Can a North Carolina lawyer offer a free computer tablet to prospective clients in a direct-mail solicitation letter, and may the lawyer loan a tablet to a client after being hired?

Plain-English summary

A personal-injury lawyer wanted to use targeted direct-mail solicitation with a flyer offering "new clients" a computer tablet with a web cam to communicate with the lawyer, marked "issued free-of-charge." The flyer did not say the tablet was on loan; only after a client signed did an office-equipment agreement require the tablet to be returned (or purchased at cost) at the end of the representation. The committee answers two questions.

On Inquiry #1, the lawyer may not offer the tablet in the solicitation letter. Rule 7.1 bars false or misleading communications, and neither the letter nor the flyer made clear that the tablet was a loan, so the disclaimer was inadequate and misleading. Beyond that, even with an adequate disclaimer the campaign is impermissible: a lawyer may use direct-mail solicitation but may not engage in in-person, live, or telephone solicitation of prospective clients with no prior professional relationship (Rule 7.3), and Rule 7.3(a) bars lawyer-initiated telephone solicitation because of its potential for abuse. An offer of promotional merchandise, whether a loan or a gift, in a targeted solicitation letter is an inducement to call the lawyer's office solely to ask about the merchandise, giving the lawyer an improper opportunity to solicit the caller in person. The committee follows 2004 FEO 2 (no promotional merchandise in a targeted direct-mail solicitation as an inducement to call).

On Inquiry #2, after the client is hired the lawyer may loan a tablet, but within Rule 1.8(e), which bars financial assistance to a client connected with litigation except advancing court costs and litigation expenses. Per comment [10], lawyers may not subsidize lawsuits or fund living expenses, but may advance litigation costs and expenses. The committee concludes a lawyer may loan a tablet if it is necessary for the client to communicate with the lawyer or to collect evidence, it is not a quid pro quo for hiring the lawyer, and the client understands it is a loan that must be returned or purchased. A lawyer may not give a tablet for use unrelated to the representation, because that would be tantamount to loaning money for living expenses, citing 2001 FEO 7.

In practice

Under the North Carolina rules as they stood at the time of the opinion, the committee holds that an offer of promotional merchandise, including the tablet here, in a targeted direct-mail solicitation letter is impermissible. Per the opinion, the offer functions as an inducement to call the lawyer's office about the merchandise, which gives the lawyer an improper opportunity for the in-person or telephone solicitation that Rule 7.3 prohibits for prospective clients with no prior professional relationship; and the specific flyer was also misleading under Rule 7.1 because it did not disclose that the tablet was a loan.

For conduct after the engagement, the opinion holds that loaning a tablet to an existing client is permissible under Rule 1.8(e) only if the tablet is necessary for the client to communicate with the lawyer or to gather evidence for the matter, the loan is not a quid pro quo for the engagement, and the client understands the tablet is on loan and must be returned or purchased at the end of the representation. The opinion states a lawyer may not give a tablet for use unrelated to the representation, treating that as the equivalent of loaning money for living expenses.

Common questions

Q: Can a North Carolina lawyer offer a free tablet to prospective clients in a direct-mail letter?

A: No. The opinion holds offering promotional merchandise in a targeted direct-mail solicitation is an improper inducement to call the lawyer for in-person solicitation under Rule 7.3, and the flyer's "free" disclaimer was misleading under Rule 7.1 because it did not say the tablet was a loan.

Q: Would a clearer disclaimer make the solicitation offer permissible?

A: No. The opinion states that even with an adequate disclaimer the campaign is not permitted, because the offer of merchandise is an inducement to call that creates an improper opportunity for in-person solicitation, following 2004 FEO 2.

Q: After a client hires the lawyer, may the lawyer loan the client a tablet?

A: Yes, within Rule 1.8(e), if the tablet is necessary for the client to communicate with the lawyer or to collect evidence, it is not a quid pro quo for hiring the lawyer, and the client understands it is a loan to be returned or purchased.

Q: Could the lawyer just give the client a tablet to keep?

A: Not for use unrelated to the representation. The opinion holds giving a tablet for unrelated use would be tantamount to loaning money for living expenses, which Rule 1.8(e) prohibits, citing 2001 FEO 7.

Background and rules framework

The opinion interprets the advertising, solicitation, and client-financial-assistance rules. Rule 7.1 (Model Rule 7.1) bars false or misleading communications about a lawyer's services. Rule 7.3 (Model Rule 7.3) permits direct-mail solicitation but bars in-person, live, or telephone solicitation of prospective clients with no prior professional relationship; Rule 7.3(a) bars lawyer-initiated telephone solicitation. Rule 1.8(e) (Model Rule 1.8) bars financial assistance to a client connected with pending or contemplated litigation except advancing court costs and litigation expenses; comment [10] explains the rationale and the cost-advance exception.

The committee relies on 2004 FEO 2 (no promotional merchandise as an inducement in a targeted direct-mail solicitation) and 2001 FEO 7 (advancing the cost of a rental car prohibited where the vehicle is used only occasionally for transportation to medical exams).

