Can a Michigan lawyer pay a flat fee to an out-of-state firm that runs group TV ads and routes injury callers to the lawyer by blind referral?

Plain-English summary

An out-of-state advertising firm proposed to market group television advertising in Michigan under the name "Injury Helpline." The tapes showed personal injury claimants discussing settlement frustrations and offered to connect viewers to a nearby lawyer through a toll-free number. The firm would contract with individual lawyers for a flat annual fee, controlled the content and frequency of the ads (subject to a 70% minimum spent on broadcast time), and refer all callers from an assigned zip code area to a contracting lawyer. The ads stated there would be no fee unless there was a recovery and did not mention costs.

The Committee applied MRPC 7.2(c), which bars giving anything of value for recommending a lawyer's services except the reasonable cost of permitted advertising and the usual charges of a not-for-profit referral service. The plan could survive only if it was "advertising," the fee was a reasonable advertising cost, and the referral was not otherwise prohibited. The Committee concluded the plan went beyond advertising: it did not promote a particular lawyer's credentials but instead advertised the general need for injury help and then made a blind referral to a specific lawyer, leaving the caller no opportunity to compare or reflect. Drawing on CI-1192, the Committee treated this as an impermissible solicitation falling within the criminal prohibition of MCLA 750.410.

The Committee identified additional defects. The "no fee unless recovery" claim, without mention of costs, was misleading under MRPC 7.1 (citing C-238). The firm's "Guide to Effective Marketing" advised sending someone to a hesitating caller, which would be unethical pressure and coercion under Ohralik v. Ohio State Bar Ass'n and Shapero v. Kentucky Bar Ass'n. And because at least 70% of fees had to buy broadcast time with no account of the rest, any portion of the fee exceeding permitted advertising would violate MRPC 7.2(c).

Currency note

This opinion was issued in 1989 and interprets the Michigan Rules of Professional Conduct as they then stood. 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 Treat this page as historical context, not current guidance.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: What separates permissible lawyer advertising from an impermissible referral in this venture?

A: The opinion concluded that ads reciting a specific lawyer's credentials, which let a viewer compare and reflect before calling, would be advertising, but that ads promoting the general need for injury help followed by a blind referral to one assigned lawyer cross into impermissible referral and solicitation.

Q: Is a "no fee unless recovery" television ad misleading?

A: Per the opinion, yes, where it omits any mention of costs. The Committee cited C-238 and MRPC 7.1, concluding that advertising contingent representation without stating that the client may still owe costs is misleading.

Q: Can the advertising firm's marketing guide direct lawyers to follow up with reluctant callers in person?

A: The opinion concluded it cannot. Sending someone to a caller who has not yet retained the lawyer would be unethical pressure and coercion under Ohralik and Shapero.

Q: Does it matter how the lawyer's flat fee is spent?

A: Per the opinion, yes. Because MRPC 7.2(c) allows paying only the reasonable cost of advertising, any part of the fee allocated to expenses other than advertising (here, the unaccounted portion beyond the 70% broadcast minimum) violates the rule.

Background and rules framework

The opinion interprets MRPC 7.2(c) (Advertising; the Model Rule 7.2 counterpart), which permits a lawyer to pay the reasonable cost of advertising and the usual charges of a not-for-profit referral service, and MRPC 7.1 (Communications Concerning a Lawyer's Services). The Committee read the advertising-versus-solicitation line through CI-1192 and the criminal solicitation statute MCLA 750.410, and grounded the in-person pressure analysis in Ohralik v. Ohio State Bar Ass'n, 436 US 447 (1978), and Shapero v. Kentucky Bar Ass'n, 486 US 466 (1988).

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) (paying for recommendations; advertising costs)

Statutes:

• MCLA 750.410 (criminal prohibition on solicitation)

Cases:

• Ohralik v. Ohio State Bar Ass'n, 436 US 447 (1978), in-person solicitation
• Shapero v. Kentucky Bar Ass'n, 486 US 466 (1988), targeted direct-mail solicitation

Other opinions cited:

• RI-7: prepaid plan and lawyer's duty over marketing
• CI-1192: paid intermediary blind-referring callers is improper
• C-238: "no fee unless recovery" without costs is misleading

See also

• Mich Ethics Op. R-18: Group TV Advertising Schemes
• Mich Ethics Op. RI-24: For-Profit Referral and Unreviewed Ads
• Mich Ethics Op. R-8: For-Profit Referral Service
• Mich Ethics Op. RI-7: Prepaid Legal Plan Control

Source

• Landing page: https://www.michbar.org/opinions/ethics/numbered_opinions?OpinionID=879&Type=6

Original opinion text

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

RI-9

May 18, 1989

SYLLABUS

A lawyer or law firm may not ethically participate in a venture for group television advertising of legal services where:

• The venture operates as an impermissible referral or solicitation as opposed to mere advertising;

• The ad alleges "no fee unless recovery" and does not mention costs to be paid by the client;

• The lawyer personally solicits clients who are reluctant to follow up a free telephone consultation with an appointment;

• The contracting lawyer's fee is allocated to an expense other than advertising.

