Can a lawyer join a for-profit company's co-op TV ad campaign that rotates incoming calls among participating lawyers?

Plain-English summary

A South Carolina lawyer proposed to join a co-op TV advertising contract with a for-profit, out-of-state, non-lawyer advertising company. Other lawyers licensed in South Carolina and neighboring states would also participate in a rotation: the lawyer at the top of the rotation receives the next call from the advertiser's call center, then moves to the bottom. Each participant pays a pro-rata share of the total advertising costs (production, air time, administration, and a reasonable profit for the company), monthly or yearly, regardless of call volume or how many calls turn into cases. The non-lawyer call-center operators exercise no discretion on the merits of any case, functioning only to identify personal-injury or death claims and connect callers to the lawyer at the top of the rotation; the inquiring lawyer would receive only South Carolina calls and reviews the ads for Rule 7.1 and 7.2 compliance. The inquiry asked whether the lawyer may enter this arrangement.

The committee concluded the lawyer may, provided the advertisements and the relationship with the company are carefully structured to comply with Rules 7.1, 7.2, 7.4, and 7.5. The core question was whether the scheme is the reasonable cost of advertising allowed under Rule 7.2(c)(1) or a for-profit lawyer referral service, which is not allowed. Rule 7.2(c) bars giving anything of value for recommending a lawyer's services but excepts the reasonable costs of advertisements (7.2(c)(1)) and the usual charges of a not-for-profit lawyer referral service (7.2(c)(2)); comment 7 recognizes that group advertising is permitted. The committee found the scheme involves only the reasonable costs of lawyer advertising, not a referral service.

The company cannot meet the 7.2(c)(2) exception because it is for-profit. To meet the 7.2(c)(1) exception, the advertisement must be for the lawyer's services, the costs must be reasonable, and the content must satisfy Rule 7.2. The committee took the inquirer at his word that he would review the ads, but pointed out that Rule 7.2 requires the office address of a South Carolina lawyer, while the inquiry indicated only the lawyer's name and geographic location appear. The committee advised that, to avoid misleading the public, the ad should state that the advertising company is not acting as a referral service and performs no screening function but merely serves as the advertising lawyers' agent, must avoid labels like "Legal Helpline" or "Injury Hotline" that combined with a toll-free number might imply a bar, governmental, or charity affiliation, and may not falsely imply a practice affiliation among the advertising lawyers. The ad must also comply with Rules 7.4 and 7.5.

In practice

The opinion holds that, under South Carolina Rule 7.2(c)(1), a lawyer may participate in a for-profit company's co-op TV advertising campaign with call rotation, because the pro-rata payments are the reasonable cost of advertising rather than a prohibited for-profit referral service (the for-profit company cannot use the 7.2(c)(2) not-for-profit referral exception). The opinion conditions this on the ad being for the lawyer's services, the costs being reasonable, and the content meeting Rules 7.1, 7.2, 7.4, and 7.5: it must carry a responsible South Carolina lawyer's office address (not just name and location), should state the company is the lawyers' agent and not a screening referral service, must avoid helpline/hotline labels implying official affiliation, and must not falsely imply a practice affiliation among the lawyers.

Common questions

Q: Can a lawyer join a for-profit company's group TV ad that rotates calls to participating lawyers?

A: Yes, if structured carefully. The committee said the arrangement is the reasonable cost of advertising under Rule 7.2(c)(1), not a for-profit referral service, provided it complies with Rules 7.1, 7.2, 7.4, and 7.5.

Q: Why isn't this a prohibited lawyer referral service?

A: Because it is group advertising, not referral. The committee said the company is for-profit (so it cannot use the not-for-profit referral exception in 7.2(c)(2)) and the call-center operators exercise no discretion on the merits, so the payments are the reasonable costs of advertising under 7.2(c)(1); comment 7 recognizes group advertising.

Q: What must the advertisement include?

A: A responsible South Carolina lawyer's office address. The committee pointed out that Rule 7.2 requires the office address of a South Carolina lawyer, while the proposal showed only the lawyer's name and geographic location.

Q: What wording must the ad avoid?

A: Anything implying screening or official affiliation. The committee said the ad should state the company is the lawyers' agent and not a screening referral service, must avoid labels like "Legal Helpline" or "Injury Hotline" that imply a bar, governmental, or charity affiliation, and may not falsely imply a practice affiliation among the lawyers.

