93 N.J.L.J. 81
February 5, 1970
Services to Corporate Employees
The facts of the inquiry in this case are as follows: A lawyer
who is counsel to a corporation states that it recently has moved
its corporate headquarters from New York City to New Jersey.
Because of this move, a number of employees who formerly resided in
New York State have now become permanent residents of New Jersey.
The corporation also has hired a number of new employees who have
moved into New Jersey from other sections of the United States. The
corporation has extensive employee benefit plans which are designed
to provide for the well-being of its employees and their
dependents. It has come to the attention of the corporation's
personnel department that many of its employees now living in New
Jersey do not have wills and that some have wills which are
substantially deficient in protecting their families (the inquirer
does not state how this information was obtained by the personnel
department of the corporation). As part of the corporation's
comprehensive benefit program, the personnel department intends to
circulate information to the employees advising them of the
necessity of having proper wills prepared by competent attorneys.
Believing that many of the employees will not respond to this
suggestion, general counsel for the corporation proposes that he or
a member of his firm be at the corporate office at certain
designated times for the purpose of advising and preparing employee
estate plans. A temporary office will be supplied to the attorney on the corporate premises for the purpose of meeting with the employees. The corporation will advise its employees that this attorney will be available at stated times and will schedule appointments for those employees who would like individual estate planning counseling. The inquirer, or one of his representatives, then will hold the conferences and supply whatever services were required. In each case, the employee will pay for the services rendered to him. The corporation will not directly subsidize any individual's estate planning.
The inquirer states that the corporation is an office client which contributes materially to the over-all income of his office.
In Drinker, Legal Ethics 162 (1953), it is said that if the corporation, under the state of facts posed, paid the lawyer's fee this would be a clear violation of Canons of Professional Ethics, Canon 35, which provides that a lawyer should avoid all relations which direct the performance of his duties by or in the interest of an intermediary. With respect to the situation where the employer does not pay the fee, Drinker states as follows, at page 163:
This latter consideration is particularly forcible in the case of corporations whose direct interest, as an entity, it is to see to it that their employees are kept free from legal difficulties and entanglements. Business corporations may and do to an ever increasing extent provide free medical services for their employees, as one of their conditions of employment, in order to keep them healthy, and consequently more efficient. Why not similarly free legal service and advice? Only, it would seem, because of the Canon, and of the decisions of the courts and the unauthorized practice committees that for a corporation to provide a lawyer to advise and serve its employees constitutes the unauthorized practice of the law by it. Suppose that the union contract provided, as one of the "fringe benefits,"for free legal service to union employees, how would the employer comply with this requirement? Doubtless, the corporation might agree to pay the lawyers' bills of the employees, but this would be subject to obvious abuse and would not satisfactorily achieve the desired result and advantage to the employer.
Thus, it would seem clear that, except for the cases hereinafter referred to, the inquirer should be advised that the course of conduct proposed to him by his corporate client would violate Canon 35 and should not be pursued. However, this conclusion must be examined in the light of the two more recent Supreme Court opinions dealing with group legal practice. They are Brotherhood of R. Trainmen v. Virginia, 377 U.S. 1, 12 L. Ed. 2d 89 (1964), and United Mine Workers v. Illinois Bar Ass'n, 389 U.S. 217, 19 L. Ed. 2d 426 (1967).
Before discussing these two opinions, it should be kept in mind that both of these actions were brought not to determine ethical problems but to restrain the unauthorized practice of the law.
In the United Mine Workers case, the Court, at page 431, recognized that the states have broad power to regulate the practice of the law and that this is beyond question. But, the Court went on to say that broad rules framed to protect the public and to preserve respect for the administration of justice may not significantly impair the value of associational freedoms, citing N.A.A.C.P. v. Button, 371 U.S. 415, 9 L. Ed. 2d 405 (1963).
In all three of the cited cases, there were associations or unions whose expressed object, among others, was to assist the members in their rights to plan with and advise each other, as members, for their collective and individual general welfare. The inquirer cites these cases as authority for his views that the proposed conduct is sanctioned by these opinions. We do not agree. The distinction between the situation of the members of the unions in the Trainmen and Mine Workers cases and the employees of the corporate client in the present case is too obvious to require any discussion. The employees whom the inquirer will see will be persons not connected with any union, nor with any other group so far as the facts reveal. They are merely employees of the same employer.
An interesting discussion of this problem is found at 82 Harvard Law Review 138-143 (1968), where the three cited cases are analyzed and discussed. The author of the article, at page 140, says that the underlying difficulty in Button, Trainmen and Mine Workers is "the social problem of the proper role of group legal services." We need not involve ourselves in a discussion of the ethics of group legal services, since we do not view the situation here to be one of group legal services, but one of individual services rendered to employees under the aegis of the corporate employer.
These employees do not have a common associational interest, as did the union members in Trainmen and Mine Workers, nor a common
social interest as the members in Button. The only collective interest that the prospective clients have in this case is that they work for the same employer. In this connection, one might ask whether in fact the employees truly are the clients of the lawyer or whether the corporation is. Obviously, the corporation is seeking to gain benefit for itself by making these services available to its employees, even though at the employees' expense. Presumably, the employer will give the employees time off to visit the lawyer in the office provided for him at the plant.
The plan suggested also might be viewed as improper because it may be considered, if not directly then at least indirectly, to be advertising contrary to Canon 27. One might also consider under Canon 6 whether the attorney is representing the employees with undivided fidelity, or whether his primary fidelity is to the corporation. The author of the Harvard Law Review article, supra, discusses this question of divided loyalty and points out that by these plans, such as in Mine Workers where no fee was paid by the member, and in Trainmen where a fee was paid but at a lesser rate because of the volume of business which the union attorney generated, the union is in fact enhancing its own image to secure more members.
It is to be noted that the corporation in the pending inquiry does not suggest that the attorney give the names of several other qualified lawyers in the vicinity so that the employees will have a choice, but only the name of the attorney in question is to be presented. This raises the question of whether the employees may not feel obligated to see this attorney since the suggestion comes from their employer.
See also, the discussion on Legal Services for the Middle Classes, 63 Columbia Law Review 973, 983 (1963), in which the author states that, if the old legal standards are to be modified, the courts and bar associations must provide safeguards so that the essentials of the lawyer-client relationship will be maintained.
We conclude that the proposed plan violates the Canons of Professional Ethics and does not find sanction in the decisions in Button, Trainmen and Mine Workers.