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96 N.J.L.J. 745
June 21, 1973
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the New Jersey Supreme Court
OPINION 256
Labor Union Attorney
Drawing Free Wills for Members
We have been asked if the following practice is in violation
of the Disciplinary Rules of the Code of Professional
Responsibility of the American Bar Association as amended by the
New Jersey Supreme Court, DR 1-103 or any other canons of
professional ethics.
The inquirer represents a local branch of a labor union which
for the welfare of its membership and their dependents has retained
him to draw wills for all members of the union who so desire this
service, at no cost to the members. The agreement also provides for
a single payment, by the union, to the attorney, which fee is not
contingent upon the number of wills drawn.
The union posted notices throughout the plant advising its
membership that it was sponsoring a program to provide each member
with a will, if desired, at no charge to the member, the cost of
the service being paid for by the union. The notice further
informed the membership that the attorney would be available at the
union hall on Wednesday of each week between the hours of 3:00 PM
and 4:30 PM. for the purpose of discussing the provisions of their
wills. No attorney's name appeared on the notice. When completed,
the wills are to be executed at the union hall, witnessed by the
members and employees of the union and delivered to the members.
The members do not come to the law office of the firm in connection
with their wills.
In our Opinion 172, 93 N.J.L.J. 81 (1970), we held that it
would be unethical for the attorney for a New Jersey corporation to
participate in a company sponsored legal program whereby general
counsel for the corporation proposed 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 plan. A temporary
office was to be supplied to the attorney on the corporate premises
for the purpose of meeting with the employees. The corporation was
to advise its employees that the attorney would be available at
stated times and would schedule appointments for those employees
who would like individual estate plan and counseling. The inquirer,
or one of his representatives, then would hold the conferences and
supply whatever services were required. In each case, the employee
would pay for the services rendered to him. The corporation would
not directly subsidize any individual estate planning.
Since our decision and Opinion 172, supra, the New Jersey
Supreme Court has adopted the Disciplinary Rules of the Code of
Professional Responsibility adopted by the American Bar Association
Disciplinary Rule 2-103(D), effective September 13, 1971, now
provides:
A lawyer shall not knowingly assist a person
or organization that recommends, furnishes, or
pays for legal services to promote the use of
his services or those of his partners or
associates. However, he may cooperate in a
unified manner with the legal service
activities of any of the following, provided
that his independent professional judgment is
exercised in behalf of his client without
interference or control by any organization or
other person:
(5) Any other non-profit organization
that recommends, furnishes, or pays
for legal services to its members or
beneficiaries, but only in those
instances and to the extent that
controlling constitutional
interpretation at the time of the
rendition of the services requires
the allowance of such legal service
activities, and only if the
following conditions, unless
prohibited by such interpretation,
are met:
(a) The primary purpose of
such organization do not
include the rendition of
legal services.
(b) The recommending,
furnishing, or paying for
legal services to its
members is incidental and
reasonably related to the
primary purposes of such
organization.
(c) Such organization does
not derive a financial
benefit from the
rendition of legal
services by the lawyer.
(d) The member or beneficiary
for whom the legal
services are rendered,
and not such
organization, is
recognized as the client
of the lawyer in that
matter.
The provisions of DR 2-103 and DR 2-104 (suggestion of need
for legal services) were the result of lengthy studies, discussions
and hearings representing many State Bar Associations, as well as
the Special Committee on Evaluation of Ethical Standards and the
Committee on the Availability of Legal Services of the American Bar
Association. After intense debate between proponents of a rule that
would broaden the scope of group legal services programs, and
opponents, the language adopted represented a compromise. Our Court
followed the recommendations of its committee that it make no
change in the rule adopted by the American Bar Association.
First we find that controlling constitutional interpretation
at the present time, requires the allowance of such legal services.
Although the matrix cases involve legal services directly related
to the primary purposes of the sponsoring organizations,
Brotherhood of R. Trainmen v. Virginia, 377 U.S. 1 (1964), and
United Mine Workers v. Ill. Bar Ass'n, 389 U.S. 217 (1967), the
United States Supreme Court has indicated their scope is greater.