Background and rules framework

The opinion interprets South Carolina Rule 7.2(c) and its exceptions, 7.2(c)(1) (reasonable costs of advertisements) and 7.2(c)(2) (not-for-profit lawyer referral service charges), with comment 7 (group advertising), plus Rules 7.1, 7.4, and 7.5, all corresponding to the like-numbered Model Rule advertising provisions of the period. The analysis turns on classifying the payments as advertising costs rather than referral fees and on ensuring the advertisement's content does not mislead the public.

Citations and references

Rules of Professional Conduct:

• MR 7.2 / SC Rule 7.2(c)(1) (reasonable cost of advertising), 7.2(c)(2) (not-for-profit referral service), Comment 7 (group advertising)
• MR 7.1 / SC Rule 7.1 (no false or misleading communications)
• MR 7.4 / SC Rule 7.4 (communication of fields of practice)
• MR 7.5 / SC Rule 7.5 (firm names and designations)

See also

• SC Bar Ethics Op. 11-05: Daily-Deal Legal Services
• SC Bar Ethics Op. 06-13: Referrals From a Trade Association
• AL Ethics Op. 1991-43: Attorney Hotline

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-13-05/
• Original PDF: https://www.scbar.org/media/af4ds1ar/13-05.pdf

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 13-05

Facts

Lawyer A, a South Carolina lawyer, proposes to enter into a co-operative style TV based advertising contract with a for profit, non-lawyer, out-of-state third party advertising company, Company B. Other attorneys licensed in South Carolina and its neighboring states will also join and participate in the advertising campaign, a rotation- based system where the attorney at the top of the rotation receives the next call from advertiser’s call center, then moves to the bottom of the rotation. Costs of advertising for each participating member are based on a pro-rata share for each participating attorney of the total advertising costs of production of ads, television air time costs, administration expenses and a reasonable profit for Company B, paid monthly or yearly by each attorney, regardless of call volume, or the number of calls made to any participating member which are accepted by attorneys as new cases.

The non-lawyer call center operators exercise no discretion in the handing of calls as to the merits of any particular case, but functions only to identify those that involve a claim for personal injury or death. The call center operator connects the caller to the attorney’s office at the top of the rotation, at which time he moves to the bottom of the rotation. Lawyer A will only receive calls originating from South Carolina.

The ads contain the names of all participating attorneys and their geographic location, and the television signal reaches into portions of the two states contiguous to South Carolina. Attorney A reviews the ads before airing to ensure compliance with Rules 7.1 and 7.2 of the S.C. Rules of Professional Responsibility.

Question

1. Can attorney A enter into such advertising arrangement consistent with the South Carolina Rules of Professional Responsibility?

Summary

Yes, provided the advertisements and relationship with Company B are carefully structured to comply with Rules 7.1, 7.2, 7.4 and 7.5. Advertisements must include the name and office address of a responsible South Carolina attorney and, in order to avoid misleading the public, should state that the advertising company is not acting as a referral service and not performing any screening function, but merely serving as an agent of the advertising lawyers. The advertisement must also avoid misleading the public with labels such as “Legal Helpline” or “Injury Hotline” that, combined with a toll-free number, might imply a bar or other governmental or charity affiliation. Finally, the advertisement may not falsely imply a practice affiliation among the advertising lawyers.

Opinion

The issue in this inquiry is whether the group advertising scheme described by the inquirer amounts to the reasonable costs of advertising, which is allowed under Rule 7.2(c)(1), or a for profit lawyer referral service, which is not. Rule 7.2(c) prohibits a lawyer from “giv[ing] anything of value to a person for recommending the lawyer’s services,” and provides exceptions including “the reasonable costs of advertisements,” see Rule 7.2(c)(1), and “the usual charges of … a not-for-profit lawyer referral service,” see Rule 7.2(c)(2). Comment 7 to Rule 7.2 acknowledges that “group advertising” is permitted. The Committee believes the scheme described involves only the reasonable costs of lawyer advertising and not a lawyer referral service.

Company B cannot satisfy the (c)(2) exception because it is a for-profit entity. In order to satisfy the (c)(1) exception, 1) the advertisement must be an advertisement for the lawyer’s services, 2) the costs must be “reasonable,” and 3) the content of the ad must be “permitted by this rule,” meaning the content of the ad must satisfy the requirements of Rule 7.2. The inquiry states that Lawyer A will review the ad and ensure its compliance with Rules 7.1 and 7.2. The Committee takes the inquirer at his word, but points out that Rule 7.2 requires the office address of a South Carolina lawyer, whereas the inquiry indicates only the lawyer’s name and geographical location appear. The Committee further advises that the advertisement must also comply with Rules 7.4 and 7.5 in addition to the many details of Rules 7.1 and 7.2.