Can a North Carolina lawyer participate in a for-profit online group advertising service that gives each lawyer exclusive rights to a zip code?

Plain-English summary

The inquiry concerns Total Attorneys, a for-profit company that, for an advertising fee, licenses each participating lawyer to use a topic-specific website (such as TotalBankruptcy.com) to advertise the lawyer's services. The license is geographically exclusive: only one lawyer per zip code may use a given site. Consumers who contact the site through a toll-free number or online form are forwarded to the participating lawyer for their zip code, and the call center does no screening or evaluation of the consumer's legal concern.

The opinion concludes that a lawyer may participate, provided each website fully, accurately, and prominently discloses several things: that it provides paid group advertising to lawyers; that it is not a law firm and cannot give legal advice; that it is not a referral service; that it does not recommend or endorse a particular lawyer; that it does not vouch for participating lawyers' qualifications; and that each participating lawyer is licensed to use the site and has paid to be the sole lawyer listed for a particular zip code.

The opinion treats the dividing line between permissible group advertising and a prohibited for-profit referral service as turning on disclosure and the absence of fee sharing. It finds the reasoning of the Arizona State Bar (Op. 2011-02) and the New Jersey Advisory Committee on Advertising (Op. 43) persuasive: with sufficient disclosure that the website's purpose is advertising rather than referral, and disclosure of the exclusive territorial arrangement, concerns about misleading the public are alleviated. So long as the disclosures are truthful and the service does not share legal fees, the arrangement is group advertising, not a for-profit lawyer referral service, citing 2004 FEO 1. To the extent 2012 FEO 10 (which had found a similar exclusive arrangement to be a prohibited for-profit referral service under Rule 7.2(d)) is inconsistent, the opinion overrules it.

In practice

Under the North Carolina rules as they stood at the time of the opinion, conduct in which a lawyer participates in a zip-code-exclusive online advertising service is permitted if the conditions the opinion sets are met: full, accurate, and prominent disclosure of the service's advertising nature, that it is not a law firm or a referral service, that it does not endorse or vouch for lawyers, and that each lawyer paid for sole listing in a zip code, with no sharing of legal fees.

Per the opinion, the analysis turns on disclosure and fee sharing: a service that truthfully discloses it is advertising (not referral) and does not take a share of legal fees is group advertising rather than a referral service prohibited by Rule 7.2(d). The opinion expressly overrules the contrary portion of 2012 FEO 10.

Common questions

Q: Can a North Carolina lawyer join a for-profit online ad service that gives each lawyer an exclusive zip code?

A: Yes, if the disclosure conditions are met. The opinion concludes a lawyer may participate provided each website fully, accurately, and prominently discloses that it is paid group advertising, not a law firm, and not a referral service, and that each lawyer paid to be the sole lawyer for a zip code.

Q: What exactly must the website disclose?

A: That it provides paid group advertising to lawyers; that it is not a law firm and cannot give legal advice; that it is not a referral service; that it does not recommend or endorse a particular lawyer; that it does not vouch for lawyers' qualifications; and that each participating lawyer is licensed to use the site and paid to be the sole lawyer listed for a zip code.

Q: What makes this group advertising rather than a prohibited referral service?

A: Per the opinion, disclosure and the absence of fee sharing. With truthful disclosure that the site's purpose is advertising and disclosure of the exclusive territorial arrangement, and no sharing of legal fees, the service is group advertising and not a for-profit referral service barred by Rule 7.2(d).

Q: Does this opinion change the prior North Carolina position?

A: Yes in part. The opinion overrules 2012 FEO 10 to the extent it is inconsistent; 2012 FEO 10 had treated a similar exclusive arrangement as a prohibited for-profit referral service.

Background and rules framework

The opinion applies North Carolina's advertising rules, Rule 7.1 (communications about a lawyer's services must be truthful and not misleading, the analogue of Model Rule 7.1) and Rule 7.2 (advertising; Rule 7.2(d) prohibits giving anything of value for a recommendation, the analogue of Model Rule 7.2 and its bar on for-profit referral services). The dispositive question is whether the online service is group advertising the lawyer may pay for, or a for-profit referral service the lawyer may not.

The opinion relies on prior North Carolina authority, 2004 FEO 1 (a lawyer may participate in an online service resembling both a referral service and a directory if there is no fee sharing and all communications are truthful), and on out-of-state opinions from Arizona and New Jersey reaching the same conclusion about territorial exclusivity.

Citations and references

Rules of Professional Conduct:

• MR 7.1 / NC Rule 7.1 (truthful communications about a lawyer's services)
• MR 7.2 / NC Rule 7.2 (advertising; Rule 7.2(d) bar on paying for recommendations / for-profit referral services)

Other opinions cited:

• Ariz. State Bar Comm. on the Rules of Prof'l Conduct, Op. 2011-02 (2011): territorial-exclusivity Internet advertising is permissible with disclosure.
• NJ Advisory Comm. on Prof'l Ethics, Op. 43 (2011): territorial exclusivity permissible when disclosed and the site does not assess legal needs or vouch for the lawyer.
• NC 2012 FEO 10: overruled to the extent inconsistent (had treated a similar arrangement as a prohibited for-profit referral service).
• NC 2004 FEO 1: a lawyer may participate in an online directory/referral-like service absent fee sharing and with truthful communications.

