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126 N.J.L.J. 894
October 4, 1990
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
COMMITTEE ON ATTORNEY ADVERTISING
Appointed by the New Jersey Supreme Court
Opinion 645 - Advisory Committee on Professional Ethics
Opinion 6 - Committee on Attorney Advertising
Attorney Membership and Participation in
Joint Advertising/Client Referral Programs
A number of inquirers have raised several questions relating
to the practice of two out-of-state organizations, hereafter A and
B, which advertise in New Jersey. The advertisements invite
members of the public who have specific types of legal problems,
detailed below, to call a toll-free number and receive a referral
to a New Jersey attorney. Since these inquiries involve matters
within the jurisdiction of both the Advisory Committee on
Professional Ethics and the Committee on Attorney Advertising, the
two Committees are issuing a joint opinion in response.
The inquiries involve consideration of the conduct of both the
non-New Jersey organizations and the New Jersey attorneys who are
their members and are accepting their referrals. This opinion
addresses the propriety of New Jersey attorneys being involved, and
concludes that such involvement is improper, based upon the facts
as they now appear.
Three organizations are involved. One, A, concentrates on
personal injury matters, and the other, B, on defense of driving
while intoxicated cases. Both are based in a city in the southern
United States. While both A and B claim to be nonprofit, no
evidence has been offered to demonstrate this fact. There is no
evidence that either is registered as a not-for-profit corporation
in New Jersey. Both appear to be under the control of a third
organization, C, which is a for-profit advertising agency. C
collects a commission from A and B for all ads placed. This same
advertising agency also appears to control a similar
advertising/referral operation in the health care area. The ad
agency apparently receives a 15% to 20% commission for all ads
placed on the air.
Both A and B follow very similar patterns:
* Both solicit lawyers to become "members" by paying an
initial fee of several hundred dollars, along with continuing
monthly charges, also of several hundred dollars.
* They promise in the attorney membership solicitation that
they will spend "100% of all monies on advertising marketing
expenses in local markets" specified in the "membership" contract.
* They utilize advertisements for legal services in a variety
of media, principally television messages which rely on
dramatizations. These ads urge interested prospective legal
clients to call a toll-free number. They state that incoming calls
will be screened by a "trained paralegal," and then referred to an
experienced member attorney in the prospective client's local area.
Oral sales representations to a prospective member attorney by a
representative of one of the organizations indicated that these
"trained paralegals" make a determination (in the case of personal
injury matters) as to whether, inter alia, the case involves "good
liability and damages." These calls go to a city in the South.
There is no evidence (i) that the calls are handled by attorneys,
(ii) what the qualifications of the paralegals are, (iii) that the
paralegals are supervised by any attorneys, or (iv) whether
attorneys admitted and licensed to practice in New Jersey have any
involvement in any training or supervision that may be conducted.
No local or member attorney is identified by name in any
* They include language in the written materials soliciting
attorney membership, and in some reported oral solicitations,
stating that members will "receive three or four cases per month"
as a result of the advertising. Plainly the inducement to member
attorneys to spend as much as $700 per month is the promise of
receiving such case referrals.
* Their television advertisements to the public tout that the
referrals will be to "experienced" attorneys. The membership
requirements stipulate only that the attorney must have
"participated in the resolution of at least 50% of the type of
cases to be referred. There is no requirement of a minimum number
of years of experience, trials, or other court appearances, nor any
indication of what "participation in resolution" is supposed to
* Neither organization is affiliated with, or endorsed or
sponsored by, any New Jersey bar association, or the New Jersey
Supreme Court.FINDINGS AND CONCLUSIONS
1. We find A and B are primarily lawyer referral schemes
which utilize advertising. Lawyers pay fees to receive referrals
of cases. The names of specific lawyers and/or law firms are not
mentioned in the ads.
2. A lawyer participating with A or B by paying money and
accepting cases would violate RPC 7.2(C), in that the flow of
payments to and apparent control by C, a for-profit entity, do not
meet the not-for-profit requirements of that rule. Further, it is
unclear whether A and B are, in fact, not-for-profit corporations,
and whether they are properly authorized to do business in New
Jersey. A lawyer considering giving anything of value to an
organization for case referrals is under a duty to establish,
before making such payment, that the organization meets the "not-
for-profit lawyer referral service or other legal service
organization" test of RPC 7.2(c).
3. A lawyer paying money to A and B would also violate RPC
7.3(d), since neither entity is sponsored or approved by a New
Jersey bar association. An attorney seeking to give anything of
value to any entity for referring a case must establish
affirmatively, before making any such payment, that the
organization complies with RPC 7.3(d).
4. The activities of the "paralegals" working for A and B may
well constitute the unauthorized practice of law, in that (a) they
appear to be acting without the direct supervision of a New Jersey
attorney, and indeed, not even in a bona fide New Jersey law
office, but in a distant state; and (b) they are asking potential
clients questions about their legal cases or claims and making a
determination thereon (as to, inter alia, whether it involves "good
liability and damages"). This determination is communicated to the
client, either explicitly or implicitly, by either giving the
client a referral to a specific lawyer or declining to make such a
referral. A lawyer accepting a referral under such circumstances
would be violating RPC 5.5(b), by assisting a person who is not a
member of the New Jersey bar in that person's unauthorized practice
activities. A lawyer who contemplates paying money and accepting
referrals based on the "screening" activity of an outside party
bears affirmative responsibilities. The lawyer must first
establish that the party is either a New Jersey lawyer or someone
acting under the direct supervision of a New Jersey lawyer, in
accordance with the Rules of Professional Conduct.
5. A lawyer or law firm purchasing advertising which does not
mention the lawyer or law firm by name, but which still leads to
client referrals or other benefits to the lawyer or firm, remains
fully bound by the ethical rules governing attorney advertising,
RPC 7.1 through RPC 7.5. If a lawyer is deriving benefit from ads
directed toward the general public, the ads must comply in all
respects with the advertising rules.
6. The ads relating to the screening and referral services of
A and B, which presumably are placed by C, are potentially
misleading under RPC 7.1 in that:
(a) The ads use the term "experienced," when the minimum
standards do not even require that the lawyer have ever appeared in
court. This is exacerbated by the fact that the word "trial"
appears in the name of organization A. We note that the use of
advertising making claims about a large number of lawyers carries
an especially high potential for misleading the public, because of
the inevitable variations among the lawyers in ability, background,
experience, and the like. Consequently, if the term "experienced"
is to be used at all in a way that is not misleading, the standards
for the term must be clear and articulated, must fully support the
normal meaning of the term, and must be met by all of the lawyers
covered by the claim.
(b) Organization A's name also contains the words "lawyers
association," which may mislead some members of the public into
thinking that they are dealing with a traditional, broad-based bar
(c) The use of the terms "screened" and "trained paralegal"
are likely--and indeed appear designed--to raise an expectation in
members of the public that their case will be reviewed by someone
familiar with applicable New Jersey law before the matter is
referred. This expectation is not correct.
(d) The Supreme Court's new Attorney Advertising Guideline 1,
effective September 4, 1990 (well after the dates of these
inquiries), requires that an ad by an attorney or law firm include
the bona fide street address of the attorney or firm. This
Guideline requires that in the future any lawyer or law firm
participating in generic advertising must ensure that the lawyer's
or firm's name and street address is included in the
For the foregoing reasons, both Committees conclude that
association or involvement of New Jersey attorneys with advertising
and referral schemes possessing the characteristics outlined above
would be improper.
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