Can a Montana provider firm for a prepaid legal plan send marketing mailings to members, and can the plan sponsor see the firm's client intake records?

Plain-English summary

A law firm acting as the Montana provider for a prepaid legal services plan asked the committee to review two marketing mailings and the propriety of the firm sharing member intake information with the plan sponsor. The plan sold memberships giving certain free services (preparation of a will, living will, and durable power of attorney) and other services at a reduced rate; the firm received a monthly per-capita payment from the sponsor. The first mailing was a postcard reminding members of the free will benefit. The second was a letter, marked as an advertisement, alerting members to recalled hip and knee implants and offering a no-cost consultation and contingent-fee representation at the prepaid discount rate.

On the advertising questions, the committee concluded that neither mailing ran directly afoul of Rule 7.2 (Advertising) or Rule 7.3 (Direct Contacts with Prospective Clients), noting Montana's rules are significantly more permissive than the ABA Model Rules. It cautioned, however, that the letter could encounter problems under Rule 7.1 (false or misleading communications) and Rule 1.1 (competence). The committee treated the letter as "loss leader" advertising that uses free services as bait for remunerative work and, while finding that this particular use did not violate the rules, flagged several statements as potentially misleading: the claim that the firm's lawyers were "very experienced" when only one had more than six years' Montana practice, the representation of a reduced fee, and the suggestion that defective knee implants existed on the market.

On confidentiality, the committee concluded that Rule 1.6 precluded the plan sponsor's unfettered access to the firm's intake records. As a threshold matter, a person's bare subscription to the plan did not create an attorney-client relationship, so initial coverage information given to the sponsor was not confidential; but once a member contacts the firm and discloses confidential information, an attorney-client relationship may form. The intake records here held confidential matter, members were not told the sponsor could see it, and their consent was not obtained. The committee stressed that once the lawyer-client relationship exists, the plan sponsor should have no dealings with the member on legal issues and quality-control mechanisms that lead to disclosure are unacceptable. A prospective waiver buried in plan documents is not the informed consent after consultation that Rule 1.6 requires.

Currency note

This opinion was issued in 2001, before the State Bar of Montana's adoption of the 2004 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.

Common questions

Q: Did the prepaid plan's postcard and letter violate Montana's advertising and solicitation rules?

A: The opinion concluded both mailings complied with Rule 7.2 (Advertising) and Rule 7.3 (Direct Contacts with Prospective Clients), and did not involve the prohibitions in Rule 7.3.

Q: What concerns did the committee raise about the implant letter?

A: The opinion flagged the letter under Rule 7.1 and Rule 1.1, identifying as potentially misleading the claim that the firm's lawyers were "very experienced" (only one had more than six years' Montana practice), the reduced-fee representation, and the statement that defective knee implants were on the market.

Q: Could the prepaid plan sponsor access the provider firm's client intake records?

A: No. The opinion concluded Rule 1.6 barred the sponsor's access because the records contained confidential information, members were not told the sponsor could see it, and their informed consent after consultation was not obtained.

Q: Does subscribing to a prepaid plan make someone the provider firm's client?

A: The opinion says no; mere subscription does not create an attorney-client relationship, and the threshold coverage information given to the sponsor is not confidential. A relationship may form once the member contacts the firm and discloses confidential information.

Background and rules framework

The opinion applies Montana's lawyer-advertising rules as they stood in 2001: Rule 7.1 (Communications Concerning a Lawyer's Services; Model Rule 7.1), barring false or misleading communications; Rule 7.2 (Advertising; Model Rule 7.2); and Rule 7.3 (Direct Contacts with Prospective Clients; Model Rule 7.3). It applies Rule 1.6 (Confidentiality of Information; Model Rule 1.6) to the intake records and Rule 1.1 (Competence; Model Rule 1.1) to the firm's experience claims. The committee cited its earlier marketing opinions 870709, 941221, 951027, and 951230, and ABA Formal Opinion 90-358 and its own Opinion 010830 on prospective-client confidentiality.

