Ethics Opinon 1976-7

May 17, 1976

SUBJECT: FREE LEGAL SERVICE PROGRAM; DEFINITION OF A FEE GENERATING CASE, PERMISSIBLE ADVERTISING, REFERRAL OF CLIENTS, CREATION OF REFERRAL PANEL

I
QUESTIONS PRESENTED

A recently organized nonprofit free legal services program has requested guidelines concerning the following issues:

1. What constitutes a fee-generating case? If there is a provision for the award of attorney's fees in a particular cause of action, does this in itself constitute a fee-generating case, irrespective of the financial profile of the client?

2. What advertising is permitted by a free legal services program? Is there a total prohibition on advertising or is some form of limited advertising permitted?

3. If a prospective client's case is not taken by the free legal services program, to whom may the cases be referred by the organization? Is it permissible for the organization to establish its own roster of attorneys to whom clients can be referred?

4. Could the free legal services program publish a notice in a legal newspaper, requesting attorneys to volunteer for a panel which promotes a particular civic or political point of view, to which panel clients could be referred by the free legal services program in lieu of the Lawyers Referral Program, provided these cases are not accepted by the free legal services program?

II
SUMMARY

Question No. 1

There are no known rules, guidelines, advisory opinions or cases establishing the definition of a "fee-generating case." This expression was created under the Legal Services Corporation Act of 1974 without further definition or elaboration. Nor have the Office of Economic Opportunity guidelines provided any direction on this subject. The committee feels, however, that the existence of a reasonable expectation for recovery of attorney's fees would qualify a case as fee-generating, irrespective of the financial profile of the client. To be considered are the availability of contractual or statutory provisions for the recovery of attorney fees, the availability of a probate, trust or other corpus against which to draw, and the ability of the other party to pay. The refusal of private counsel to accept a retainer after the foregoing items have been considered would support the position that the case is not fee-generating. Certainly, any retainer made on a contingent fee basis would constitute a fee-generating case, irrespective of the financial profile of the client.

Question No. 2

The publicizing of activities of a legal service office providing counsel with respect to civic, political or constitutional rights is permitted, provided that the names of the attorney members are not publicized and that the specific limitations of California State Bar Rule 2-104(F) are met.

Question No. 3

A legal service office can refer clients to outside counsel, including the lawyer referral service, provided that no solicitation is made by outside counsel and no publication of such a list of outside counsel is made. Referrals can be made only upon specific request for such by the client. The organization may establish its own roster of nonmember attorneys to whom clients may be referred, provided that the nonmember attorney gives nothing of value to the organization either to secure the referral or to compensate the organization for having made the referral, and further provided that the roster is truly representative of the general bar of the area and does not in any way tend to favor any particular members or special group.

Question No. 4

The legal service program could publish a notice in a legal newspaper, requesting attorneys to volunteer for a panel which promotes a particular civic, political or constitutional point of view, and refer clients to such panel in lieu of the lawyer referral service, provided, however, that referrals to panel members are made only upon specific request of the client, that no list of panel members is published by the organization, and that the panel attorney gives nothing of value to the organization to secure a position on the panel.

III
STATUTES AND CANONS

Question No. 1

Neither the Rules of Professional Conduct of the State Bar of California nor the Code of Professional Responsibility of the American Bar Association refer to the concept of a fee-generating case or otherwise elaborate thereon.

Questions No. 2-4

Rules of Professional Conduct of the State Bar of California.

Rule 2-102. Publicity in General

(A) A member of the State Bar shall not prepare, cause to be prepared, use or participate in the use of, any form of public communication that contains professionally self-laudatory statements calculated to attract lay clients; as used herein, "public communication" includes, but is not limited to, communications by means of television, radio, motion picture, newspaper, magazine, or book.

(B) A member of the State Bar shall not publicize himself, his partner, or any other attorney, lawyer or counselor at law as a member of the State Bar through newspaper or magazine advertisements, radio or television announcements, display advertisements in city or telephone directories, or other means of commercial publicity, nor shall he authorize or permit others to do so in his behalf except as permitted under Rules 2-103 and 2-104. . . .

(C) Except as provided in these rules, a member of the State Bar shall not solicit professional employment by compensating or giving anything of value to representatives of the press, radio, television, or other communication medium in anticipation of or in return for publicity, of himself or any other attorney.

Rule 2-104. Recommendation of Professional Employment.

(A) A member of the State Bar shall not recommend employment, as a private practitioner, of himself, his partner or associate to a nonlawyer who has not sought his advice regarding employment of a member of the State Bar.

