Can a lawyer provide services through a prepaid legal services plan, and what must the plan do to qualify?
Apply this to your situation
This page answers the general question as of 2006. Ezel answers yours: whether it's allowed on your facts, under the current North Carolina Rules of Professional Conduct, with citations.
Plain-English summary
A registered prepaid legal services plan, "Estate Plans," solicited members with offers of estate-planning documents drafted by "qualified local attorneys" at about half the usual price, and claimed to be "approved" by the State Bar. The opinion addresses whether a lawyer may provide services through the plan, in three variations.
On the basic question, the opinion concludes no, as offered. A lawyer may participate in a prepaid legal services plan only if the conditions in Rule 7.3(d)(2) are satisfied. Those conditions include that the plan is operated by an organization not owned or directed by the lawyer; the plan is registered with the State Bar and complies with applicable rules; the lawyer notifies the State Bar in writing before participating and within 30 days of discontinuing; the lawyer, after reasonable investigation, has a good-faith belief the plan complies with the Rules; all advertisements that say the plan is registered with the State Bar also explain that registration is not approval by the State Bar; and any in-person or telephone solicitation of memberships avoids contacting people known to need legal services in a covered matter and is free of coercion, duress, harassment, or false or misleading communication. The plan failed at least the registration-is-not-approval condition: it could say it was registered but not imply State Bar approval, and the lawyer must tell the plan it cannot participate until its solicitation complies. The lawyer also has an ongoing duty to confirm the plan continues to comply.
On the second variation, where the plan touts savings because clients meet with its estate-planning consultants rather than a lawyer, the opinion concludes the lawyer need not be present during communications with a prospective member but must communicate with the client enough to provide competent representation (Rules 1.1 and 1.4). A third party may record intake information, but if a third party decides what services the lawyer will provide, the lawyer is deprived of independent judgment in violation of Rule 5.4(c). On the third variation, the opinion concludes that if the lawyer believes the plan's materials to the client are misleading, the lawyer should not participate.
In practice
Under the North Carolina rules as they stood at the time of the opinion, the analysis turns on whether the plan meets Rule 7.3(d)(2), whether the lawyer keeps independent professional judgment, and whether the lawyer can communicate enough to be competent. The opinion holds that a lawyer may participate only in a qualifying, accurately advertised plan, and must withdraw or decline where the plan implies State Bar approval, directs the lawyer's services, or gives clients misleading materials.
Per the opinion, the lawyer need not attend intake but must have a dialogue with the client sufficient to elicit the information needed for competent representation, and must monitor the plan's continuing compliance.
Common questions
Q: Can a lawyer take clients through a prepaid legal services plan?
A: Only a qualifying one. The opinion concludes a lawyer may participate only if the plan meets the conditions of Rule 7.3(d)(2), including that the plan is registered, not owned or directed by the lawyer, and advertised accurately.
Q: Can a plan say it is "approved" by the State Bar because it is registered?
A: No. The opinion concludes a plan may say it is registered with the State Bar but may not state or imply that the State Bar approved it; advertisements must explain that registration is not approval.
Q: Does the lawyer have to meet with the client, or can the plan's consultants handle it?
A: The lawyer must communicate enough to be competent. The opinion concludes the lawyer need not be present at intake, but must have a dialogue with the client sufficient for competent representation (Rules 1.1 and 1.4), and a third party may not decide what services the lawyer provides (Rule 5.4(c)).
Q: What if the lawyer thinks the plan's materials mislead clients?
A: Then the lawyer should not participate. The opinion concludes that if the lawyer believes the information the plan provides to clients is misleading, the lawyer should not take part in the plan.
Background and rules framework
The opinion applies North Carolina Rule 7.3(d) (conditions for participating in a prepaid or group legal services plan, including the definition of such a plan), Rule 5.4(c) (a lawyer may not let a person who recommends, engages, or pays the lawyer direct the lawyer's professional judgment), and Rules 1.1 and 1.4 (competence and communication). These track Model Rules 7.3, 5.4, 1.1, and 1.4. The opinion cites 2003 FEO 7 on the lawyer's duty to communicate directly enough with the client to provide competent representation.
Citations and references
Rules of Professional Conduct:
- MR 7.3 / NC Rule 7.3(d) (prepaid and group legal services plans; conditions for participation)
- MR 5.4 / NC Rule 5.4(c) (no third-party direction of the lawyer's professional judgment)
- MR 1.1 / NC Rule 1.1 (competence)
- MR 1.4 / NC Rule 1.4 (communication)
Other opinions cited:
- NC 2003 FEO 7: a lawyer must communicate directly enough with the client to provide competent representation.