Citations and references

Rules of Professional Conduct:

• Mont. R. Prof. Cond. 7.1, 7.2, 7.3 (advertising and direct contact) / Model Rules 7.1, 7.2, 7.3
• Mont. R. Prof. Cond. 1.6 (confidentiality), 1.1 (competence) / Model Rules 1.6, 1.1

Other opinions cited:

• ABA Formal Opinion 90-358 (information imparted by a prospective client)
• Montana Ethics Opinions 870709, 941221, 951027, 951230 (marketing and mailings), 010830 (prospective-client confidentiality)

See also

• State Bar of Montana Ethics Op. 941221: Solicitation by Targeted Mailing
• State Bar of Montana Ethics Op. 010830: Prospective Clients and Taint-Shopping
• NY State Bar Op. 428: Prepaid Legal Service Brochure
• NY State Bar Op. 416: Group Legal Service Plan Guidelines

Source

• Landing page: https://www.montanabar.org/For-Attorneys/State-Bar-Resources/Ethics-Opinions
• Original PDF: https://www.montanabar.org/Portals/MONTANA/011114.pdf

Original opinion text

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

ETHICS OPINION

FACTS: A provider law firm for a pre-paid legal services business requests the Ethics Committee review two of their marketing mailings as well as the propriety of the firm sharing information gathered by it with the pre-paid plan sponsor.

The pre-paid plan sponsor sells memberships that entitle members to certain legal services free of charge and to others at a reduced rate. The free benefits include the preparation of a will, living will and power of attorney. The premium is paid to the pre-paid plan sponsor and the provider firm receives a monthly per capita payment from the pre-paid plan sponsor. In an attempt to persuade the members to take advantage of the will benefit provided (and enhance membership retention), the provider firm proposes to mail the following postcard to their active members:

   As the [pre-paid legal service] provider law firm for the State of Montana, we are writing to request that you take advantage of the will preparation benefits afforded to you as part of your membership. As a [pre-paid legal service] member you are entitled to the following free benefits:

   o Preparation of your Will;
   o Preparation of your Living Will;
   o Preparation of your Durable Power of Attorney.

   As mentioned, all of these items will be prepared for you at no charge. In order to take full advantage of these benefits, please call us at [their 800#]. Thank you for the opportunity to continue to assist you with your legal needs.

The firm is also proposing to send the following letter to the pre-paid legal service members in the State:

                           THIS IS AN ADVERTISEMENT

   Dear Pre-Paid Member:

   Re: Hip and Knee Implants

   If you currently have an attorney representing you on these matters, please disregard this advertisement. It has recently been announced that certain hip implants which were marketed primarily in the United States between July, 1997, and December, 2000, are being recalled. Approximately 17,500 of these defective "hip joints" have been implanted into patients. It appears that most, if not all, of these defective components will have to be surgically removed. Perhaps you have seen news coverage of this problem. Although it has not been on the news, it now appears that there may be defective knee joint implants on the market as well.

   A number of people who have received these defective joints have contacted us to ask about their legal rights. It is our opinion that anyone who has received one of these defective joints may be entitled to substantial monetary damages. As your Pre-Paid provider firm, we have a number of lawyers who are very experienced both in products liability cases and in any kind of medical/legal case. We are available to consult with you at any time at no cost if you think you have received one of the defective hip implants or one of the possibly defective knee implants.

   If you elect to have us represent you against the manufacturer, we will do so on a contingency fee basis and at the usual Pre-Paid discount rate. A contingency fee arrangement means that we will not bill you for our services but will be paid a percentage of any amounts recovered for you. If we do not win or settle your case, you will owe us nothing for attorney fees, although you may be liable for costs.

   If you believe or a family member feels you or they might have a claim for a defective hip, knee or other joint implant, please call us for a consultation. We can advise you at no cost regarding your legal rights and options, and can potentially help you decide what action, if any, you should take.

   If you call us, please make reference to this letter. Remember, your Pre-Paid membership is valuable, but only if you use it when it is necessary.

