Can a law firm pay for a solo practitioner's television and radio advertising in exchange for the solo referring cases to the firm?

Plain-English summary

A firm proposed to fund television and perhaps radio advertising for an experienced solo practitioner. A dedicated phone line at the solo's office would take incoming calls; callers with apparently meritorious claims would be told another attorney who specializes in the problem would contact them, and someone in the firm would then discuss the case and either decline it or schedule a contract-signing appointment. The solo was expected to keep many of the cases himself; the firm's cases would be handled on contingency, and the solo would receive a referral fee. The firm asked whether it could fund the advertising under this arrangement.

The Disciplinary Commission concluded the firm may not fund the advertising for a solo practitioner who would in turn refer cases to the firm, because the arrangement causes to be made a false or misleading communication about the lawyers' services available to the public. The opinion quoted Rule 7.1, which bars a lawyer from making or causing to be made a false or misleading communication about the lawyer or the lawyer's services. The central concern was that a caller responding to the advertised number is misled as to who they are dealing with and who will represent them; while referral itself is acceptable in the State, advertising a conduit in which the firm avoids direct participation other than funding the ads misleads the public about which attorney or attorneys they will deal with and possibly retain.

The opinion added that lawyers involved in open referrals must ensure the client is aware of the referral system, the division of fees, and the degree of participation of the attorneys involved, as required by Rule 1.5. The Commission stated that any advertising scheme circumventing full disclosure of relevant information to the consuming public violates both the rules and their spirit and purpose, and that the circuitous referral concept proposed was not structured to prevent misleading the public while maintaining the integrity of the representation.

Currency note

This opinion was later modified by RO-99-01. It was also issued in 1992, before the 2002 Ethics 2000 revisions to the ABA Model Rules of Professional Conduct and Alabama's subsequent amendments to its Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a law firm pay for a solo practitioner's advertising if the solo refers cases to the firm?

A: Per the opinion, no. The Commission concluded the funding arrangement causes a false or misleading communication under Rule 7.1 because callers are misled about who will actually represent them.

Q: Is lawyer-to-lawyer referral itself prohibited in Alabama?

A: No. The opinion stated the referral concept is acceptable in the State; the problem was the advertised conduit that hid the funding firm's role and misled the public about which attorneys they would deal with.

Q: What disclosure did the opinion say open referrals require?

A: The opinion stated that, under Rule 1.5, the client must be made aware of the referral system, the division of fees, and the degree of participation of the attorneys involved.

Background and rules framework

The opinion interprets Rule 7.1 (Model Rule 7.1, communications concerning a lawyer's services) of the Alabama Rules of Professional Conduct, and refers to Rule 1.5 (Model Rule 1.5, fees and division of fees) for the disclosures required in referral arrangements.

Citations and references

Rules of Professional Conduct:

• Model Rule 7.1 / Ala. R. Prof. C. 7.1 (false or misleading communications about a lawyer's services)
• Model Rule 1.5 / Ala. R. Prof. C. 1.5 (fees; disclosure of fee division in referrals)

See also

• AL Ethics Op. 1993-23: bankrolling a referral-front firm
• AL Ethics Op. 1992-13: fee-splitting with a non-lawyer

Source

• Landing page: https://www.alabar.org/office-of-general-counsel/formal-opinions/1992-23/
• Original PDF: https://www.alabar.org/assets/2019/02/RO-92-23.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

ETHICS OPINION

RO-92-23

QUESTION:

"Our firm is desirous of funding the television advertising, and perhaps radio advertising, for a solo practitioner here in the ______ area. We expect to have a telephone line installed at the solo practitioner's office to be used exclusively for responses to the advertising. When calls come in, information pertaining to the caller's potential case is taken down and, assuming the claim has merit, the caller is informed up front that he or she will be contacted by another attorney who specializes in the problem related by the caller. Someone in our firm will contact the caller and discuss the potential case over the phone and, if appropriate, either inform the caller that the firm is declining to represent him or her or schedule an appointment with the caller at which time an employment contract would be executed between our firm and the caller assuming our firm decides to take the case.

It is anticipated and expected that the solo practitioner will retain many of these cases himself. The solo practitioner has been in private practice in the state for approximately ten years, and has extensive litigation experience in state and federal court.

All cases which our firm decides to handle will be done on a contingency fee basis, and the solo practitioner will receive a referral fee."

ANSWER:

Your firm may not fund the television advertising for a solo practitioner who will in turn refer cases to your firm, as such a concept causes to be made a false or misleading communication about the lawyers' services available to the public.

DISCUSSION:

Rule 7.1, Alabama Rules of Professional Conduct, states as follows:

"Rule 7.1 Communications Concerning a Lawyer's Services

A lawyer shall not make or cause to be made a false or misleading communication about the lawyer or the lawyer's services. A communication is false or misleading if it:

(a) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading;

(b) is likely to create an unjustified expectation about results the lawyer can achieve, or states or implies that the lawyer can achieve results by means that violate the Rules of Professional Conduct or other law;

(c) compares the quality of the lawyer's services with the quality of other lawyers' services, except as provided in Rule 7.4; or

(d) communicates the certification of the lawyer by a certifying organization, except as provided in Rule 7.7."

The main concern with your proposed referral scheme is that anyone who calls the listed number in the advertisement is mislead as to who they are dealing with and who will be representing them in their particular legal matter. While the referral concept is obviously an acceptable one in this State, the advertising of such a conduit whereby your firm avoids direct participation in the advertising other than funding same misleads the public as to what attorney or attorneys they will be dealing with and possibly having as their legal representative.

Further, the lawyers involved in open referrals must insure that the client is aware of the referral system, division of fees, degree of participation of attorneys involved, etc., as mandated by Rule 1.5, Alabama Rules of Professional Conduct.

The purpose of the rules is to protect the public. Any advertising scheme which would circumvent full disclosure of relevant information to the consuming public when advertising legal services violates not only the rules themselves, but their spirit and purpose as well.

Strict adherence to the applicable rules would not allow a plan such as that proposed by you. The circuitous referral concept envisioned therein is not a plan structured so as to prevent any misleading of the public while maintaining the integrity of the representation of the client.

JAM/vEi

12/18/92