References: MRPC 7.1, 7.2(c); RI-7; MCLA 750.40; Ohralik v. Ohio State Bar Ass'n, 436 US 447 (1978); Shapero v. Kentucky Bar Ass'n, 108 S Ct 1916 (1988). CI-1192 is distinguished.

TEXT

An out-of-state advertising firm proposes to market specialized legal group television advertising in Michigan called "Injury Helpline." The firm prepares and broadcasts tapes containing summaries of personal injury claimants discussing their frustrations in attempting to negotiate settlement claims, interjected with how "I.H." can help them by referring them to a nearby lawyer through a toll free telephone.

The firm proposes to contract with individual lawyers for a negotiated flat annual fee, renewable at the lawyer's option. It alleges it is not a lawyer referral agency, it provides no screening or responses to calls, but acts as advertising agent for and refers telephone calls to the lawyers. The firm has complete control over the content of and number of times the tapes will be broadcast, with the one proviso that at least 70% of the fees collected from lawyers shall be used to purchase broadcast time. The tapes will not specifically mention the name of any lawyer. The firm will refer all callers from a specified area (one or more zip codes) to a contracting lawyer. The lawyer shall provide a free initial consultation and agrees there will be no fee unless there is a recovery (the advertising will so state). Possible costs are not mentioned. All terms and conditions of further legal representation will be negotiated and agreed upon between lawyer and client without involvement of the firm. Contracting lawyers represent only that they are licensed to practice law and practice in the personal injury field of law.

MRPC 7.2(c) states:

"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."

The plan can avoid the clear prohibition of MRPC 7.2(c) only if it constitutes "advertising or written communication permitted by this Rule," if the amount paid by the lawyer is not more than a "reasonable cost" of such advertising, and if the referral is not otherwise ethically prohibited.

The first question is, does the plan constitute "advertising," or does it go beyond advertising and include improper referral or solicitation.

The plan would clearly constitute "advertising" if the tapes were custom prepared specifically for a contracting lawyer, reciting the credentials of that lawyer, etc. The listener would then have the opportunity to inquire of others regarding that specific lawyer -- to compare the named lawyer with other lawyers -- to think and reflect before deciding whether to call the listed lawyer or some other lawyer. Such is not the case here. The plan does not advertise the lawyer, but rather advertises the potential need for personal injury legal assistance and then makes a blind referral to a specific lawyer.

In CI-1192 we stated that it is improper for a lawyer to participate in a marketing scheme whereby a paid intermediary advertised professional services of varying descriptions and, upon receipt of telephonic inquiries, directly connects the caller to a provider of such professional services selected by the intermediary. The plan in CI-1192 included lawyers of different specialties - the promoters screened the calls and referred to a specific lawyer providing that type of legal services. The I.H. plan differs only in that it is limited to personal injury lawyers, but is similar in that there is a blind referral to a specific lawyer. CI-1192 concluded that telephone calls where a contract for retention of a lawyer's services could result from an initial contact, in which the client had no opportunities for reflection as to either the need for legal services or the qualifications and desirability of retaining a particular lawyer, fell within the criminal prohibition of MCLA 750.410, and were impermissible solicitations. That same rationale applies here.

There are some other minor points of the plan which deserve brief comment. The advertising advises that the lawyer will provide a free initial consultation and will not charge a fee unless there is a recovery, without any mention of costs. In C-238 we stated that such an advertisement would be misleading, and MRPC 7.1 prohibits any form of public communication which is misleading.

The I.H. plan includes a "Guide to Effective Marketing" which states:

"If the case sounds good and the client hesitates on making an appointment send someone to them."

If the caller has not yet retained the lawyer, initiation of personal contact by the lawyer would constitute unethical pressure and coercion. Ohralik v. Ohio State Bar Ass'n, 436 US 447 (1978); Shapero v. Kentucky Bar Ass'n, 108 S Ct 1916 (1988).

The I.H. plan provides that at least 70% of the fees retained must be used to purchase broadcast time, without stating how the remaining monies are to be used. To the extent the contract fee covers more than permitted advertising, such plan would violate 7.2(c).