TX 1994-10-01

Can a lawyer run a newspaper ad aimed at people with a specific legal problem, and can the lawyer send a layperson a letter proposing to trade client referrals?

Short answer: The Committee concluded that a targeted print advertisement is permissible if it complies with Rule 7.01 and is not false or misleading; a bare promise of cash settlements without qualification may create an unjustified expectation in violation of Rule 7.01(a)(2). It also concluded that a letter offering, even by implication, to exchange referrals with a layperson violates the spirit of Rule 7.01(i)'s ban on giving anything of value for referrals.

Disclaimer: Advisory only. Not binding precedent.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

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Texas Ethics Opinion 507: Targeted Advertising and a Reciprocal-Referral Letter

Short answer: The Committee concluded that a targeted newspaper advertisement is permissible if it complies with Rule 7.01 and is not false or misleading, but a bald cash-settlement claim may create an unjustified expectation; and that a letter offering a layperson reciprocal referrals, even by implication, violates the spirit of Rule 7.01(i)'s ban on giving anything of value for referrals.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the Texas Disciplinary Rules of Professional Conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. The opinion text is reproduced at the bottom; the official source (linked) controls.

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Plain-English summary

The Committee considered two communications by a lawyer pursuing home-foundation claims tied to a home warranty program. The first was a bold newspaper advertisement, with an illustration of a bowed foundation, linking a named corporation to "claims," declaring that cash settlements could be obtained from that corporation, listing damage conditions, and inviting readers to call the named lawyer. The second was an unsolicited letter to a foundation-repair contractor (not a prospective client) describing the firm's history of cash settlements against a named corporation, expressing interest in discussing such claims, noting a contingent fee, and inviting questions.

On the advertisement, the Committee began under Rule 7.01, which bars false or misleading communications, including statements likely to create an unjustified expectation about results. It concluded the advertisement may be false or misleading to the extent it could create an unjustified expectation that a cash settlement would automatically follow from hiring the lawyer, and that the bare statement about cash settlements, without qualification, may violate Rule 7.01(a)(2). The Committee declined to hold the ad per se false or misleading in its overall impression, calling that a question of fact it could not answer, and citing Zauderer v. Office of Disciplinary Counsel for the principle that a lawyer may use public media to inform the public so long as the communication is truthful.

On the letter, the Committee concluded the communication, though benign on its face, raised several implications of prohibited conduct. A lawyer may not ask another person to do what the lawyer is bound to avoid, and Rule 7.01(i) bars giving or promising anything of value to a layperson for referring clients. The Committee read the letter as implying an enticement to trade client referrals with the contractor in exchange for the lawyer referring customers back, and concluded that initiating that arrangement would violate the spirit of Rule 7.01(i), even where the wording avoids the literal terms of the rule. The Committee noted it lacked jurisdiction to decide whether the communications constituted the criminal offense of barratry under Texas Penal Code Section 38.12, as prohibited by Rule 8.04(a)(8).

Currency note

This opinion was issued in 1994, under the Texas Disciplinary Rules of Professional Conduct that took effect January 1, 1990. Texas did not adopt the ABA's Ethics 2000 revisions; its rules have been amended only piecemeal since, including the comprehensive 2021 revisions adopted by Texas Supreme Court order, which reorganized the lawyer-advertising rules in Part VII. 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 a lawyer run a newspaper ad targeting people with a specific legal problem?

A: The Committee concluded targeted print advertising is permissible if it complies with Rule 7.01 and the content is not false, misleading, or deceptive and does not involve illegal activity.

Q: Can an ad promise that clients will get cash settlements?

A: The Committee concluded a bare statement that cash settlements can be obtained, without qualification, may create an unjustified expectation about results in violation of Rule 7.01(a)(2), though it declined to call the ad per se misleading.

Q: Can a lawyer offer to trade referrals with a contractor or other layperson?

A: The Committee concluded a lawyer cannot give or promise anything of value, expressly or by implication, to a layperson for referring clients; a letter worded to dodge Rule 7.01(i) but implying a reciprocal-referral arrangement violates the spirit of the rule.

Background and rules framework

The opinion interprets Texas Disciplinary Rule 7.01 (communications concerning a lawyer's services; ABA Model Rule 7.1), including 7.01(a)(1)-(2) (false or misleading statements and unjustified expectations) and 7.01(i) (no giving anything of value to a layperson for referrals; related to Model Rule 7.2 on referrals). It also references Rule 7.03 (solicitation; Model Rule 7.3) and notes that Rule 8.04(a)(8) ties professional conduct to the barratry statute. The advertising analysis rests on Zauderer.

Citations and references

Rules of Professional Conduct:

MR 7.1 (communications concerning a lawyer's services), MR 7.2 (advertising and referrals), MR 7.3 (solicitation)
Texas Disciplinary Rules 7.01 (incl. 7.01(a)(1)-(2), 7.01(i)), 7.03, 8.04(a)(8)

Statutes:

Texas Penal Code Section 38.12 (barratry) (referenced; the Committee declined to decide whether the conduct was barratry)

Cases:

Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), a lawyer may use public media to inform the public so long as the communication is truthful

Source

Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-507/
Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_507.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative. The statutory section symbol appeared in the source as an unreadable encoded character and has been restored as the word "Section."