See also

• AL Ethics Op. 2012-01: Groupon Legal Deals
• CA Op. 2001-155: Law Firm Website Advertising Rules
• DC Ethics Op. 329: Nonprofit Referral Fee Costs

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2013-formal-ethics-opinion-10/

Original opinion text

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

Facts:

Total Attorneys is a for-profit company that provides group advertising services to lawyers. In exchange for an advertising fee, Total Attorneys provides participating lawyers with a license to use a Total Attorneys website (TotalBankruptcy.com or TotalDivorce.com, for example) to advertise the participating lawyer’s legal services. The license is geographically exclusive and only one lawyer within a particular zip code is licensed to use the advertising site. Participating lawyers pay a specified fee per contact per month to cover the costs of advertising and marketing services, including the design and operation of the website, telephone support services, and customer management software.

Total Attorneys establishes and maintains a website that provides consumers with information on certain legal subjects such as bankruptcy law. Consumers who wish to contact the participating lawyer within the consumer’s zip code may either call a toll free number provided by the website call center, or fill out an online contact form. Total Attorneys forwards the contact to the participating lawyer. The interactions between the website call center and the consumer are limited to obtaining basic information and facilitating the first contact with the participating lawyer. The website call center does not engage in any screening or evaluation of the consumer, or the consumer’s potential legal concern.

Each page on the website includes a disclaimer similar to the following:

PAID ATTORNEY ADVERTISEMENT: THIS WEB SITE IS A GROUP ADVERTISEMENT AND THE PARTICIPATING ATTORNEYS ARE INCLUDED BECAUSE THEY PAY AN ADVERTISING FEE. It is not a lawyer referral service or prepaid legal services plan. Total Bankruptcy is not a law firm. Your request for contact will be forwarded to the local lawyer who has paid to advertise in the ZIP code you provide. Total Bankruptcy does not endorse or recommend any lawyer or law firm who participates in the network, nor does it analyze a person's legal situation when determining which participating lawyers receive a person's inquiry. It does not make any representation and has not made any judgment as to the qualifications, expertise, or credentials of any participating lawyer. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. The information contained herein is not legal advice. Any information you submit to Total Bankruptcy does not create an attorney-client relationship and may not be protected by attorney-client privilege. Do not use the form to submit confidential, time-sensitive, or privileged information. All photos are of models and do not depict clients. All case evaluations are performed by participating attorneys. An attorney responsible for the content of this site is Kevin W. Chern, Esq., licensed in Illinois with offices at 25 East Washington, Suite 400, Chicago, Illinois 60602. To see the attorney in your area who is responsible for this advertisement, please click here, or call 866-200-8052.

Inquiry:

May a lawyer participate in the online legal service described above?

Opinion:

Yes, provided each Total Attorneys website fully, accurately, and prominently discloses the following: it provides paid group advertising services to lawyers; it is not a law firm and cannot provide legal advice; it is not a referral service; it does not recommend or endorse a particular lawyer; it does not vouch for the qualifications of participating lawyers; and each participating lawyer is licensed to use the advertising site and has paid to be the sole lawyer listed for a particular zip code.

The Arizona State Bar issued an ethics opinion that holds that a lawyer may ethically participate in an Internet-based group advertising program that limits participation to a single lawyer for each zip code from which prospective clients may come, provided the service fully and accurately discloses its advertising nature and, specifically, that each lawyer has paid to be the sole lawyer listed for a particular zip code. Ariz. State Bar Comm. on the Rules of Prof’l Conduct, Op. 2011-02 (2011).

The New Jersey Advisory Committee on Advertising similarly concluded that territorial exclusivity is permissible when such exclusivity is disclosed, the methodology for the selection of the attorney based on zip code is made clear, and the website does not assess consumers’ legal needs or vouch for the qualifications of the participating attorney. NJ Advisory Comm. on Prof'l Ethics, Op. 43 (2011).

2012 FEO 10 examined numerous issues relative to a web-based company that provides litigation and administrative support services to “network” lawyers who represent clients with a particular type of legal matter (e.g., landlord’s eviction) while simultaneously providing non-legal services to the same clients. In response to the exclusive arrangement with each lawyer whereby no other network lawyer may provide legal services to a participating client in a designated territory, the opinion concludes that the service is a for-profit referral service prohibited by Rule 7.2(d).

Nevertheless, the reasoning of the Arizona State Bar and the New Jersey Committee on Advertising is persuasive. With sufficient disclosure that the purpose of the website is to provide advertising and not referrals, and with disclosure of the exclusive territorial arrangement with participating lawyers, any concerns about misleading members of the public are alleviated. Provided the disclosures are truthful and there is no sharing of legal fees with the service, Total Attorneys is merely group advertising and not a for-profit lawyer referral service. See 2004 FEO 1 (holding that a lawyer may participate in an online service that is similar to both a lawyer referral service and a legal directory provided there is no fee sharing with the service and all communications about the lawyer and the service are truthful).

To the extent 2012 FEO 10 is inconsistent with this opinion, it is overruled.