Can a Michigan lawyer pay a fee to a nonprofit lawyer referral service, and what must the lawyer do about the service's advertising?

Plain-English summary

A lawyer asked whether it was ethical to join an attorney referral service run by a nonprofit corporation that was not affiliated with any government agency or bar association. To participate, a lawyer paid an annual membership fee and met standards such as good standing, no pending discipline, no unexplained history of discipline or malpractice, and demonstrated expertise in a practice area. The service told lawyers it "thoroughly screens" participants and told the public that it "recommends only screened and qualified attorneys, assuring clients competent counsel," though it appeared to do no independent verification of the application answers.

The Committee applied MRPC 7.2(c), which permits a lawyer to pay the "usual charges" of a not-for-profit referral service. Because the service represented that it put all dues toward operating costs and advertising rather than profit, a participating lawyer could ethically pay the annual membership fee if the service was in fact nonprofit. Turning to MRPC 7.1, and drawing on RI-7, the Committee held that lawyers who participate should make a reasonable review of the service's advertising and may not continue to participate in a service whose advertising the lawyer knows, or comes to know, violates MRPC 7.1 or is otherwise false or misleading.

The Committee then flagged a concrete problem: the claim that the service "recommends only screened and qualified attorneys, assuring clients competent counsel," combined with the absence of any independent verification, could be misleading and create unjustified expectations under MRPC 7.1. The opinion concluded that if those advertising corrections are not or cannot be made, the lawyer may not participate.

Currency note

This opinion was issued in 1989 and interprets the Michigan Rules of Professional Conduct as they then stood. The opinion also notes it was issued before the enactment of MRPC 6.3(b). The MRPC have since been amended, and later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer pay a fee to a nonprofit lawyer referral service?

A: Per the opinion, yes. MRPC 7.2(c) lets a lawyer pay the usual charges of a not-for-profit referral service, so if the service is in fact nonprofit, the annual membership fee is permissible.

Q: Does a lawyer have to monitor a referral service's advertising?

A: The opinion concluded that participating lawyers should make a reasonable review of the service's advertising and may not continue to participate if they know, or come to know, that the advertising violates MRPC 7.1 or is otherwise false or misleading.

Q: What kind of referral-service advertising claim is a problem?

A: The opinion identified the claim that the service "recommends only screened and qualified attorneys, assuring clients competent counsel," paired with no independent verification of applicants, as potentially misleading and capable of creating unjustified expectations under MRPC 7.1.

Background and rules framework

The opinion interprets MRPC 7.2(c) (Advertising; the Model Rule 7.2 counterpart), permitting payment of the usual charges of a not-for-profit referral service, and MRPC 7.1 (Communications Concerning a Lawyer's Services), barring false or misleading communications. MRPC 7.4 (communication of fields of practice) is also referenced. The Committee applied the lawyer-review duty from RI-7.

Citations and references

Rules of Professional Conduct:

• MR 7.1 / MRPC 7.1 (communications concerning a lawyer's services)
• MR 7.2 / MRPC 7.2(c) (not-for-profit referral charges)
• MR 7.4 / MRPC 7.4 (fields of practice)

Other opinions cited:

• RI-7: lawyer's duty to review an organization's marketing

See also

• Mich Ethics Op. R-6: Lawyer Referral Service Rules
• Mich Ethics Op. R-8: For-Profit Referral Service
• Mich Ethics Op. RI-24: For-Profit Referral and Unreviewed Ads
• Mich Ethics Op. RI-7: Prepaid Legal Plan Control

Source

• Landing page: https://www.michbar.org/opinions/ethics/numbered_opinions?OpinionID=901&Type=6

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

NOTE: This opinion was issued prior to the enactment of MRPC 6.3(b). Please see the rule for further detail.

RI-31

October 3, 1989

SYLLABUS

A lawyer may participate in a nonprofit referral service which charges the lawyer a fee.

A lawyer may participate in a referral service if the lawyer is allowed to review and monitor the advertising disseminated by the referral service.

A lawyer may not participate in a referral service when the advertising of the referral service contains misleading statements.

References: MRPC 7.1, 7.2(c), 7.4; RI-7.

TEXT

A lawyer wishes to know if it is ethical to participate in an attorney referral service that is operated by a nonprofit corporation but which is not affiliated with any government agency or bar association.

To become a participant in the attorney referral service, a lawyer would only have to pay an annual membership fee and meet the referral service's standards. Those standards, as explained in the referral service brochure, are that the lawyer: (1) be a member of good standing of the State Bar; (2) have no pending disciplinary actions by any state bar; (3) have no unexplained "history" of disciplinary action, professional malpractice, or criminal conviction; (4) have specialization or demonstrated expertise in one (or more) area of practice.

