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                                         100 N.J.L.J. 1205
                                        December 29, 1977


Appointed by the New Jersey Supreme Court


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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