Mr. Justice Black speaking for a divided five man court, has said
in United Transportation Union v. Michigan, 401 U.S. 576, (1971):
In the context of this case we deal with a
cooperative union of workers seeking to assist
its members in effectively asserting claims
under the FELA. But the principle here
involved cannot be limited to the facts of
this case. At issue is the basic right to
group legal action, a right first asserted in
this Court by an association of Negroes
seeking the protection of freedoms guaranteed
by the Constitution. The common thread running
through our decisions in NAACP v. Button,
Trainmen, and United Mine Workers is that
collective activity undertaken to obtain
meaningful access to the courts is a
fundamental right within the protection of the
First Amendment. However, that right would be
a hollow promise if courts could deny
associations of workers or others the means of
enabling their members to meet the costs of
legal representation. That was the holding in
United Mine Workers, Trainmen and NAACP v.
Button. 401 U.S. 576, at 586.
In Informal Opinion 1237, the Standing Committee on Ethics and
Professional Responsibility of the American Bar Association
(8/9/72) approved a union group legal services referral program
whereby attorneys recommended by the union participated in a
program to render legal services in accordance with established fee
schedules. The A.B.A. Committee established certain guidelines for
the plan set forth in that Opinion.
At about that same time, at its August, 1972 annual meeting,
the House of Delegates of the American Bar Association upon the
recommendation of the Association's Special Committee on Prepaid
Legal Services, adopted the following interim standards to be met
by all plans providing for prepaid legal services:
(1) The entire plan shall be reduced to
writing and a description of its
terms shall be distributed to the
members or beneficiaries thereof;
(2) The plan and description shall:
(a) State clearly and in
detail the benefits to be
provided, exclusions
therefrom and conditions
thereto;
(b) Describe the extent of
the undertaking to
provide benefits and
reveal such facts as will
indicate the ability of
the plan to meet the
undertaking;
(c) Provide that there shall
be no infringement upon
the independent exercise
of professional judgment
of any lawyer furnishing
service under the plan;
(d) Specify that a lawyer
providing legal service
under the plan shall not
be required to act in
derogation of his
professional
responsibilities; and
(e) Set forth procedures for
the objective review and
resolution of dispute of
disputes arising under
the plan;
(3) There shall be a periodic written
report not less often than annually
disclosing to members or
beneficiaries of the plan, to this
association and to the bar of any
state in which benefits are paid a
summary of the operations of the
plan including, but not limited to,
all relevant financial data, the
number of members or beneficiaries
receiving legal services, and the
kinds of benefits provided;
(4) Each plan should provide for an
advisory group including members of
the bar and beneficiaries of the
plan which shall meet periodically
to review and evaluate the
organization and operation of the
plan and to offer suggestions for
its improvement.
The August, 1972 meeting of the American Bar Association House
of Delegates had before it a second recommendation of the Special
Committee on Prepaid Legal Services which was amended with consent
of that Committee to include the following sentence, and then was
adopted as so amended:
The American Bar Association strongly urges
that each plan provide that the members or
beneficiaries have freedom of choice of
attorneys (open panel) in the rendering of
legal services under the plan.
In its Formal Opinion 332, the Standing Committee on Ethics
and Professional Responsibility of the American Bar Association
(2/73), approved a plan of prepaid legal services which met the
interim A.B.A. standards and provided for an "open panel" whereby
the
members had freedom of choice of attorney.
Conversely in Formal Opinion 333, (2/73), the Committee held
that where there is a "closed panel" or one designated lawyer a
question of fact will be presented in each case as to whether the
plan promotes the lawyer's professional status in violation of the
Disciplinary Rules.
We need not reach such questions here since the inquiry is
deficient in meeting even the interim standards.