(B) Except as permitted under Rule 2-104(C), a member of the State Bar shall not compensate or give anything of value to a person or organization to recommend or secure his employment by a client, or as a regard for having made a recommendation resulting in his employment by a client.

(C) The participation of a member of the State Bar in a lawyer reference service established, sponsored, supervised and operated in conformity with the Minimum Standards for a Lawyer Reference Service in California, as adopted and as from time to time amended by the Board of Governors is not, of itself, a violation of these Rules of Professional Conduct provided the name of such member of the State Bar is not publicized. Nothing in this rule shall prohibit a representative of such lawyer reference service from identifying a member of the State Bar who is participating in that service, and stating the address and telephone number of such member, in connection with the making of a requested reference in conformity with the said Minimum Standards.

. . . .

(F) The participation of a member of the State Bar in a legal aid plan or program for the furnishing of services to indigents or pursuant to the plan or program of a nonprofit organization formed for charitable or other public purposes which furnishes legal services to persons only in respect of their civic or political or constitutional rights and not otherwise in furtherance of such charitable or other public purposes of such organization, and the publicizing of such plans or programs are not, of themselves, violations of these Rules of Professional conduct provided the name of such member of the State Bar is not publicized. Nothing in this rule shall prohibit a representative of such a plan or program from stating in response to inquiries as to the identity of such member of the State Bar such member's name, address and telephone number.

(G) A member of the State Bar shall not accept employment when he knows or should know that the person who seeks his services does so as a result of conduct prohibited under this rule.

American Bar Association Code of Professional Responsibility.

Rule DR2-101. Publicity in General.

(A) A lawyer shall not prepare, cause to be prepared, use, or participate in the use of, any form of public communication that contains professionally self-laudatory statements calculated to attract lay clients; as used herein, "public communication" includes, but is not limited to, communication by means of television, radio, motion picture, newspaper, magazine, or book.

(B) A lawyer shall not publicize himself, his partner, or associate as a lawyer through newspaper or magazine advertisements, radio or television announcements, display advertisements in city or telephone directories, or other means of commercial publicity, nor shall he authorize or permit others to do so in his behalf except as permitted under DR2-103 . . . .

(C) A lawyer shall not compensate or give anything of value to representatives of the press, radio, television, or other communication medium in anticipation of or in return for professional publicity in a news item.

Rule DR2-103. Recommendation of Professional Employment

. . . .

(D) A lawyer shall not knowingly assist a person or organization that recommends, furnishes, or pays for legal services to promote the use of his services or those of his partners or associates. However, he may cooperate in a dignified manner with the legal service activities of any of the following, provided that his independent professional judgment is exercised in behalf of his client without interference or control by any organization or other person:

(1) A legal aid office or public defender office:

(a) Operated or sponsored by a duly accredited law school.

(b) Operated or sponsored by a bona fide nonprofit community organization.

(c) Operated or sponsored by a governmental agency.

(d) Operated, sponsored, or approved by a bar association representative of the general bar of the geographical area in which the association exists.

. . . .

(3) A lawyer referral service operated, sponsored, or approved by a bar association representative of the general bar of the geographical area in which the association exists.

(E) A lawyer shall not accept employment when he knows or it is obvious that the person who seeks his services does so as a result of conduct prohibited under this Disciplinary Rule.

DR2-104. Suggestion of Need of Legal Services

(A) A lawyer who has given unsolicited advice to a layman that he should obtain counsel or take legal action shall not accept employment resulting from that advice, except that:

. . . .

(2) A lawyer may accept employment that results from his participation in activities designed to educate laymen to recognize legal problems, to make intelligent selection of counsel, or to utilize available legal services if such activities are conducted or sponsored by any of the offices or organizations enumerated in DR2-103(D)(1) through (5), to the extent and under the conditions prescribed therein.

IV
FORMAL OPINIONS

Question No. 1

No formal opinions exist with regard to the definition of a fee-generating case.

Question No. 2

The Committee on Ethics and Professional Responsibility of the American Bar Association, in Formal Opinion 334, dated August 10, 1974, concerning legal services office publicity stated:

Publicizing the services provided by a legal services office is proper within limits herein prescribed. The activities on behalf of clients by the staff of lawyers of a legal services office may be limited or restricted only to the extent necessary to allocate fairly and reasonably the resources of the office and to establish proper priorities in the interest of making maximum legal services available to the indigent and then only to an extent and in a manner consistent with the requirements of the Code of Professional Responsibility. . . .

