Can a Colorado lawyer participate in a prepaid or group legal service plan, and what conditions must the plan meet?
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This page answers the general question as of 1989. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion 81 (adopted March 18, 1989) set out criteria for when a Colorado lawyer may ethically participate in a prepaid legal service plan, or represent clients who are plan members. Under the then-governing Code (DR 2-103), the Committee concluded that a lawyer may not accept employment through a plan the lawyer knows or should know violates applicable law, court rules, or any Disciplinary Rule. It distinguished open-panel plans (members pick their own lawyers) from closed-panel plans (the plan selects the lawyer), and non-profit from for-profit plans: a lawyer may work for a non-profit closed-panel plan if members can choose their own counsel when the plan's counsel would be unethical, improper, or inadequate, while a for-profit plan had to be open-panel unless the plan bore ultimate liability for its members.
The Committee concluded that, in all cases, the plan must recognize the member or beneficiary, not the plan, as the client, and must let the participating lawyer exercise independent professional judgment, maintain client confidences, practice competently, and avoid conflicts of interest. Drawing on ABA Formal Opinion 87-355, it flagged the risk that a lawyer financially dependent on a plan could lose independence, and cautioned against plan terms that cap the lawyer's time, fix caseloads, or limit preparation, because inadequate preparation can violate the competence rules. Where a plan's time limits prevented competent handling and no satisfactory supplemental fee agreement with the client could be reached, the lawyer had to decline the matter.
The opinion also concluded that a plan must not require disclosure of client confidences (for example, through quality-control mechanisms), must not restrict the lawyer's ability to represent the member once a client, and must advertise and solicit within the advertising rules (then DR 2-101), avoiding false or misleading claims. A plan that advertises free choice of counsel without an effective procedure to exercise it, or that advertises adequate representation while capping preparation time, is misleading. Finally, a lawyer may not initiate or promote a plan primarily to provide financial benefit to the lawyer or the lawyer's firm.
Currency note
This opinion was issued in 1989, before Colorado's 2008 revisions to the 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. In particular, the opinion's open-panel/closed-panel framework reflects the former Code; ABA Model Rule 7.3 later abandoned that distinction, and Colorado's current rules differ.
Common questions
Q: Could a Colorado lawyer join a prepaid legal service plan?
A: Yes, conditionally. The opinion concluded a lawyer may participate only if the plan complies with the governing rules: the member must be the client, the plan must not interfere with the lawyer's independent judgment, competence, confidentiality, or conflict-avoidance, and members must be able to select other counsel when the plan's counsel would be inadequate.
Q: Who was the lawyer's client in a plan, the plan or the member?
A: The member. The opinion concluded that the plan member or beneficiary, and not the plan itself, must be recognized as the client, and that the plan may not direct or interfere with the legal matter once it is referred to the lawyer.
Q: Could a plan limit how much time the lawyer spent on a case?
A: Not in a way that compromised competence. The opinion concluded that plan terms capping lawyer time or preparation raised serious competence and independence concerns, and that if the matter could not be competently handled within the plan's limits and no supplemental fee agreement could be reached, the lawyer had to decline it.
Q: Did the rules treat for-profit and non-profit plans differently?
A: Yes, at the time. The opinion concluded that non-profit closed-panel plans were permitted (with a member's right to choose other counsel when the plan's counsel would be inadequate), while for-profit plans generally had to be open-panel unless the plan bore ultimate liability for the member.
Background and rules framework
The opinion interpreted the then-governing Colorado Code of Professional Responsibility, principally DR 2-103 (recommendation of professional employment and participation in qualified legal assistance organizations), DR 5-107 (no third-party interference with professional judgment), DR 6-101 (competence and adequate preparation), DR 4-101 (confidentiality), and DR 2-101 (advertising). It relied heavily on ABA Formal Opinion 87-355 on for-profit prepaid plans. The modern analogs are Colorado's rules on independence (Rule 5.4(c)) and prepaid and group legal service plans (Rule 7.3).
Citations and references
Rules of Professional Conduct:
- Colo. RPC 7.3 / Model Rule 7.3 (prepaid and group legal service plans; current analog)
- Colo. RPC 5.4(c) / Model Rule 5.4 (no third-party interference with professional judgment)
- Colo. Code of Professional Responsibility DR 2-103, DR 5-107, DR 6-101, DR 4-101, DR 2-101 (governing rules at issuance)
Cases:
- Cuyahoga County Bar Ass'n v. Gold Shield, Inc., 369 N.E.2d 1232 (Ohio Ct. Common Pleas 1975), for-profit group legal services and open-panel requirements
- Feinstein v. Attorney-General, 326 N.E.2d 288 (N.Y. 1975), whether a prepaid plan is insurance
Other opinions cited:
- ABA Formal Op. 87-355 (1987): lawyers' participation in for-profit prepaid legal service plans
- D.C. Bar Op. 170 (1986); Kentucky Bar Op. 312 (1986)
See also
- AlaBar Op. 1999-04: Conflicts Where a Firm Sells a Prepaid Plan
- ABA Formal Op. 465: Deal-of-the-Day Marketing Programs
- CBA Formal Op. 106: Referral Fees and Networking Organizations
Source
- Landing page: https://www.cobar.org/ethicsopinions
- Original PDF: https://www.cobar.org/Portals/COBAR/repository/ethicsOpinions/FormalEthicsOpinion_81_2011.pdf
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