   In a separate matter, the pre-paid plan sponsor is proposing that the Montana member firm join the pre-paid plan sponsor's computer network so that the pre-paid plan sponsor has access to the Montana firm's member intake records. The intake records include information on the member's specific legal issue, the facts giving rise to that issue and the advice or recommendations given by the attorney in response, as well as the name, address, phone number, membership number, and listing of covered dependants of the insured. No mechanisms are available for the firm to monitor the pre-paid plan sponsor's access to or use of the information gleaned from the firm's intake records. The member is not advised in advance that this information may be accessed by the pre-paid plan sponsor and the member's consent is not obtained prior to it being accessed by the pre-paid plan sponsor.

QUESTIONS PRESENTED:

1. Does the information contained in the postcard and letter violate Rules 7.2 and 7.3 of the Montana Rules of Professional Conduct?

2. Does Rule 1.6 of the Montana Rules of Professional Conduct preclude the pre-paid legal service plan sponsor's unfettered access to the information contained in the provider firm's intake records?

SHORT ANSWERS:

1. Both the postcard and letter comply with the constraints of Rules 7.2 (Advertising) and 7.3 (Direct Contact with Prospective Clients); however, as to the letter, the provider firm should consider the added cautions of Rule 7.1 (Communications Concerning a Lawyer's Services), and Rule 1.1 (Competence).

2. Yes.

DISCUSSION:

A threshold issue to these inquiries is whether the members of the pre-paid plan are the clients of the provider law firm before any contact with the firm. It is the opinion of this Committee that the mere subscription to a pre-paid legal service plan does not create an attorney-client relationship. The pre-paid plan sponsor is not a law firm. The threshold information provided to the pre-paid plan sponsor to initiate coverage therefore is not deemed confidential, nor subject to any attorney-client privileges. If a member utilizes their benefit and contacts the provider firm, an attorney-client relationship may be created. The key element for determining when an attorney-client relationship is entered is whether confidential information has been disclosed by the client to the provider firm lawyer. See ABA Formal Opinion 90-358 and Montana Ethics Committee Opinion 010830.

The postcard and letter as proposed do not run directly afoul of Montana Rules of Professional Conduct 7.2 and 7.3. The letter, however, could potentially encounter challenges within Rule 7.1 and Rule 1.1. The Rules regulating what information attorneys may offer about legal services provide:

      RULE 7.1 Communications Concerning a Lawyer's Services

            A lawyer shall not make 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; or
            (c) compares the lawyer's services with other lawyer's services, unless the comparison can be factually substantiated.

      RULE 7.2 Advertising

            (a) Subject to the requirements of Rule 7.1, a lawyer may advertise services through public media, such as a telephone directory, legal directory, newspaper or other periodical, outdoor, radio or television, or through written communication not involving solicitation as defined in Rule 7.3.

           (b) A copy or recording of an advertisement or written communication shall be kept for two years after its last dissemination along with a record of when and where it was used.
           (c) A lawyer shall not give anything of value to a person for recommending the lawyer's services, except that a lawyer may pay the reasonable cost of advertising or written communication permitted by this rule and may pay the usual charges of a not-for-profit lawyer referral service or other legal service organization.
           (d) Any communication made pursuant to this rule shall include the name of at least one lawyer responsible for its content.

   RULE 7.3 Direct Contacts with Prospective Clients

           A lawyer shall not contact, or send a written communication to a prospective client for the purpose of obtaining professional employment, if:

           (a) the lawyer knows or reasonably should know that the physical, emotional, or mental state of the person is such that the person cannot exercise reasonable judgment in employing a lawyer;
           (b) the person has made known to the lawyer a desire not to receive a communication from the lawyer; or
           (c) the lawyer reasonably should know that the communication involves coercion, duress or harassment;
           (d) the lawyer reasonably should know that the person is already represented by another lawyer.

