Can a lawyer advertise for clients but plan to refer most of them to other lawyers without saying so in the ad?

Plain-English summary

The opinion addresses a lawyer who advertises legal services but whose ads do not disclose that a majority of the responding callers will be referred to other lawyers. The Board concludes the practice is ethically improper: the failure to disclose the referral intent makes the advertisement misleading under Rule 7.1, and the lawyer must also comply with the disciplinary standards applicable to lawyer referral services.

Rule 7.1 permits advertising through public media so long as the communication is not false, fraudulent, deceptive, or misleading, and treats a communication as misleading if it omits a fact necessary to keep the statement, as a whole, from being materially misleading. The opinion recognizes that lawyer advertising is protected commercial speech under Bates v. State Bar of Arizona and later cases, but explains that potentially misleading ads may be cured by required disclosures without offending the First Amendment, citing Zauderer and Peel. A true statement that omits relevant information can be as misleading as a false one.

The opinion reads the Georgia advertising rules as embodying a policy of full disclosure: ads must be marked as advertising, include at least one responsible attorney's name, and not imply associations among lawyers that do not exist (Rules 7.1 and 7.5). It surveys Virginia, Maryland, and New York opinions that required referral-style advertising to disclose that the advertiser was a referral service rather than a single law firm, and finds those situations analogous. An ad that conveys only the advertising attorney's own services, while in fact most callers are referred out, gives clients incomplete information that matters to someone choosing a lawyer rather than a referral service.

The opinion adds that the referring lawyer may be circumventing the rules governing lawyer referral services. Under Rule 7.3(c), lawyers may accept referrals only from a bona fide referral service that files the required annual report with the State Disciplinary Board; if the advertising lawyer is not operating such a service, the client is deprived of that information, and the lawyers who accept and pay for the referrals also violate Rule 7.3(c). The opinion concludes that where a majority of responding callers are referred out, the arrangement becomes a lawyer referral service that must be disclosed and must comply with the referral-service rules.

In practice

The opinion holds that, under the Georgia advertising rules as they stood at the time of the opinion, a lawyer may advertise his own services and accept the resulting cases, but an ad becomes misleading under Rule 7.1 when the lawyer intends to refer a majority of callers to other lawyers and does not disclose that intent. In that situation the opinion treats the arrangement as a lawyer referral service that must be disclosed and must satisfy the referral-service requirements of Rule 7.3(c), and it states that lawyers who accept and pay for referrals from a non-compliant service also violate Rule 7.3(c).

Common questions

Q: Can a lawyer run ads for cases and then refer most callers to other lawyers?

A: Not without disclosure. The opinion concludes that advertising for business while intending to refer a majority of callers out, without saying so, omits information necessary to keep the ad from being misleading and violates Rule 7.1.

Q: Why is the omission misleading if the ad's statements are technically true?

A: The opinion explains that a true statement that omits relevant information can be as misleading as a false one. An ad conveying only the advertising attorney's services does not reflect that most callers are referred out, which matters to a client choosing a lawyer rather than a referral service.

Q: When does this kind of advertising become a "lawyer referral service"?

A: The opinion concludes that where a majority of responding callers are referred to other lawyers, the practice becomes a lawyer referral service, which must be disclosed and must comply with Rule 7.3(c), including the bona fide referral service's annual reporting to the State Disciplinary Board.

Q: Do the lawyers who receive the referrals have a problem too?

A: Yes. The opinion states that lawyers who accept referrals from and pay an illicit referral service that does not comply with Rule 7.3(c) violate that rule by participating in the service.

Background and rules framework

The opinion interprets Georgia Rule of Professional Conduct 7.1 (communications about a lawyer's services, including 7.1(a)(1)-(6); Model Rule 7.1), Rule 7.3(c) (lawyer referral services; counterpart to Model Rule 7.2), and Rule 7.5 (firm names and trade names; Model Rule 7.5). It applies First Amendment commercial-speech doctrine from Bates v. State Bar of Arizona, 433 U.S. 350 (1977), In re R.M.J., 455 U.S. 191 (1982), Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), and Peel v. Attorney Registration and Disciplinary Commission, 496 U.S. 91 (1990). This opinion replaced the earlier FAO 92-2.