"Historically, the need for legal services of those unable to pay reasonable fees had been met in part by lawyers who donated their services or accepted court appointments on behalf of such individuals. The basic responsibility for providing legal services for those unable to pay ultimately rests upon the individual lawyer, and personal involvement in the problem of the disadvantaged can be one of the most rewarding experiences in the life of a lawyer. Every lawyer, regardless of professional prominence or professional workload, should find time to participate in serving the disadvantaged. The rendition of free legal services to those unable to pay reasonable fees continues to be an obligation of each lawyer, but the efforts of individual lawyers are often not enough to meet the need. Thus it has been necessary for the profession to institute additional programs to provide legal services. Accordingly, legal aid offices, lawyer referral services, and other related programs have been developed, and others will be developed, by the profession. Every lawyer should support all proper efforts to meet this need for legal services." EC 2-25.

Most recently, the Legal Services Corporation Act of 1974 has provided funding to legal services offices through a public legal services corporation. . . .

Canon 2 requires a lawyer to assist the legal profession in fulfilling its duty to make legal counsel available. To what extent may a legal services office publicize its activities or suggest to individuals that its services be utilized without involving the lawyers acting on its behalf in a violation of the restrictions on publicity or on the seeking of legal business? [See DR2-103 and DR2-104.]

Previous opinions have allowed legal services offices to make known their availability to potential clients. Informal Opinion 1227 states:

"Our view is in keeping with history. In Formal Opinion 148, this committee sanctioned the publicizing of the availability of legal services without charge by lawyers with somewhat different social philosophies from those associated with [name omitted]. Consistency compels that we not waver from the sound principle there set forth to the effect that the various former canons cited by objectors were 'never aimed at a situation such as this, in which a group of lawyers announce that they are willing to devote some of their time and energy to the interests of indigent citizens whose constitutional rights are believed to be infringed. The adoption of the Code of Professional Responsibility only strengthens this observation, observing as it does in the first provision of EC-1: A basic tenet of the professional responsibility of lawyers is that every person in our society should have ready access to the professional services of a lawyer of integrity and competence.'"

DR2-101(B), as amended by the House of Delegates of the American Bar Association in February, 1974, provides:

"A lawyer shall not publicize himself, or his partner, or associate, or any other lawyer affiliated with him or his firm, as a lawyer through newspaper or magazine advertisements, radio or television announcements, display advertisements in city or telephone directories, or other means of commercial publicity, nor shall he authorize or permit others to do so in his behalf, except that a lawyer recommended by, paid by, or whose legal services are furnished by, any of the offices or organizations enumerated in DR2-103(D)(1) through (5) may authorize or permit or assist such organizations to use such means of commercial publicity, which does not identify any lawyer by name, to describe the availability or nature of its legal services or legal service benefits. . . ."

There are, however, limitations upon the publicity which may be given the activities of a legal services office:

(A) General Availability. Publicity reasonably calculated to educate persons as to their legal rights and responsibilities, to spread knowledge of the availability of legal services generally or with respect to representation on specific problems, or to inform others of the activities of a legal service program is ethical if carried on by a legal services office in compliance with DR 2-101(A) and (B), as amended February, 1974. Informal Opinion 1172 construed DR2-101(A) as prohibiting any publicity which contains an "element of extolling any individual lawyer for his role in the case." The publicity of a legal services office should be designed to acquaint its public with the availability of the office's services, not those of individual attorneys it employs. Individual lawyers may be identified in private responses to inquiries to the extent permitted by DR2-101(B)(6).

(B) Particular Causes. A staff lawyer in a legal services office may advise a client of the client's right to initiate litigation. There is nothing to prevent a lawyer from serving a legal services office which makes known through any method of publicity not proscribed by a disciplinary rule that services are available to indigents with claims to assert such claims on their behalf. EC 2-3 is helpful as a guideline for staff lawyers, where it states in part:

". . . The giving of advice that one should take legal action could well be in fulfillment of the duty of the legal profession to assist laymen in recognizing legal problems. The advice is proper only if motivated by a desire to protect one who does not recognize that he may have legal problems or who is ignorant of his legal rights or obligations. Hence, the advice is improper if motivated by a desire to obtain personal benefit, secure personal publicity, or cause litigation to be brought merely to harass or injure another. . . ."

