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100 N.J.L.J. 1205
December 29, 1977
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the New Jersey Supreme Court
OPINION 383
Nationwide Group Legal Services Plan
In recent weeks many lawyers in New Jersey and elsewhere have
been approached by attorneys of other states seeking to have them
join what is variously described as a "group legal services plan"
or a "group legal services referral program." The most common of
these plans seems to be one which has been proposed by a firm of
lawyers in Los Angeles, California, and for convenience the plan
hereinafter discussed will be referred to as the California plan
and the firm of lawyers as the California firm or simply the firm.
The California firm describes itself as an "umbrella" law firm
operating under the style of A & B, formed for the express purpose
of providing legal services to the individual members of nonprofit
groups and to employees. The individual law firms coming under the
umbrella specialize in various areas of the law. Under its
agreement with the groups it represents, the California firm
operates as follows:
a. "The client has the privilege of
telephoning and talking to a lawyer
and getting any legal advice he may
need at no charge.
b. Where necessary the client comes to
the office and gets the legal advice
again at no charge for the initial
conference.
c. Further work involving a legal
matter may be performed by the
lawyer at a fee quoted to the client
and agreed on by him. The client
then is free to employ the lawyer
and the lawyer accepts the client
employment.
d. The client may arrange to pay a
"reasonable fee," payable in monthly
installments.
The firm does not offer "prepaid group legal services." It
describes itself as a large California law firm having other firms
associated with it both within and without the State of California.
It has entered into agreements with various organizations to
provide legal services for those organizations in the manner set
forth above. The services which the firm provides are accomplished
by contract with various organizations such as manufacturing
concerns, service organizations, savings and loan associations and
many nonprofit organizations. Apparently there is no fee
arrangement between the firm and the contracting organization, all
fees being paid by the individual client himself. The basic purpose
of the organization being formed by the California firm is to
enable individuals who otherwise have difficulty in choosing a
lawyer to be able to turn to their own employer organization for
assistance. The employer, in turn, would refer him to one of the
firm's associates. Apparently a number of these organizations
contracting with the firm are nationwide in scope and accordingly
have requested that the same type of service available in
California be made available to their members throughout the
country.
The Code of Professional Responsibility adopted by our Supreme
Court contains detailed provisions with respect to recommendation
of professional employment. These appear in DR 2-103. The basic
rule appears in subparagraph (c): "A lawyer shall not request a
person or organization to recommend or promote the use of his
services or those of his partner or associate or any other lawyer
affiliated with him or his firm as a private practitioner."
Exceptions to this basic rule are thereafter set forth in
subparagraph (d). These exceptions are in four categories, and an
attorney may be recommended by one of these organizations; namely,
(1) a legal aid office or a public defender office; (2) a military
legal assistance office; (3) a lawyer referral service operated,
sponsored or approved by a bar association; and (4) any bona fide
organization that recommends, furnishes, or pays for legal services
to its members or beneficiaries under the conditions set forth in
the rule.
The proposal as originally made by the California firm
contemplated contracts with many organizations which would not have
qualified under the exceptions set forth above in subparagraph (d)
of DR 2-103. As a result, the firm has now put together a new plan
called "Brotherhood Group Legal Services Plan," ostensibly based on
the opinion of the Supreme Court of the United States in
Brotherhood of Railroad Trainmen v. Virginia, ex rel, Virginia
State Bar, 377 U.S. 1 (1964). This plan is apparently designed to
come within the provisions of DR 2-103(d)(4). The plan, however,
has not been submitted to our Supreme Court for registration as
required under subparagraph (4)(g).
It appears to this Committee that the California firm plan has
gone far beyond the concept of lawyer referral services as set
forth in our disciplinary rules. Nevertheless, it may very well be
that such a plan for making legal services available on a
nationwide basis is a necessity, given the scope of activities of
many organizations in this country.
The recent decision of the Supreme Court of the United States
in Bates v. State Bar of Arizona, 433 U.S. 360, 63 L.Ed. 2d 810
(1977), has given added impetus to the whole matter of advertising
by attorneys, lawyer referral services being in essence one phase
of this subject. What effect this decision will have on the
limitations on lawyer referral services set forth in DR 2-103 is
not known. An article in the June 1977 issue of the American Bar
Association Journal, "Does the Lawyer Referral Service Have a
Future?,” page 789, shows a wide divergence of opinion, some
thought being expressed that lawyer referrals will give way to
general advertising.
ABA Comm. on Ethics and Professional Responsibility, Informal
Opinion 1313 (1975), has considered the matter of a firm providing
group legal services to members of a credit union. The proposal
considered is not unlike the California firm's concept except that
it is somewhat more limited in scope. The committee concluded that
the proposal would not seem to contravene any of the ethical
considerations or disciplinary rules set forth in the code.
The Oregon State Bar Committee on Legal Ethics, in Opinion
346, reached a different conclusion. Its opinion deals specifically
with the California Plan. The opinion states that it is limited to
nationwide nonprofit organizations. The committee concluded that
the California Plan could not fit into the exception provided in DR
2-103(d)(4). The committee points out that Canon 2 and its
disciplinary rules attempt to balance the obligation of every
lawyer to insure the availability of competent and affordable legal
representation against the lawyer's obligation to avoid even the
appearance of solicitation of clients. The committee comments on
the fact that the Oregon State Bar has recently instituted programs
such as a specialization program and accompanying law lists
designed to strike that balance. The committee concludes, however,
that the California program is primarily motivated by a desire to
promote the economic interests of its associates. This being so,
the committee disapproved the plan. It should be pointed out, of
course, that this opinion was rendered prior to the United States
Supreme Court's decision in Bates, supra.
It has been suggested that there are other areas of the Code
of Professional Responsibility which would be violated by any
lawyer who be came an "associate" of the California firm. These
might include DR 2-107(a) dealing with division of fees. This might
arise should the California firm establish a nationwide
administrative office to which each associate would contribute a
share of the aspens of maintaining the office. Another might be DR
2-105 relating to specialization. Our Supreme Court permitted the
listing of specialties in the New Jersey Law Journal for a brief
period of time, but the operation of this relaxation of DR 2-105(a)
has been suspended.
We are inclined to view the approach to this problem of the
American Bar Association's Committee as more in keeping with
present trends. A great deal has been written about the
availability of legal services for the wealthy and poor, while the
great mass of Americans who fall between these extremes find legal
services unavailable at a reasonable price or they are
insufficiently informed as to where such services might be
available. Since the Supreme Court of the United States has lifted
some of the restrictions on advertising, it would seem even more
desirable to have lawyer referral services become a principal means
for providing the necessary information to the public and at the
same time keeping advertising within reasonable limits.
Accordingly, in our opinion, a New Jersey attorney may
ethically associate himself with the California firm provided the
plan offered by that organization is properly registered in
accordance with the provisions of DR 2-103(d)(4), and provided also
that thereafter the attorney observes all the restrictions
applicable to associations with out-of-state law firms. See R. 1:21
and DR 2-102.
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