See also
- NC 2013 FEO 10: Online Group Legal Advertising and Territorial Exclusivity
- ABA Formal Op. 501: Solicitation
Source
- Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2006-formal-ethics-opinion-4/
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
Inquiry #1:
Estate Plans is a prepaid legal service plan registered with the North Carolina State Bar. In its solicitation letter, Estate Plans states that it provides various "plans of protection" from the most basic, consisting of a will, trust documents, power of attorney, health care power of attorney, and living will, to more comprehensive estate planning services. For a yearly fee, the solicitation letter claims clients would have access to "qualified local attorneys" who would draft these legal documents for about half the price the client would normally pay.
In addition, Estate Plans also claims to be "approved" by the State Bar.
May a lawyer participate in Estate Plans and provide legal services to persons covered under the plan?
Opinion #1:
No. A lawyer may only participate in a prepaid legal service plan if the plan meets the conditions of participation in Rule 7.3(d)(2). A prepaid legal services plan is "any arrangement by which a person, firm, or corporation, not authorized to engage in the practice of law, in exchange for any valuable consideration, offers to provide or arranges the provision of legal services that are paid for in advance of the need for the service." Rule 7.3(d)(1).
For a lawyer to ethically participate with a prepaid legal services plan, the following conditions must be satisfied:
(A) The plan must be operated by an organization that is not owned or directed by the lawyer;
(B) The plan must be registered with the North Carolina State Bar and comply with all applicable rules regarding such plans;
(C) The lawyer must notify the State Bar in writing before participating in a plan and must notify the State Bar no later than 30 days after the lawyer discontinues participation in the plan;
(D) After reasonable investigation, the lawyer must have a good faith belief that the plan is being operated in compliance with the Revised Rules of Professional Conduct and other pertinent rules of the State Bar;
(E) All advertisements by the plan representing that it is registered with the State Bar shall also explain that registration does not constitute approval by the State Bar; and
(F) Notwithstanding the prohibitions in paragraph (a), the plan may use in-person or telephone contact to solicit memberships or subscriptions provided:
(i) The solicited person is not known to need legal services in a particular matter covered by the plan; and
(ii) The contact does not involve coercion, duress, or harassment and the communication with the solicited person is not false, deceptive, or misleading.
Rule 7.3(d)(2).
Estate Plans has failed to meet at least one of the conditions for participation by a North Carolina lawyer. Although Estate Plans may represent that it is registered with the North Carolina State Bar, it may not state or imply that the State Bar has approved its plan. Rule 7.3(d)(2)(E). Under these circumstances, a lawyer must inform Estate Plans that it cannot participate in the plan unless its solicitation letter complies with Rule 7.3(d)(2)(E). Even if a prepaid services plan was at one time operating in compliance with the Rules of Professional Conduct, a lawyer participating in such a plan has an ongoing duty to determine that the plan continues to operate in accordance with the Rules.
Inquiry #2:
Estate Plans claims that its legal services plan can save clients money because the clients meet directly with its employees, who are qualified estate planning consultants, rather than a lawyer. It is unclear whether or to what extent the client has contact with the lawyer drafting the estate planning documents.
May a lawyer participate with Estate Plans under these circumstances?
Opinion #2:
Rule 5.4(c) states that a lawyer "shall not permit a person who recommends, engages, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services." The lawyer also has an obligation to provide competent representation and to communicate with the client to the extent necessary to do so. Rules 1.1 and 1.4.
The lawyer need not be present during communications with a prospective insured relative to participate in the plan. However, the lawyer must communicate with the insured client in order to fulfill the duties described above. If a third party decides what services the lawyer ultimately will provide to the client, then the lawyer has been deprived of the ability to exercise independent judgment to determine what services may be appropriate under the circumstances in violation of Rule 5.4(c). In addition, the lawyer needs to make sure he has received and has given enough information to the client so that he can provide competent representation. Certainly, there is no issue with a third party recording intake information; however, the lawyer must be able to engage in a dialogue with the client in order to elicit the information necessary to provide competent representation. See 2003 FEO 7.
Inquiry #3:
A lawyer believes the initial packet provided by Estate Plans to clients contains information that may be misleading.
May the lawyer participate with Estate Plans under these circumstances?
Opinion #3:
No. If a lawyer believes the information Estate Plans is providing to the client is misleading, then he should not participate in the plan.
Get today's answer for your situation
You just read a 2006 opinion on this question. Ezel checks the current North Carolina Rules of Professional Conduct and answers your specific situation, with citations.
Opens in Ezel Pro. Every answer cites the rules it relies on.