(C) Filing of actions. The publicizing by a legal aid society of the filing of suits by lawyers employed by it was approved by a majority of the committee over a vigorous dissent in Informal Opinion 1172. The majority opinion recognized that there should be "no element of extolling any individual lawyer for his role in the case," as this would "introduce a wholly different consideration." Informal Opinion 1230 qualified that holding to the extent that, while there is nothing improper in furnishing to public media copies of pleadings which are matters of public record, information should be furnished only upon request because "the voluntary furnishing by counsel to the public media of pleadings prepared by him constitutes an invitation to those media to publish and comment upon the contents of these pleadings and is itself an extra judicial statement in contravention of DR7-107(G)." The practices suggested in the opinion were intended "to put a brake on any tendency to rush into print or to draft complaints with an eye to biased publicity which might affect the impartiality of the tribunal."

Within these limitations, we hold that the publicizing of the activities of a legal services office is within the scope of the Code of Professional Responsibility and therefore there is nothing improper in a lawyer acting on behalf of an office which engages in such publicity.

Viewing the problems discussed above on the aspirational level of the Code's ethical considerations, we stress that all lawyers should use their best efforts to avoid the imposition of any unreasonable and unjustified restraints upon the rendition of legal services by legal services offices for the benefit of the indigent and should seek to remove such restraints where they exist. All lawyers should support all proper efforts to meet the public's need for legal services.

Questions No. 3-4

There exist no formal opinions regarding referral of cases by the free legal services program or the creation of a volunteer panel.

V
INFORMAL OPINIONS

Question No. 1

In Informal Opinion 1166 which issued on August 9, 1970, the Committee on Ethics and Professional Responsibility of the American Bar Association with respect to a military legal assistance program stated:

. . . where a member of the military or his family is able to pay a reasonable fee for the desired legal services, the matter should be referred to a lawyer in private practice and not handled by the military legal assistance office at public expense. . . . Another type of matter that should ordinarily be referred would be a case where the fee would be paid out of the corpus. (i.e., contingent fee cases, or cases where the fees would be paid out of estates.)

Question No. 2

The Committee on Ethics and Professional Responsibility of the American Bar Association in Informal Opinion 992, dated August 26, 1967, concerning the propriety of announcements and news releases pertaining to the opening of legal aid offices by a legal assistance corporation, stated:

. . . It seems to the members of the Ethics Committee that the suggestion made in the request to the Grievance Committee of _________ County that the activity of the L.A.A. is unethical stems largely from a lack of understanding of the purpose and function of a legal aid society and from the fact that they are specifically recognized in the Canons of Ethics. Canon 35. Unfortunately the impression is still far too prevalent among the members of the bar that a legal aid society is a competitor of the practicing lawyers and that it is taking from them something of value. Actually it does the opposite, because in the absence of a legal aid society busy practicing lawyers would be obligated to give freely of their time and skills in serving the indigent.

In Informal Opinion 1227, concerning the publication of a newsletter by a legal services corporation, which issued on August 24, 1972, the Committee on Ethics and Professional Responsibility stated:

. . . The growth of the so-called public interest law firm was a phenomenon of the late 1960's. See generally Cahn and Cahn, Power to the People or the Profession?--The Public Interest in Public Interest Law, 79 Yale L.J. 1005 (1970); Note, the New Public Interest Lawyers, 79 Yale L.J. 1069 (1970). These organizations seek to go beyond provisions of legal services to the indigent, and additionally effect what they regard as social reforms through test case litigation, usually in their own organizational name, or through legislative or administrative means. Recognition of their impact already is found in the Pro Bono Report, a periodical of the Section of Individual Rights and Responsibilities of this Association, a more formal publication presumably distributed only to lawyers, but bearing some similarities to the ones in question. . . .

. . . We cannot regard the newsletter as a communication "calculated to attract lay clients" for its purposes seem primarily to advise those already interested in activities of ________ of current happenings in matters wherein the organization is a litigant or participant, nor can it be termed a form of "commercial publicity" of individual lawyers as it is primarily a means of publicizing goals of ________ as an entity, not the abilities of individual lawyers.

DR2-103(D) poses the more general issue of lawyer participation per se in ________ to the extent that _______ can be regarded as providing legal services to others. Nothing in the record before us suggests that it could not be treated as a "legal aid office" "operated by a bona fide nonprofit community organization," and thus lawyer cooperation would be legitimate, as it was in Informal Opinion 992. However DR2-103(D) requires that the cooperation be in a "dignified" manner. Certain of the cartoons doubtless overreach the sensitivities of some. However, the CPR does not define "dignified" and we would be reluctant to judge the newsletter other than as a whole, sounding the caveat that pronounced indiscretion could be regarded by disciplinary authorities as lacking in dignity.