The Ethics Committee has issued several previous opinions discussing marketing mechanisms and mailings: 870709, 941221, 951027, and 951230. Those Opinions discuss in considerable detail Montana's rules regulating what information attorneys may offer about legal services. In particular, Ethics Opinion 941221 discusses the history of our Rules and their significant permissiveness compared to the ABA's Model Rules.

The facts supplied indicate that the prohibitions of Rule 7.3 are not involved and that the postcard and letter comply with the requirements of Rule 7.2. Notable, however, are the confines of Rule 7.1. The provider firm must assure that all advertising is accurate and that it does not mislead or create unjustified expectations. The Committee recognizes that the advertisement is intended as loss leader advertising in that it has the undisclosed agenda of luring remunerative business to the firm using the "bait" of free services. The Committee's opinion is that this particular loss leader advertising does not violate the ethical rules. However, the Committee encourages attorneys who utilize loss leader advertising to analyze the issue of whether their loss leader advertising is misleading.

Further, Rule 1.1 provides that "A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation." The Committee raises the issues of competence and accuracy in light of the fact that only one of the provider firm members has more than six years' experience in the practice of law in Montana. The letter represents: "[a]s your Pre-Paid provider firm, we have a number of lawyers who are very experienced both in products liability cases and in any kind of medical/legal case."

The Ethics Committee feels that while, on balance, it is left to the provider firm to determine if this is, in fact, an accurate representation of the firm's competence, the statement seems an exaggeration.

Another potential misrepresentation exists in the context whether the member is entitled to a reduced attorney fee: as we understand it, the member is told that in becoming a member of the plan, they pay reduced attorney fees. The provider firm must assure that the client actually receives a reduced fee.

An additional area where the accuracy of representation is unclear is the statement: "it now appears that there may be defective knee joint implants on the market as well." Simply put, is it true that there is an acknowledged defective knee joint that has been implanted? Or is the letter passing along rumor?

The pre-paid plan raises several remaining areas of concern central to Rule 1.6:

1. Rule 1.6 precludes the pre-paid legal service plan sponsor's unfettered access to the information contained in the provider firm's intake records. The pertinent portion of Rule 1.6 provides: "[a] lawyer shall not reveal information relating to representation of a client unless the client consents after consultation, except for disclosures that are impliedly authorized in order to carry out the representation..." As set out above, the intake records include information generally considered confidential and the member is not advised that the information given to the firm may be accessed by the pre-paid plan sponsor.

The pre-paid plan sponsor should have no dealings with plan subscribers on legal issues after their matters have been referred to a lawyer. Once the lawyer-client relationship exists between the plan member and the participating lawyer, that relationship must be no different from the traditional lawyer-client relationship. The plan member becomes a client of the lawyer providing the services, and there should be no interference with that relationship by the plan sponsor. Plan quality control mechanisms are unacceptable to the extent that they lead to disclosure by the lawyer of the information relating to the representation.

2. The client consent required to over-ride the confidentiality protection must be informed consent after consultation. Merely including a prospective waiver in the plan's documents is not sufficient to permit plan sponsor's access to intake records. "Consultation" is defined in the Model Rules as "communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question." Model Rules of Professional Conduct, Terminology (1999).

The facts presented indicate that the members are unaware of the plan sponsor's interest in access to the provider firm's records. Consent clearly is not accomplished. The suggestion that there might be mechanisms available for the firm to monitor the plan sponsor's access to or use of the information gleaned from the firm's intake records is moot. Such access is unacceptable absent informed client consent after consultation.

CONCLUSION:

The proposed postcard and letter do not run directly afoul of Rules 7.2 (Advertising) and 7.3 (Direct Contact with Prospective Clients). However, there is potential that the letter overstates the experience of the firm or could otherwise be misleading, perhaps in violation of Rule 7.1 (Communications Concerning a Lawyer's Services), and Rule 1.1 (Competence).

The plan sponsor's interest in access to the provider firm's records is precluded by Rule 1.6 (Confidentiality), absent informed client consent after consultation.

                             THIS OPINION IS ADVISORY ONLY