Citations and references

Rules of Professional Conduct:

• Georgia RPC 7.1 (false or misleading communications) / Model Rule 7.1
• Georgia RPC 7.3(c) (lawyer referral services) / counterpart to Model Rule 7.2
• Georgia RPC 7.5 (firm names and letterhead) / Model Rule 7.5

Cases:

• Bates v. State Bar of Arizona, 433 U.S. 350 (1977), lawyer advertising as commercial speech
• In re R.M.J., 455 U.S. 191 (1982); Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985); Peel v. Attorney Registration and Disciplinary Comm'n, 496 U.S. 91 (1990)

Other opinions cited:

• Virginia Op. 1029 (1988); Maryland Op. 88-65 (1988); New York Op. 597 (1989): disclosure in referral-style advertising

See also

• ABA Formal Op. 501: Solicitation
• ABA Formal Op. 474: Referral Fees and Conflicts of Interest
• ALA Ethics Op. 2003-01: Various Advertising Issues

Source

• Landing page: https://www.gabar.org/handbook?rule=rule458

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Click here for an explanation regarding the history of this opinion.

STATE BAR OF GEORGIA
FORMAL ADVISORY OPINION NO. 05-6
Approved and Issued On May 3, 2007 Pursuant to Bar Rule 4-403
By Order Of The Supreme Court Of Georgia Thereby Replacing FAO No. 92-2
Supreme Court Docket No. S06U0799

QUESTION PRESENTED:
Ethical propriety of a lawyer advertising for legal business with the intention of referring a majority of that business out to other lawyers without disclosing that intent in the advertisement.

SUMMARY ANSWER:
It is ethically improper for a lawyer to advertise for legal business with the intention of referring a majority of that business out to other lawyers without disclosing that intent in the advertisement and without complying with the disciplinary standards of conduct applicable to lawyer referral services.

OPINION:
Correspondent seeks ethical advice for a practicing attorney who advertises legal services but whose ads do not disclose that a majority of the responding callers will be referred to other lawyers. The issue is whether the failure to include information about the lawyers referral practices in the ad is misleading in violation of the Georgia Rules of Professional Conduct. Rule 7.1 of the Georgia Rules of Professional Conduct governing the dissemination of legal services permits a lawyer to "advertise through all forms of public media...so long as the communication is not a false, fraudulent, deceptive, or misleading communication about the lawyer or the lawyer's services."A communication is false or misleading if it "[c]ontains a material misrepresentation of fact or law or omits a fact necessary to make the statement considered as a whole not materially misleading,"Rule 7.1(a)(1).

The advertisement of legal services is protected commercial speech under the First Amendment. Bates v. State Bar of Arizona, 433 U.S. 350 (1977). Commercial speech serves to inform the public of the availability, nature and prices of products and services. In short, such speech serves individual and societal interests in assuring informed and reliable decision-making. Id. at 364. Thus, the Court has held that truthful ads including areas of practice which did not conform to the bar's approved list were informative and not misleading and could not be restricted by the state bar. In re R.M.J., 455 U.S. 191 (1982).

Although actually or inherently misleading advertisements may be prohibited, potentially misleading ads cannot be prohibited if the information in the ad can be presented in a way that is not deceiving. Gary E. Peel v. Attorney Registration and Disciplinary Comm'n of Illinois, 496 U.S. 91, 110 S.Ct. 2281, 2287-2289 (1990). Requiring additional information so as to clarify a potentially misleading communication does not infringe on the attorney's First Amendment. Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985).