Citations and references

Rules of Professional Conduct:

• Model Rule 7.1 / NC Rule 7.1 (false or misleading communications)
• Model Rule 7.3 / NC Rule 7.3, 7.3(a) (solicitation; in-person and telephone contact)
• Model Rule 1.8 / NC Rule 1.8(e) and cmt. [10] (financial assistance to a client; cost-advance exception)

Other opinions cited:

• 2004 FEO 2: a lawyer may not offer promotional merchandise in a targeted direct-mail solicitation letter as an inducement to call the lawyer's office.
• 2001 FEO 7: advancing the cost of a rental car is prohibited where the vehicle is used only occasionally for transportation to medical exams.

See also

• CA COPRAC Op. 1995-142: Targeted Direct-Mail Marketing of Legal Services
• ABA Formal Op. 501: Solicitation of Clients
• NC State Bar 2019 FEO 6: Prize as an Incentive to Engage Social Media
• Illinois Op. 95-06: Advancing Financial Assistance to a Client

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2015-formal-ethics-opinion-3/

Original opinion text

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

Inquiry #1:

Lawyer represents clients in personal injury matters. Lawyer advertises his legal services by way of targeted direct mail solicitation. The solicitation letter includes a flyer that states:

NEW CLIENTS TO LAW FIRM: NEW COMPUTER TABLET

New clients of law firm wishing to communicate electronically may be issued a computer tablet with an internet-capable web cam that will allow low cost-free video conferences and electronic mail directly with the lawyer.

Disclaimer: Any equipment issued is issued free-of-charge to new clients to better facilitate communication with the law firm during representation.

The flyer does not indicate that the computer tablet is on loan and must be returned to Lawyer at the conclusion of the representation.

After a client hires the firm, Lawyer presents the client with an office equipment agreement. The agreement provides that the tablet must be returned to Lawyer at the end of the representation and, at that time, the client will have the option to purchase the tablet at cost. The client must pay for the tablet if it is not returned timely and in good condition. If the tablet is damaged, the client agrees to repair the tablet, replace the tablet with one of equal value, or purchase the tablet at cost from Lawyer.

May Lawyer offer a computer tablet to a prospective client in a direct mail solicitation letter?

Opinion #1:

No. A lawyer shall not make false or misleading communications about the lawyer or the lawyer’s services. Rule 7.1. Neither Lawyer’s direct mail solicitation letter nor the flyer makes clear that the tablet is on loan and must be returned at the conclusion of the representation unless the client elects to purchase the tablet from Lawyer. The disclaimer included on the flyer is inadequate under the circumstances and is misleading.

Even with an adequate disclaimer, Lawyer’s direct mail solicitation campaign is not permissible. A lawyer may advertise legal services by way of direct mail solicitation letters, but is prohibited from engaging in in-person, live, or telephone solicitation of prospective clients with whom the lawyer has no prior professional relationship. Rule 7.3. Rule 7.3(a) prohibits lawyer-initiated telephone solicitation of a prospective client because of the potential for abuse inherent in live telephone contact by a lawyer with a person known to be in need of legal services. An offer of promotional merchandise, whether on loan or as a gift, in a targeted direct mail solicitation letter is an inducement to a prospective client to call the lawyer’s office solely to inquire about the merchandise, thereby giving the lawyer the improper opportunity to solicit the caller in person. 2004 FEO 2 (lawyer may not offer promotional merchandise in a targeted direct mail solicitation letter as an inducement to call the lawyer's office).

Inquiry #2:

Lawyer sends direct mail solicitation letters to prospective clients known to be in need of legal services. Lawyer does not offer merchandise to prospective clients in the solicitation letter. After being hired by a client, may Lawyer offer to clients temporary use of a computer tablet for purposes of communicating with Lawyer or gathering information and/or evidence to be used for the client’s matter?

Opinion #2:

Rule 1.8(e) prohibits a lawyer from providing financial assistance to a client in connection with pending or contemplated litigation, except the lawyer may advance court costs and expenses of litigation.

Pursuant to comment [10] to Rule 1.8:

Lawyers may not subsidize lawsuits or administrative proceedings brought on behalf of their clients, including making or guaranteeing loans to their clients for living expenses, because to do so would encourage clients to pursue lawsuits that might not otherwise be brought and because such assistance gives lawyers too great a financial stake in the litigation. These dangers do not warrant a prohibition on a lawyer lending a client court costs and litigation expenses, including the expenses of medical examination and the costs of obtaining and presenting evidence, because these advances are virtually indistinguishable from contingent fees and help ensure access to the courts. Similarly, an exception allowing lawyers representing indigent clients to pay court costs and litigation expenses regardless of whether these funds will be repaid is warranted. [Emphasis added.]

Lawyer may loan a tablet to a client provided the tablet is necessary for the client to communicate with Lawyer and/or for the collection of evidence; the tablet is not quid pro quo for hiring Lawyer or law firm; and the client understands that the tablet is not a gift, but is on loan and must be returned to Lawyer or purchased at the end of the representation. Lawyer may not give a tablet to a client solely for use that is unrelated to the representation because to do so would be tantamount to loaning money to the client for living expenses. See 2001 FEO 7 (advancing cost of rental car prohibited if vehicle used only occasionally for client’s transportation to medical exams).