Legal Ethics Opinion 1497

Advertising-Referrals-Non-Lawyer-Conflict of Interest: Referral
of Business to Firm by Trade Association

You have indicated that a national trade association
[Association] proposes an agreement with a law firm [Firm]
wherein members of the Association would be invited to call the
Association's legal department with their questions, certain of
which would be handled by the Association's in-house legal
counsel and others, such as those concerning only the individual
member company and its particular business needs, would be
analyzed by the Association on a preliminary basis and, if the
member wished the matter to be referred to the Firm, the
Association would prepare it for referral.  You indicate that
this preparation would involve identification of the member, the
nature of the legal problem, and the current status of the

The Firm would provide an initial consultation to the member free
of charge and further representation of the member would be at a
discount from the Firm's usual hourly rates.  You advise that the
Association originated the idea of referring its members solely
to the Firm's attorneys without any urging or compulsion from the
Firm which would receive no fee or other remuneration from the
Association for its affiliation with the Association and would
pay no fee to the Association.  

You indicate that the Association's members would be free to use
other counsel instead of or in addition to the Firm. 
Furthermore, you indicate that the Firm has reviewed the
Association's referral program, and the screening and referral
form used in it.

You also indicate that the Association would publicize the
program to its members, including the free consultation and the
reduced rates.  Finally, you advise that the Firm would review
the advertising to be sure it contains no statements or claims
that are false, fraudulent, misleading, or deceptive.

You have asked the committee to opine whether, under the facts of
the inquiry and relative to the Code of Professional
Responsibility Disciplinary Rules regarding solicising, it is
proper for the Firm to establish and maintain the relationship
with the Association as described.  Your inquiries as to the
Association's compliance with the Unauthorized Practice Rules
[Part Six: Section I of the Rules of the Virginia Supreme Court]
have been referred to the Standing Committee on Unauthorized
Practice of Law for response.

This committee is cognizant of the constitutional protections
delineated by the U.S. Supreme Court in recognizing the right and
desirability of organized groups to advise their members as to
referrals for appropriate legal services.  See, e.g., NAACP v.
Button, 37l U.S. 4l5 (l963); Brotherhood of Railroad Trainmen v.
Virginia State Bar, 377 U.S. l (l964); United Mine Workers v.
Illinois State Bar, 389 U.S. 2l7 (l967); United Transportation
Union v. State Bar of Michigan, 40l U.S. 576 (l97l).  

The appropriate and controlling disciplinary rules relative to
your inquiry are: 

     DR 2-l03(D) which, in pertinent part, prohibits a lawyer
     from compensating, in any form, a person or organization to
     recommend or secure his employment by a client or as a
     reward for having made a recommendation resulting in his
     employment by a client; 

     DR 2-l02(A) which permits a lawyer's participation in the
     use of professional notices and devices, including law
     lists, so long as such notice or device does not include any
     statements or claims that are false, fraudulent, misleading,
     or deceptive; 

     DR 2-l0l(A) which permits a lawyer to use or participate in
     the use of public communications so long as such
     communication does not contain any false, fraudulent,
     misleading, or deceptive statement or claim; 

     DR 5-l06(B) which prohibits a lawyer from permitting a
     person who recommends, employs, or pays him to render legal
     services for another to direct or regulate his professional
     judgment in rendering such legal services [emphasis added];

     DR 3-l0l(A) which prohibits a lawyer from aiding a nonlawyer
     in the unauthorized practice of law.  

See also Ethical Considerations 2-7 [advice and recommendation of
third parties, including business associates, help in the
layperson's informed selection of a lawyer]; 2-l7 [suggesting
that lawyers support the principle of lawyer referral systems and
encourage the evolution of other ethical plans which aid in the
selection of qualified counsel; 2-28 [a lawyer is under no
obligation to act as adviser or advocate for every person who may
wish to become his client] and 5-23 [cautioning lawyers to
exercise independent professional judgment on behalf of clients
without regard to the economic, political, or social goals of
third parties]. 

The committee has previously opined that it is not improper for
an attorney to participate with an organization which provides
its [other] participants with a list of attorneys from which to
choose an attorney or another of their own preference.  LEO #333. 
Similarly, the committee has earlier opined that an attorney may
participate in a real estate settlement where a real estate firm
has recommended to its customers that a specific attorney handle
the closing, provided that certain requisites are met.  LEO #539. 
Furthermore, the committee has consistently recognized the
positive role played by lawyer referral services while cautioning
lawyers as to the parameters within which such services must
operate.  See, e.g., LEOs #407, 738, 910, 926, 1014, l348. 

In the facts you present, the committee believes that a Firm
participating in the manner described would not be in violation
of DR 2-l03(D) since the Firm will not compensate the Association
for having referred its members.  The committee is of the further
opinion that the arrangement presented would not be violative of
either DR 2-l02(A) or DR 2-l0l(A) provided that no false,
fraudulent, misleading or deceptive statements or claims were
made in any publicity.  

The committee cautions that o receives referrals from the
Association should have the right at all times to decline to
serve any Association member in any particular matter.  ABA Comm.
on Ethics and Prof. Resp. Informal Op. l237 (August 9, l972). 
Moreover, in keeping with the mandates of DR 5-l06(B), the
committee cautions that Firm lawyers providing legal services to
Association members upon referral must not permit any direction
or regulation by the Association in the lawyers' exercise of
independent professional judgment to the individual client.  

Finally, the committee opines that if any activity of the
Association is found to be in violation of the Unauthorized
Practice Rules, it would be improper and violative of DR 3-l0l
for the Firm to assist in any such activity.

Committee Opinion
October 19, 1992