Can a Michigan lawyer join a prepaid legal services plan run by a financial company whose nonlawyer president resolves disputes between the lawyer and members?
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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 Michigan Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer wanted to join a legal services plan offered through a financial organization. Members would pay a set fee covering both accounting and legal services, the organization would pay the lawyer out of that fee, and a contract would state that the organization had no right to control the lawyer. Marketing would be the organization's sole responsibility, without lawyer participation. The organization's president, a nonlawyer, would handle any problems or disputes between the lawyer and a member, and if a dispute could not be resolved through the president's intervention, the member's fee would be refunded.
The Committee applied MRPC 5.4(c) and (d), which bar a lawyer from letting a person who recommends, employs, or pays the lawyer direct or regulate the lawyer's professional judgment, and bar practicing in a for-profit entity where a nonlawyer has the right to direct or control a lawyer's professional judgment. The Committee noted the rule's comment permits affiliating with a prepaid plan only where the structure lets the lawyer independently exercise professional judgment. Here, because the nonlawyer president would control client disputes, the lawyer could not be expected to exercise professional judgment independently.
The Committee also addressed the marketing left entirely to the organization. Under MRPC 7.1 and 7.3, a lawyer has a duty to assure that communications about the lawyer's services are not false, fraudulent, deceptive, or misleading and are not improper solicitation. The opinion concluded that if a lawyer becomes aware of improper communications, the lawyer should bring the matter to the organization for correction, and should not accept employment from a member obtained through improper communications without first correcting the information and confirming the member wishes to proceed. On these facts, the lawyer could not ethically participate.
Currency note
This opinion was issued in 1989 and interprets the Michigan Rules of Professional Conduct as they then stood. The MRPC have since been amended, and 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 lawyer join a prepaid legal plan where a nonlawyer resolves disputes between the lawyer and clients?
A: Per the opinion, no. The Committee concluded that giving the organization's nonlawyer president control over client disputes meant the lawyer could not be expected to exercise independent professional judgment, violating MRPC 5.4(c) and (d).
Q: Does a contract saying the organization has no control over the lawyer cure the problem?
A: The opinion concluded it did not, because the actual plan structure still gave the nonlawyer president authority over disputes with members; the Committee looked to how the plan operated, not just the contract's disclaimer.
Q: Is a lawyer responsible for a prepaid plan's marketing even when the organization handles all advertising?
A: The opinion concluded that a lawyer cannot be expected to review the organization's entire marketing plan, but still has a duty under MRPC 7.1 and 7.3 to address improper communications about the lawyer's services once aware of them, and to correct them before accepting employment obtained through them.
Background and rules framework
The opinion interprets MRPC 5.4 (Professional Independence of a Lawyer; the Model Rule 5.4 counterpart), specifically subsections (c) and (d) on nonlawyer interference with professional judgment, together with MRPC 7.1 (Communications Concerning a Lawyer's Services) and MRPC 7.3 (Direct Contact With Prospective Clients). The Committee relied on the comment to MRPC 5.4, which allows affiliation with a prepaid or union-sponsored plan only where the structure permits the lawyer independently to exercise professional judgment on a client's behalf.
Citations and references
Rules of Professional Conduct:
- MR 5.4 / MRPC 5.4(c), (d) (professional independence; nonlawyer control)
- MR 7.1 / MRPC 7.1 (communications concerning a lawyer's services)
- MR 7.3 / MRPC 7.3 (direct contact with prospective clients)
Other opinions cited:
- C-233; CI-1132; CI-1209: prior Michigan opinions on legal service plans and solicitation.
See also
- Mich Ethics Op. R-6: Lawyer Referral Service Rules
- Mich Ethics Op. R-8: For-Profit Referral Service
- Mich Ethics Op. RI-24: For-Profit Referral and Unreviewed Ads
- Mich Ethics Op. RI-9: Group TV Advertising Venture
Source
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
RI-7
February 10, 1989
SYLLABUS
A lawyer may not participate in a prepaid legal service plan offered by a financial organization, wherein the president of the organization, a nonlawyer, has control over handling any disputes between the lawyer and the member who seeks a legal service.
A lawyer participating in a prepaid legal services plan, who becomes aware that the marketing plan of the organization makes representations about the lawyer's legal services plan participation which are improper under the Rules, has a duty to bring the matter to the attention of the organization for correction, and to correct the representation for any member who has relied on the improper information.
References: MRPC 5.4(c), 5.4(d), 7.1, 7.3; C-233; CI-1132, CI-1209.
TEXT
A lawyer desires to participate in the legal services plan offered through a financial organization. The organization will assess a set fee for each member which would entitle the member to both accounting and legal services. A contract between the lawyer and the organization to provide routine legal services for organization members will expressly state that the organization has no right of control over the lawyer. Marketing of the legal services plan will be the sole responsibility of the organization without participation by the lawyer.
The organization will pay the lawyer from the set fee paid by its members. The members will be advised that though the lawyer is being paid by the organization from the member's fee, the member is the client of the lawyer.
The president of the financial organization, who is not a lawyer, will handle any problems or disputes that arise between the lawyer and the member. If the problem cannot be resolved through intervention by the president, the member's fee is refunded.
The issue is whether the proposed legal access program and the requesting lawyer's connection with the program would violate the Michigan Rules of Professional Conduct.
First, a legal services program must assure that the professional judgment of the lawyer will not be interfered with by the underlying organization. MRPC 5.4(c) and (d) state:
"(c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services.
"(d) A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for profit if:
". . .
"(3) A nonlawyer has the right to direct or control the professional judgment of a lawyer."
The Rules safeguard against any interference with the professional judgment of a lawyer who is rendering the legal services by the entity which is to pay the lawyer for those services. The Comment accompanying MRPC 5.4 reemphasizes this charge:
"A lawyer does not violate this rule by affiliating with or being employed by an organization such as a union sponsored prepaid legal services plan, provided the structure of the organization permits the lawyer independently to exercise professional judgment on behalf of a client." Emphasis added.
In the fact situation presented, a lawyer faced with the potential of the president of the organization which hired him to control client disputes, could not be expected to exercise his professional judgment independently.
Second, under the plan here, the lawyer would permit the organization to be responsible for marketing without review by the lawyer. Although the lawyer could not be expected to review the entire marketing plan of the organization, a lawyer has a duty to assure that communications about the lawyer's services are not false, fraudulent, deceptive or misleading, do not contain a material misrepresentation of law or fact, are not likely to create an unjustified expectation, and are not improper solicitation. MRPC 7.1 and 7.3. If the lawyer becomes aware of improper communications, therefore, the lawyer should bring the matter to the attention of the organization for correction. Further, the lawyer should not accept any employment from a plan member, when the employment was obtained in reliance on the improper communications, without first correcting the information and verifying that the member wishes to proceed.
For these reasons, the lawyer may not ethically participate in the legal services plan described.
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