In that respect care must also be taken to insure that recitations of events in pending causes do not contravene DR 7-107. We lack sufficient knowledge of the identity of recipients of the newsletter to evaluate this possibility. However, it is manifest that the broader the circulation, and the less it is confined to subscribers, contributors, and members of _______, the greater the risk of abuse in this respect.

Our view is in keeping with history. In Informal Opinion 148, this Committee sanctioned the publicizing of the availability of legal services without charge by lawyers with somewhat different social philosophies from those associated with _______.

Consistency compels that we not waver from the sound principle there set forth to the effect that the various former Canons cited by objectors were "never aimed at a situation such as this, in which a group of lawyers announce that they are willing to devote some of their time and energy to the interests of indigent citizens whose constitutional rights are believed to be infringed." The adoption of the CPR only strengthens this observation, observing as it does in the first provision of EC-1-1:

"A basic tenet of the professional responsibility of lawyers is that every person in our society should have ready access to the independent professional services of a lawyer of integrity and competence."

Questions No. 3-4

Although Informal Opinion 1139, dated August 9, 1970, does not specifically address a lawyer referral panel created by a legal services corporation, the Committee on Ethics and Professional Responsibility stated the following with regard to the establishment of a lawyer referral service by a specialized bar association:

. . . We believe, however, that a specialist bar association may qualify to have a lawyer referral service if such organization has been recognized as a qualified specialist group in a particular field of law or law practice (as their name might imply) by the authority having jurisdiction under state law over the subject of specialization and the membership of such group can be said to be truly representative of the general bar of the area by accepting all applications for membership from the general as well as the specialized bar of the area.

While we believe it will be difficult for many so-called specialized bar associations to qualify under the restrictions intended by the Code and also encourage and attract an adequate cross section of membership from the general bar of the area, we do not wish to foreclose without further evaluation any attempt by the qualified and approved members of the bar of an area from assisting in making legal services fully available to the public.

We see nothing wrong, however, with an organization such as the ones you have indicated establishing a lawyer referral service if it is conducted within the standards set forth in the Code and as interpreted above whose full membership is available to and it encourages membership by all members of the bar and does not in any way tend to aggrandize any particular members or any special group of the bar but is aimed at the basic philosophy of making a broad-based, well-run lawyers referral service more generally available to the public; . . .


VI
ANALYSIS

Question No. 1

It appears logical that when either a retainer is made on a contingent fee basis or there exists a reasonable expectation for the recovery of attorney fees by contract or under statutory provisions, the essence of a fee generating case is present. This would also be the case if there were a probate estate or other corpus which is available to attach by virtue of the cause of action. This conclusion is not affected by the financial profile of the client, since the fees under the above conditions are provided by either the opposing party or an independent corpus. Informal Opinion 1166, although not directly on point, supports this conclusion in principle by requiring a military legal assistance office to refer the matter to private counsel under the above conditions.

Question No. 2

A limited form of advertising is permissible under both Rule 2-104(F) of the Rules of Professional Conduct of the State Bar of California and Disciplinary Rule DR2-103(D)(1) of the Code of Professional Responsibility of the American Bar Association. Furthermore, this position is amply supported by Formal Opinion 334 and Informal Opinions 992 and 1227 issued by the Committee on Ethics and Professional Responsibility of the American Bar Association. Furthermore, Formal Opinion 334 provides guidelines for the type of limited advertising in which the legal services corporation may engage.

Questions No. 3?4

The legal services program should not be placed in a lesser position than other individuals or organizations in our society who have the right to recommend counsel for professional employment provided they receive no compensation from the referral. This position is necessarily limited to the extent that the outside counsel does nothing to solicit the referral as provided under Rules 2-102 and 2-104 of the Rules of Professional Conduct of the State Bar of California and Disciplinary Rules DR2-101 and DR2-103 of the Code of Professional Responsibility of the American Bar Association. This position is supported in essence by Informal Opinion 1139 of the Committee on Ethics and Professional Responsibility of the American Bar Association, which provides guidelines for the composition of a special roster which may be maintained by the legal services organization. Referrals from the roster shall be made in a fair and equitable manner.

 

Disclaimer: This opinion was issued by the Legal Ethics Committee of the San Diego County Bar Association. It is advisory only and is not binding upon any member of the SDCBA, any other member of the State Bar of California, the State Bar of California or its Board of Governors, or any persons or tribunals charged with regulatory responsibilities. The SDCBA, its officers, directors, agents, and the Legal Ethics Committee members assume no responsibility or liability in rendering this opinion.