|Oregon State Bar Bulletin JANUARY 2008|
Rules of the Road
By Helen Hierschbiel
You finally decide to make the leap and hang out your own shingle. You lease the perfect office space and arrange your brand-new used office furniture according to your Feng Shui consultant’s recommendations. Eventually you get your computer system running so that it doesn’t freeze every time you hit Enter. The PLF practice management advisers help you set up your trust account and a conflict check system, and you send out notices to everyone you can think of to let them know you’re ready to start working for pay. Now you sit, alone at your desk, waiting for the clients to come streaming in. But how do you entice them into your office? Did you miss the legal services marketing class in law school?
These days, many lawyers are turning to the Internet as their primary marketing tool. More often than not, law firms establish websites with creative domain names designed to reach a target audience. Online legal directories threaten to replace the traditional "yellow pages" entirely. Perhaps the most creative Internet-based marketing tool is the for-profit service that matches lawyers to potential clients, promising to produce big business for participating lawyers. Online matching services generally require lawyers to pay an application fee and periodic payments to participate. Lawyers provide information about their practice areas and experience for inclusion in the listings. Prospective clients may fill out an online questionnaire explaining their legal problems and providing other relevant information.
Whether lawyers may ethically participate in such online legal matching services is a common question for the Legal Ethics Hotline and requires reference to several interconnected rules of professional conduct.
False or Misleading
The Oregon State Bar Legal Ethics Committee recently addressed the propriety of Internet-based referral services in Formal Opinion No 2007-180 Internet Advertising: Payment of Referral Fees. The opinion starts with a reminder that Internet-based advertising is governed by the same rules as other advertising. The basic ground rule is that advertising cannot be false or misleading. See RPC 7.1(a). Because Web pages may be viewed by persons outside of Oregon, lawyers must take care to ensure the advertisement identifies the jurisdictional limits of their practices. Furthermore, while lawyers may include their names in directories or other advertising Web pages, they must not allow a directory to promote them using means that involve false or misleading communications. RPC 7.2(b). Lawyers are responsible for content that they did not create to the extent they know about that content. 1
Payment for Services
More difficult questions arise when it comes to payment for an online advertisement. A lawyer may pay the costs of advertisements and to hire others to assist with or advise about marketing the lawyer’s services. RPC 7.2(a). However, lawyers may not "give anything of value to a person or organization to promote, recommend or secure employment by a client, or as a reward for having made a recommendation resulting in employment by a client … " RPC 7.2(a). Comment 5 to the ABA Model Rule 7.2 describes the recommendation of a lawyer’s services as "channeling" clients to the lawyer and cites the use of "runners" as the classic example of conduct that violates RPC 7.2(a). Former OSB Formal Op No 2005-112 distinguished advertising and recommendation as follows:
When services are advertised, the nonlawyer does not physically assist in linking up lawyer and client once the advertising material has been disseminated. When a lawyer’s services are recommended, the nonlawyer intermediary is relied upon to forge the actual attorney and client link.
Although not specifically discussed in the opinion, indirect or nonmonetary compensation for referrals is considered "something of value" and therefore also prohibited under RPC 7.2(a). See OSB Formal Op No 2005-175 (prohibiting lawyer participation in a business referral club, the purpose of which is to facilitate referral exchange between members).
OSB Formal Op No 2007-180 also notes the application of RPC 5.4(a), which prohibits lawyers "from giving a nonlawyer a share of a legal fee in exchange for services related to the obtaining or performance of legal work." In re Griffith, 304 Or 575, 611 (1987)(interpreting former DR 3-102, which is now RPC 5.4(a)). The opinion explains:
In the context of advertising, RPC 5.4 thus precludes a lawyer from paying someone, or a related third party, who advertises or otherwise disseminates information about the lawyer’s services based upon the number of referrals, retained clients, or revenue generated from the advertisements. By contrast, paying a fixed annual or other set periodic fee not related to any particular work derived from a directory listing violates neither RPC 5.4(a) nor RPC 7.2(a). A charge to Lawyer based on the number of hits or clicks on Lawyer’s advertising, and that is not based on actual referrals or retained clients, would also be permissible.
Other substantive law may also limit a lawyer’s ability to pay a referral fee. See, e.g., 11 USC 503(b)(4); ORS 9.500 and 9.505.
A lawyer may be recommended by a for-profit referral service or other similar legal services plan as long as 1) the operation of the plan does not result in the lawyer violating the rules of professional conduct relating to professional independence or unlawful practice of law;2 2) the lawyer recognizes the recipient of legal services as the client, not the plan; 3) the plan does not place any restrictions on the lawyer’s exercise of professional judgment; and 4) the plan does not engage in any solicitations that would be improper if done by a lawyer.
Improper solicitations include in-person, live telephone or real-time electronic contact with prospective clients who are not lawyers and who do not have a family, close personal or prior professional relationship with the lawyer. RPC 7.3(a). The opinion does not decide what constitutes "real-time electronic contact," but the definition of electronic communication suggests that Internet chat rooms would fall into that category. See RPC 1.0(c).
Online marketing of legal services is the wave of the future. The Pew Internet & American Life Project, estimates that 7 million people a month will use the Internet to search for law-related services by the end of 2007.3 While lawyers may be well-served to jump on the Internet marketing bandwagon, they must take care that the service they use does not run afoul of the rules of professional conduct. Determining whether the service amounts to mere advertising or a referral service is the first step in ensuring compliance with the ethics rules. And, as with all advertising, lawyers should confirm that the information being distributed about them is not false or misleading.
1 Lawyers who request to be listed in online directories are often unaware that they are not always updated and may go unchanged for many years, even though the lawyer may have made no more than a single payment for the listing. Because lawyers generally are responsible for the accuracy of information about them, lawyers should keep track of the directories with which they have chosen to list their services, and check periodically to make sure their information has been updated as necessary.
2 See RPC 5.4, 5.5 and OSB Formal Op No 2005-168.
3 Dreiling, Choosing Up Sides, ABA Journal, May 2007.
ABOUT THE AUTHOR
Helen Hierschbiel is deputy general counsel for the Oregon State Bar. She can be reached at (503) 620-0222, or toll-free in Oregon at (800) 452-8260, ext. 361, or by e-mail at firstname.lastname@example.org.
© 2008 Helen Hierschbiel