QUESTION PRESENTED

Is it a violation of the Texas Disciplinary Rules of Professional Conduct if an attorney causes to be published in a newspaper of general circulation an advertisement targeted for potential clients who have a specific legal problem.
Is it a violation of the Texas Disciplinary Rules of Professional Conduct if an attorney sends an unsolicited letter to a lay person not a prospective client but who is in a unique position to refer targeted clients to the attorney in exchange for business referrals from the attorney.

STATEMENT OF FACTS

A. A certain corporation administers a home warranty program which has as members certain homebuilders in a specified area. These homebuilders provide warranties to home buyers in the specified area. An attorney publishes an advertisement in a newspaper of general circulation within the area in which the homebuilders mentioned above have constructed a significant number of homes. The advertisement is in bold-faced type 4 2" by 2" block with an illustration of a house that appears to have a bowed foundation. The corporation's name is linked to the word "claims" in the advertisement. Further, the advertisement declares cash settlements can be obtained from the name corporation. Additionally, the advertisement refers to several potential damaged conditions involving bricks, sheetrock and foundation. The advertisement identifies the attorney by name and gives the telephone number for the attorney with the invitation to call for information.

B. An attorney sends an unsolicited letter to a foundation-repair contractor who is not a prospective client and informs the recipient of the letter that the attorney's law firm has successfully represented a specified number of clients who experienced foundation failure. Further, the letter (a) informed the recipient of the law firm's history in obtaining cash settlements from a specified corporation; (b) characterized the amount of the settlements as sufficient to fund repairs; (c) disclosed the firm's interest in discussing with the recipient claims against a named corporation; (d) described the firm's goal to negotiate sizeable cash settlements to pay for repairs; (e) mentioned a percentage fee would be retained only if there is a recovery; and (f) invited the home repair contractor to call if the contractor has any questions.

DISCUSSION

This Committee lacks jurisdiction to decide questions of law, specifically whether the communications under discussion constitute the criminal offense of barratry as that term is defined in Texas Penal Code Section 38.12 and prohibited by Rule 8.04(a)(8).

An evaluation of the communications to the extent they may constitute commercial speech entitled to First Amendment protection must begin with an analysis under Rule 7.01. This opinion does not discuss the impact, if any of proposed Amendments, of Part VII of the Texas Disciplinary Rules of Professional Conduct.

Rule 7.01 reads in pertinent part: (a) A lawyer shall not make a false or misleading communication about the qualifications or the services of any lawyer or law firm. A statement is false or misleading if it: (1) Contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading . . . . (2) Is likely to create an unjustified expectation about results the lawyer can achieve.

It is a cardinal principle that lawyer advertising must not be false, misleading or deceptive. Comment I, Rule 7.01. The judgment of this Committee is the advertisement may be false or misleading to the extent it may create "an unjustified expectation" that a cash settlement would automatically be forthcoming once the attorney was hired. This Committee does not decide, however, that the newspaper advertisement is per se false, misleading or deceptive in its overall impression. Such determination involves a question of fact that this Committee is unable to answer. As long as the communication is truthful an attorney may use public media to inform the public of the attorney's services. See Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 105 S.Ct. 2265, 85 L.Ed.2d 652 (1985). In the instant case the bare declaratory statement regarding cash settlements, without benefit of qualification, may violate Rule 7.01(a)(2).

Concerning the communication addressed to the home repair contractor who does not qualify as a prospective client, it is the opinion of this Committee that this communication although benign on its face does inspire careful consideration of several implications of prohibited conduct. Obviously an attorney is prohibited to ask another person to take some action that the attorney is ethically bound to avoid. See Comment Rule 7.03. Secondly, the communication to the contractor may involve matters of prohibited unethical conduct not expressly stated within the four corners of the letter but implied by the transmittal of the letter. Further, Rule 7.01(I) is applicable to this fact situation. There, it is provided, in pertinent part, that "a lawyer shall not give or promise to give anything of value to a lay person for referring clients or potential clients to any lawyer or law firm . . . ." The application of Rule 7.01(I) leads to the reasonable conclusion that the lawyer cannot expressly or impliedly offer to give or provide anything of value to the home repair contractor for referring clients. Notwithstanding the express language of the communication the implication seeded in the transmittal is the enticement to the home repair contractor to refer clients to the attorney in exchange for referral of customers to the contractor. It is the opinion of this Committee that conduct by the attorney to initiate this arrangement would violate the spirit of Rule 7.01(I).

It is permissible for an attorney to advertise in print media and to target prospective clients with a specific legal problem if the attorney complies with Rule 7.01. The content of the advertisement must not be false, misleading or deceptive or involve illegal activity.

It is not permissible for an attorney to give or promise to give anything of value, expressly or by implication, to a lay person as an inducement for referring clients or potential clients to the lawyer. When a written communication is so worded to avoid violating the letter of Rule 7.01(I), but gives rise to implications of prohibited conduct, the attorney's conduct must be evaluated in the light of the spirit of Rule 7.01.

CONCLUSION

Tex. Comm. On Professional Ethics, Op. 507 (1994)