The referral service states in its promotional literature and in various documents that it thoroughly screens participating lawyers according to "detailed information on the application form." The one-page application contains a box approximately 2x3 inches in the lower left corner which asks "Have you (or any member of your firm): been subject to any state bar association disciplinary action or proceedings? Been convicted of, or pled guilty to, any felony or crime of moral turpitude? Been successfully sued for professional malpractice?" [Emphasis provided in brochure]. There are "yes/no" boxes for the lawyer to indicate answers. Other than asking these questions, there is no other information pertaining to the "screening" of the lawyer members, and no indication that the referral service independently verifies the application information.

The literature sent to lawyers soliciting participation in this program alleges: "Each dues-paying member attorney receives all referrals in his/her geographical area for his/her area(s) of specialization," that the attorney referral service "recommends only screened and qualified attorneys, assuring clients competent counsel" [emphasis provided in brochure], that "membership dues . . . vary depending on the size of the firm, territory, and specializations," and that there is no "referral fee for potential clients." If a case is referred to the participating lawyer, that lawyer does not have to pay the referral service a referral fee or a percentage of any recovery received.

The referral service provides advertising services to the participating lawyers by (a) placing ads in the Yellow Pages, and (b) using other unspecified methods of media coverage. In its soliciting brochure to prospective participating lawyers, the referral service claims to "market" the lawyer's firm to the public without the use of "unprofessional" advertising. The advertising does not recommend a particular lawyer; instead, the advertising markets the referral service and then provides callers with the name of one of its participating lawyers located in the caller's geographical area.

The participation of a lawyer in a referral service is governed by MRPC 7.2(c) which provides:

"(a) Subject to the provisions of these rules, a lawyer may advertise.

"(b) A copy or recording of an advertisement or written communication shall be kept for two years after its last dissemination along with a record of when and where it was used.

"(c) A lawyer shall not give anything of value to a person for recommending the lawyer's services, except that a lawyer may pay the reasonable cost of advertising or written communication permitted by this rule and may pay the usual charges of a not-for-profit lawyer referral service or other legal services organization." Emphasis added.

Lawyers may pay for the "usual charges" of a not-for-profit referral service. The referral service states that it is "currently not attempting to generate profits (i.e. all "dues" are put into operating costs, and the cost of expanding advertising)." If the service is in fact nonprofit, a participating lawyer may ethically pay the annual membership fee.

The information provided about this referral service raises some questions about its advertisements. Attorney advertising is governed by MRPC 7.1 which provides:

"A lawyer may, on the lawyer's own behalf, on behalf of a partner or associate, or on behalf of any other lawyer affiliated with the lawyer or the lawyer's firm, use or participate in the use of any form of public communication that is not false, fraudulent, misleading, or deceptive. A communication shall not:

"(a) contain a material misrepresentation of fact or law, or omit a fact necessary to make the statement considered as a whole not materially misleading;

"(b) be likely to create an unjustified expectation about results the lawyer can achieve, or state or imply that the lawyer can achieve result by means that violate the Rules of Professional Conduct or other law; or

"(c) compare the lawyers' services with other lawyers' services, unless the comparison can be factually substantiated."

In RI-7, the Committee reviewed a proposed prepaid legal services plan and observed:

". . . the lawyer would permit the organization to be responsible for marketing without review by the lawyer. Although the lawyer could not be expected to review the entire marketing plan of the organization, a lawyer has a duty to assure that communications about the lawyer's services are not false, fraudulent, deceptive or misleading, do not contain a material misrepresentation of law or fact, are not likely to create an unjustified expectation, and are not improper solicitation. MRPC 7.1 and 7.3. If the lawyer becomes aware of improper communications, therefore, the lawyer should bring the matter to the attention of the organization for correction. Further, the lawyer should not accept any employment from a plan member, when the employment was obtained in reliance on the improper communications, without first correcting the information and verifying that the member wishes to proceed."

Lawyers who participate in the referral service should make a reasonable review of referral service advertising. A lawyer may not continue to participate in a referral service whose advertising the lawyer knows, or comes to know, violates MRPC 7.1 as to information about the lawyer's services, or is otherwise false, fraudulent, deceptive or misleading.

As noted above, the referral service will claim in its advertisements to clients that it recommends only screened and qualified attorneys, thereby assuring clients of competent counsel. However, as noted above, it does not appear that there is any attempt by the referral service to independently verify the information obtained. Such misleading statements could result in unjustified expectations which violate MRPC 7.1. If the advertising corrections are not or cannot be made, then the lawyer may not participate in the referral service.