When out-of-state co-counsel runs ads that may refer cases to a South Carolina firm, must the South Carolina firm be named in the ads?

Plain-English summary

A South Carolina firm was developing a multi-state litigation practice with out-of-state associated co-counsel who would run advertisements outside South Carolina to seek clients. The two would often work together, but in some circumstances the out-of-state co-counsel might merely refer cases to the South Carolina firm. The question was to what extent the South Carolina firm must be identified in those out-of-state ads.

The committee concluded the South Carolina firm should be identified in any advertisement run by the co-counsel that may result in a referral. Under Rule 7.1, a lawyer may not make false or misleading communications, and an ad that omits the South Carolina firm's involvement could be materially misleading because it omits a material fact about the nature of the representation. Under Rule 7.2(e), a lawyer may not pay all or part of the cost of another firm's advertisement unless the ad discloses the nonadvertising lawyer's name and address, the relationship between the two lawyers, and whether the advertising lawyer may refer cases received through the ad to the nonadvertising lawyer. The committee cited Ethics Advisory Opinion 99-01 (anonymous "advertising cooperative" ads are unethical). Finally, Rule 7.2(i) requires every ad to disclose the geographic location of the office where the lawyer who will actually perform the services principally practices.

In practice

Under this opinion, on the facts presented, the South Carolina firm must be named in out-of-state co-counsel advertising that may produce a referral to it. The committee anchored that to three requirements: Rule 7.1 (omitting the firm's involvement can be materially misleading), Rule 7.2(e) (a firm paying any part of another's ad must disclose the nonadvertising firm, the relationship, and whether referrals may flow), and Rule 7.2(i) (the ad must show where the lawyer who will actually do the work practices).

Common questions

Q: If my out-of-state co-counsel advertises and may send me the cases, do I have to be named in the ads?

A: The opinion concludes you should be identified in any ad that may result in a referral to your firm, under Rules 7.1, 7.2(e), and 7.2(i).

Q: Why would leaving my firm out be misleading?

A: Under Rule 7.1, omitting the firm's involvement in the litigation can be a material omission that makes the ad, considered as a whole, materially misleading about the nature of the representation.

Q: What must the ad disclose if I help pay for it?

A: Per Rule 7.2(e), the name and address of the nonadvertising lawyer, the relationship between the advertising and nonadvertising lawyers, and whether the advertising lawyer may refer cases from the ad to the nonadvertising lawyer; Rule 7.2(i) adds the office location where the work will principally be done.

Background and rules framework

The opinion applies South Carolina's versions of Model Rule 7.1 (communications about a lawyer's services) and Model Rule 7.2 (advertising), specifically SC Rule 7.2(e) (paying for another lawyer's advertising) and Rule 7.2(i) (disclosure of the office location), in the South Carolina Rules of Professional Conduct, Rule 407, SCACR.

Citations and references

Rules of Professional Conduct:

• MR 7.1 / SC Rule 7.1(a) (false or misleading communications; material omissions)
• MR 7.2 / SC Rule 7.2(e) (paying for another firm's advertising; required disclosures)
• MR 7.2 / SC Rule 7.2(i) (disclosure of the office location where services are performed)

Other opinions cited:

• SC Ethics Advisory Opinion 99-01 (anonymous "advertising cooperative" pooling expenses is unethical)

See also

• SC Bar Ethics Op. 04-06: Descriptive law-firm website addresses
• ABA Formal Op. 501: Solicitation of clients

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-04-05/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 04-05

Facts
South Carolina firm is developing a multi-state litigation practice. South Carolina firm’s associated co-counsel, who is from another state, will run advertisements outside of South Carolina regarding the potential litigation for the purpose of seeking clients. South Carolina firm and the associated co-counsel will likely work on the litigation together; nevertheless, under some circumstances, out-of-state co-counsel may merely refer cases to South Carolina firm and not actually work on the referred cases.

Question
To what extent, if any, must the South Carolina firm be identified in the advertisements that are run outside of South Carolina?

Summary
In general, a lawyer may advertise through any media so long as the content of the advertisement is not false or misleading. Rule 7.1, SCRPC. In addition, the nonadvertising lawyer may not pay for the costs of advertising unless certain conditions are met, including disclosing whether the advertising lawyer may refer any case received through the advertisement to the nonadvertising lawyer. Rule 7.2(e), SCRPC. Moreover, an advertisement must disclose the geographic location of the office of the lawyer who will actually perform the services advertised. Rule 7.2(i), SCRPC. Thus, under the facts presented, Rules 7.1, 7.2(e) and 7.2(i), South Carolina firm should be identified in any advertisements run by the out-of-state co-counsel that may result in a referral.

Opinion
Under Rule 7.1, SCRPC, a “lawyer shall not make false, misleading, deceptive, or unfair communications about the lawyer or the lawyer’s services.” Advertising would violate this rule if it contains a “material misrepresentation of fact…or omits a fact necessary to make the statement considered as a whole not materially misleading….” Rule 7.1(a), SCRPC. Therefore, any out-of-state advertisements that do not disclose South Carolina firm’s involvement in the litigation may be considered materially misleading under Rule 7.1 because it omits a material fact concerning the nature of the potential client representation.

More specifically, under Rule 7.2, SCRPC, a nonadvertising lawyer may not pay for the costs of advertising unless certain conditions are met. Rule 7.2 provides, in pertinent part:

No lawyer shall, directly or indirectly, pay all or a part of the cost of an advertisement by a lawyer not in the same firm unless the advertisement discloses the name and address of the nonadvertising lawyer, the relationship between the advertising lawyer and the nonadvertising lawyer, and whether the advertising lawyer may refer any case received through the advertisement to the nonadvertising lawyer. Rule 7.2(e), SCRPC (emphasis added).

Under this prohibition, if South Carolina firm in any way pays for the advertising, which under the facts presented may result in client referrals, then South Carolina firm would be required to be identified in the advertisements in accordance with Rule 7.2(e). See, e.g., Ethics Advisory Opinion 99-01 (use of an “advertising cooperative” to run anonymous advertisements on behalf of lawyers who pool their expenses is unethical).

Finally, Rule 7.2(i) further requires all advertisements to disclose the geographic location of the office in which the lawyer who will actually perform the services advertised principally practices law. Rule 7.2(1), SCRPC. Thus, the failure to identify South Carolina firm in out-of-state advertisements resulting in referrals is impermissible under the South Carolina Rules of Professional Conduct.