Can a new bar group set up a members-only lawyer referral service and run radio ads touting a low consultation fee that undercuts an existing service?

Plain-English summary

The inquiry asked whether a group of attorneys may organize a bar association and (1) run a referral service composed of its members where a referral plan already operates in the territory, (2) broadcast radio spot announcements stating that "the (name of organization) has established a fee of only three dollars for consultations" and inviting listeners to contact the station for more information, and (3) advertise a minimum consultation fee lower than the existing association's. The Committee concluded the proposed conduct would be improper and a violation of Canon 24 (9-0).

The Committee began by noting that organizing a bar association is not unethical per se; any group of lawyers is free to organize one, and propriety does not depend on the State Bar's approval. The problem is purpose and manner. If the entire purpose of the group is to operate this referral plan in this way, the group is organized for an improper purpose; and operating the plan as proposed is improper for several reasons. Participation in a referral plan, as distinguished from membership in the particular association, should be open to all lawyers in the area in good standing with the State Bar. The advertising does not clearly show its purpose to be only to give beneficial information to the public; it contains no educational information about the desirability of legal services or the fact that most lawyers consult for reasonable fees. It stresses that "the members" of this particular association, rather than most lawyers, set the fee, implying the service was driven by a selfish desire to increase the employment of a particular group, and implying those lawyers are superior to non-participating lawyers who supposedly charge more than reasonable fees. The Committee said that for a reference-plan advertisement to be educational rather than competitive, it should stress that most lawyers will consult for a reasonable fee stated in advance, and that any fee mentioned should be one the community's lawyers generally consider reasonable. Stating a $3 fee, below prevailing fees in the state and the area and below what most lawyers can economically justify, made the advertisement competitive with other lawyers.

Currency note

This opinion was issued in 1960, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. It also predates Bates v. State Bar of Arizona, 433 U.S. 350 (1977), which loosened categorical advertising restrictions, though prohibitions on solicitation were not eliminated. 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: Can lawyers organize a new bar association with its own referral service?

A: The Committee said organizing a bar association is not unethical per se, but a referral plan should be open to all area lawyers in good standing, not limited to the association's members, especially where a referral plan already operates.

Q: What made the radio advertising improper?

A: The Committee found the spots competitive rather than educational: they stressed that this group's members set a low fee, implied other lawyers overcharge, and lacked educational information that most lawyers consult for reasonable fees.

Q: Why did the $3 consultation fee matter?

A: The Committee said a $3 fee, below prevailing fees in the state and area and below what most lawyers can economically justify, made the advertisement competitive with other lawyers, in violation of Canon 24.

Background and rules framework

The opinion interprets former Texas Canon 24, which governed advertising and solicitation, as applied to a lawyer-referral plan and its public advertising. The modern analogs are ABA Model Rules 7.2 (advertising, including the treatment of lawyer-referral services) and 7.3 (solicitation of clients).

Citations and references

Rules of Professional Conduct:

• MR 7.2 (advertising and lawyer-referral services) and MR 7.3 (solicitation of clients), as the modern analogs
• Texas Canon 24 (former canon on advertising and solicitation)

See also

• TX Ethics Op. 239: County Bar Distributing Pamphlets
• TX Ethics Op. 224: Professional Card in a Circus Program
• TX Ethics Op. 196: Solicitation and "Feeding" of Law Business

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-205/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_205.pdf

Original opinion text

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

QUESTION PRESENTED

Is it proper for a group of attorneys to organize a bar association and:
Organize a referral service composed of the members of such bar association, even though there is already an existing referral plan operating in the territory;
Run a series of spot announcements over a local radio station generally as follows: "So that no one who has a legal problem need go without the privilege of consulting a lawyer, the (name of organization) has established a fee of only three dollars for consultations. If you desire more information, contact this station";
Advertise a minimum consultation fee lower than the existing consultation fee of an already organized bar association?

18 Baylor L. Rev. 292 (1966)

SOLICITATION - ESTABLISHMENT OF REFERRAL SERVICE BY A BAR GROUP - LOCAL ADVERTISING OF SUCH REFERRAL SERVICE
It is improper for a group of attorneys to organize a bar association and establish a referral service for its members only, particularly when an existing referral plan is already operating in the area; and such group may not run a series of spot announcements over local radio stations, which announcements state the name of the organization and a minimum consultation fee lower than the existing minimum consultation fee set by the already operating referral service; and neither may such announcements properly invite the radio audience to contact the radio station for further information.

Canon 24.

Such action would be improper and a violation of Texas Canon No. 24.

Historically, bar associations have been organized on a volunteer basis (for example, the American Bar Association), and this is still wholly true in Texas except for the State Bar of Texas, in which membership is required by law. The propriety or lack of propriety of organizing a bar association is not based upon approval or disapproval of the association on the part of the State Bar of Texas or any other group of lawyers. Ethically, then, any group of lawyers is free to organize any bar association, and the organization of a bar association cannot be unethical per se.

It is possible, however, that the organization may be for an improper purpose, or that the organization may be operated in an improper manner and, to the extent that such is done the members of the association may be acting unethically, though this is because their acts are in violation of some canon or law and not because they organized a bar association.

Therefore, if the entire purpose of organizing a local group is to operate the referral plan above referred to in the manner stated, then such a bar group has been organized for an improper purpose. And, in addition, if such bar group operates the proposed referral plan in the manner set out it will be operating in an improper manner for the following reasons:
Participation in such a referral planΧas distinguished from membership in the particular bar association should be open to all members of the bar in that area who are in good standing with the State Bar of Texas.
The instant advertising does not clearly show its purpose to be only to give beneficial information to the public. The advertising contains no educational type of information concerning the desirability of securing legal services nor concerning the fact that most lawyers will consult with individuals for reasonable fees.
The advertising program stresses that "the members" of the particular bar associationΧrather than most lawyersΧhave established the fee stated, thereby giving the impression that such referral service was actuated by selfish desire to increase professional employment of a particular group of lawyers.
The instant advertising fails to stress that the proposed referral plan is a method which should be used only by those who have no better method of contacting an attorney.
The advertising is worded so as to indicate it is for the benefit of a particular group of lawyers, namely members of this particular bar association.
The advertisements in question imply that the participating lawyers are superior toΧor are rendering a service superior toΧthat rendered by others and non-participating lawyers, in that it is implied that other lawyers charge a fee larger than reasonable. In order that an advertisement on behalf of a Lawyers' Reference Plan be educational rather than competitive, it is better to stress that most lawyers will consult with a client for a reasonable fee stated in advance and that the purpose of the Lawyers' Reference Service is to aid one to find the lawyer who will so give advice for a reasonable fee. If the advertisement mentions a specific fee, it should be a sum generally considered by the lawyers in the community to be reasonable. An advertisement which states a fee of one reference service lower than that publicly stated by another local reference service is obviously a competitive advertisement.
By stressing a fee of $3.00, which is below the fees generally prevailing in the state (and, as inquiry indicates, in that particular area) and below the fee which most lawyers in the state can economically justify, the advertisement is competitive in nature with the other lawyers practicing in the area. (9-0)

Tex. Comm. On Professional Ethics, Op. 205 (1960)