Georgia Rules of Professional Conduct balance the lawyer's First Amendment rights with the consumer's interest in accurate information. In general, the intrusion on the First Amendment right of commercial speech resulting from rationally based affirmative disclosure requirements is minimal.

A true statement which omits relevant information is as misleading as a false statement. So, for example, when contingency fees are mentioned in the communication, the fees must be explained. Rule 7.1(a)(5). The Rules prohibit communications which are likely to create an unjustified explanation about results the lawyer can achieve or comparison of service unless the comparison can be substantiated. Rule 7.1(a)(2), (3).

The Rules evidence a policy of full disclosure enabling the client to investigate the attorney(s) and the services offered. Any advertisement must be clearly marked as an ad, unless it is otherwise apparent from the context that it is such a communication and at least one responsible attorney's name must be included. Rule 7.1(a)(4), (6)(b). Law firms practicing under a trade name must include names of practicing attorneys. The firm's trade name cannot imply connections to an organization with which it has no connection. Rule 7.5(a)(2). An attorney is prohibited from implying associations with other attorneys when an association does not exist and may state or imply practice in a partnership or other organizations only when that is the fact. Rule 7.5(d). These disclosure requirements assure that the public receives accurate information on which to base decisions.

Similarly, other jurisdictions have required disclosure of attorney names and professional associations in the advertisement of either legal services or referral services. A group of attorneys and law firms in the Washington, D.C. area planned to create a private lawyer referral service. The referral service's advertising campaign was to be handled by a corporation entitled "The Litigation Group."Ads would state that lawyers in the group were willing to represent clients in personal injury matters. The person answering the telephone calls generated by the ad would refer the caller to one of the member law firms or lawyers.

The Virginia State Bar Standing Committee on Legal Ethics found the name misleading because it implied the entity was a law firm rather than simply a referral service. The Committee required the ad include a disclaimer explaining that "The Litigation Group "was not a law firm. Virginia State Bar Standing Committee on legal Ethics, Opinion 1029, 2/1/88.

The Maryland State Bar Association Committee on Ethics was presented with facts identical to those presented in Virginia. The Maryland Committee also required additional information in the ad to indicate the group was not a law firm or single entity providing legal services. Maryland State Bar Association Committee on Ethics, Opinion 88-65, 2/24/88.

Similarly, an opinion by the New York Bar Association prohibited an attorney from using an advertising service which published ads for generic legal services. Ads for legal services were required to include the names and addresses of participating lawyers and disclose the relationship between the lawyers. New York Bar Association, Opinion 597, 1/23/89.

The situations presented to the Virginia, Maryland and New York committees are analogous to the facts presented here. The advertiser in all these cases refers a majority of the business generated by the ad, without disclosure. The ad here does not disclose any association with other attorneys.

The advertisement at issue conveys only the offer of legal services by the advertising attorney and no other service or attorney. The ad does not accurately reflect the attorney's business. The ad conveys incomplete information regarding referrals, and the omitted information is important to those clients selecting an attorney rather than an attorney referral service.

Furthermore, the attorney making the referrals may be circumventing the regulations governing lawyer referral services. Attorneys may subscribe to and accept referrals from a "a bona fide lawyer referral service operated by an organization authorized and qualified to do business in this state; provided, however, such organization has filed with the State Disciplinary Board, at least annually a report showing its terms, its subscription charges, agreements with counsel, the number of lawyers participating, and the names and addresses of lawyers participating in the service."Rule 7.3(c)(1). These regulations help clients select competent counsel. If the attorney is not operating a bona fide lawyer referral in accordance with the Rules, the client is deprived of all of this information. The attorneys accepting the referrals also violate Rule 7.3(c) by participating in the illicit service and paying for the referrals.

Assuming that the advertisements at issue offers only the advertising attorneys services and that the attorney accepts cases from the callers, the ad is not false or inherently misleading. However, where a majority of the responding callers are referred out, this becomes a lawyer referral service. The Rules require disclosure of the referral as well as compliance with the Rules applicable to referral services.