit organization. See Attorney Grievance Commission of Maryland v. Martin 308 Md. 272; 518 A.2d 1050 (1986). That case, although decided under the “Disciplinary Rules” which preceded our current Rules of Professional Conduct, is still instructive. There, the Court of Appeals reprimanded the attorney involved and held that the DR (which is the predecessor to our Rule 7.2(c )),
prohibits an attorney from accepting a referral from a profit making organization where the attorney is . . selected by the organization except where the organization has ultimate legal responsibility for the person referred.”
The inquirer in 05-11 was “approached” (selected) by the Organization and urged to join and pay dues for the purpose of giving and receiving referrals. Thus, rule 7.2 would be violated by an attorney member of the Organization accepting, or making, a referral . As stated in our 05-11 opinion, additional Rules which are implicated include these:
1.7(b) (a lack of disclosure of the lawyer’s potentially compromised interest in making referrals)
5.4 (professional independence)
7.3 (in person contact)
Participating in the Organization and paying dues, but never making a referral and never receiving a referral would be consistent with “ethical standards of the attorney’s profession” and should not be a violation, but the whole reason for participating is networking, getting and giving referrals. It was this circumstance which led to our comment in 05-11 that:
‘ . . the Committee is not naive. Participation in this organization is intended to harness the efforts of others to market your legal services. The possibility of joining solely for the educational benefits strikes the Committee as purely “theoretical.” ‘
Our opinion in docket 05-11 was carefully considered when it was issued and has been reviewed a number of times since then by the committee. It was quoted by the ABA Journal & Report of Friday April 22, 2005 which cited a professional ethics expert who agreed with our analysis in regard to Rules 1.7 and 5.4. We see no need to repeat here the discussion which was presented in our 05-11 opinion.
That prior opinion is consistent with the opinions of our sister states. The most recent one is the New Hampshire Bar Association Ethics Committee. In their Opinion #2005-06/6, issued in October 2006, that committee cited with approval our prior opinion as well as Oregon Bar Association Formal Opinion No. 2005-175 and New York State Bar Association Committee on Professional Ethics Opinion 741-5/25/2001. The New Hampshire Bar Association’s Ethics Committee’s opinion cited the many sister states’ opinions on the subject and concluded with: “All come to the same conclusion: membership in such an organization compromises the lawyer’s independence, potentially creates undisclosed conflicts of interest, and risks in-person solication.”
We decline to reverse our prior opinion.
1 While your footnote seeks to compare the Organization in question to a civic organization such as the Chamber of Commerce, Rotary, Kiwanis, etc. in the experience of the Committee members these organizations do not have as their primary focus: cross pollinating each other’s businesses and providing profits for its founder. Rather, many of those organizations’ primary goal is service to the community and a variety of charitable projects. Some actively discourage joining if the applicant’s primary focus is for networking or business referral purposes. It should also be noted that these are “not-for-profit” organizations which is obviously a fundamental crieteria set forth in Rule 7.2(c) (2).
REFERENCES:
Attorney Grievance Commission of Maryland v. Martin, 308 Md. 272; 518 A.2d 1050 (1986).
Opinions of the Maryland Ethics Committee: 05-11 (Available at www.msba.org)
Maryland Rules of Professional Conduct: 1.7 (b), 5.4, 7.2 (c ), 7.3
ABA Journal & Report, Friday April 22, 2005
New Hampshire Bar Association Ethics Committee, Opinion #2005-06/6
Oregon Bar Association Formal Opinion No. 2005-175
New York State Bar Association Committee on Professional Ethics Opinion 741-5/25/2001
ASSIGNED TO: WALTER S. B. CHILDS
DATE ASSIGNED: February 28, 2007
DATE DISTRIBUTED: March 29, 2007