First and foremost, there is no written description of the
plan to judge compliance with the interim standards. There is no
statement of the amount of compensation to the attorney. On the
facts stated, it appears that he is not a full time retained
attorney for the union and for these estate planning services he
will receive a flat fee no matter how many or how complex are the
family and legal problems that he faces. It will be recalled that
in the Brotherhood of R. Trainmen case, the counsel fee was agreed
at 25% of the recoveries as opposed to potential 50% fees and in
the United Mine Workers case, the union retained a full-time
workmen's compensation claimant's counsel at an annual salary which
appeared reasonable for that time and place. The comments of the
Standing Committee on Ethics and Professional Responsibility of the
American Bar Association in Informal Opinion 1236 (8/24/72),
disapproving a plan proposed by a proprietary social and fraternal
savings club are appropriate. There an attorney proposed to render
services to members at a discount. DR 2-103(B) states that except
for situations that are here irrelevant, "a lawyer shall not give
anything of value to a person or organization to recommend or
secure his employment by a client." That committee found that the
attorney under the proposed arrangement in exchange for its
recommendation of him to its members, would be giving the club a
thing of value; namely, the ability to provide its members with
another type of "savings" - legal services at a discount. Ethical
Consideration 2-17 of the Code of Professional Responsibility
adopted by the American Bar Association says that "adequate
compensation is necessary in order to enable the lawyer to serve
his client effectively and to preserve the integrity and
independence of the profession." In its Informal Opinion 1236, the
Standing Committee on Ethics and Professional Responsibility of the
American Bar Association held it to be improper for a lawyer to
agree in advance that services rendered to members of a group will
be provided for fees less than those customarily being charged.
Because of the wide variation and services required in particular
types of work, any such agreement could not help but leave an
attorney bound by such an agreement either to perform services for
some of the club members at a substantial loss or not to take the
time required to perform them properly.
Absent a statement of the fees proposed to be charged for the
estate planning services, we cannot sanction such a plan in vacuo.
In addition, we recommend that, as a general practice the
attorney representing the association not be the attorney selected
to render legal services to the association members. In our Opinion
114, 90 N.J.L.J. 480 (1967), we set forth the reasons why counsel
for a corporation or association should not represent individual
members or groups. Inherent in such a situation is the difficulty
in representing multiple clients. In order to represent his
individual clients adequately, the attorney might find the
compensation for the wills inadequate and yet to retain his
representation of the union, he might be unwilling to seek a change
in the fee schedule.
Finally, we question the proposed system of execution of
wills, whereby the officers of the union attend to the execution
and delivery of the wills. This appears to be a simple procedure
but a review of 5 Clapp, Wills and Administration, sec 54 (1962),
will show the degree of professional care that is required.
In conclusion then we find that controlling constitutional
interpretation now requires the sanctioning of group legal service
programs even though not related to the primary purposes of
nonprofit organizations. However, each such program will have to be
established consistent with the interim standards established by
the American Bar Association and with other ethical and
professional standards required of attorneys. While it will be
difficult for this Committee to examine each plan, attorneys
participating in them will find guidance in the decisions of the
Standing Committee on Ethics and Professional Responsibility of the
American Bar Association and in the Ethical Considerations adopted
by the American Bar Association in connection with the Code of
Professional Responsibility Ethical Consideration 5-1 counsels that
the professional judgment of a lawyer should be exercised within
the bounds of the law solely for the benefit of his client and free
of compromising influences and loyalties EC 5-14 points out that a
problem with respect to the maintenance of independent professional
judgment arises whenever a lawyer is asked to represent two or more
clients who have different interests.
Finally, EC 5-24 sets forth certain specific guidelines to
help an attorney. "To assist a lawyer in preserving his
professional independence, a number of courses are available to
him. ...A lawyer should not accept employment from such an
organization unless the board sets only broad policies and there is
no interference in the relationship of the lawyer and the
individual client he serves. Where a lawyer is employed by an
organization, a written agreement that defines the relationship
between him and the organization and provides for his independence
is desirable since it may serve to prevent misunderstanding as to
their respective roles. Although other innovations in the means of
supplying legal counsel may develop, the responsibility of the
lawyer to maintain his professional independence remains constant,
and the legal profession must insure that changing circumstances do
not reset in the loss of professional independence of the lawyer."
Canon 2 of the Code of Professional Responsibility adopted by
the American Bar Association states that "[a] lawyer should assist
the legal profession in fulfilling its duty to make legal counsel
available." If properly prepared, a written plan with a reasonable
fee schedule and a written agreement between the participating
attorneys and the union, could be adopted to make legal counsel
available to the members of the union at reasonable fees. The
dangers inherent in closed or "one man" panels should be observed.
But we cannot find under the facts presented to us that the plan
presented meets the criteria established by either the Standing
Committee on Ethics and Professional Responsibility of the American
Bar Association or the prior decisions of this Committee. We
therefore disapprove of the plan as proposed.
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