Does a contingent-fee ad promising no fee if nothing is recovered, but not mentioning the client's liability for costs, violate the advertising rules?

Plain-English summary

The inquiry concerned advertisements stating that a lawyer would perform legal services on a contingent-fee basis and that the client would be charged no fee if nothing was recovered, but which did not state that the client might be responsible for litigation costs regardless of the outcome. The question was whether omitting the client's potential liability for costs makes the advertisement false or misleading.

The committee answered yes. It was of the opinion that, under RPC 7.1, a communication is false or misleading if it omits a fact necessary to make the statement considered as a whole not materially misleading. Because a client remains obligated for costs and expenses of litigation under RPC 1.8(e), an advertisement that omits that obligation deprives a consumer of legal services of necessary information.

The committee relied on outside authority. It cited the United States Supreme Court's decision in Zauderer v. Office of Disciplinary Counsel, which addressed a "no recovery, no legal fees" advertisement that did not distinguish "legal fees" from "costs," and in which the Court found a self-evident possibility of deception and held that a state could require lawyers to disclose a client's liability for costs. It also cited the California Supreme Court's decision in Loni v. The State Bar of California, where omitting additional charges from a solicitation was held to violate the rule against omitting facts necessary to keep a statement from being misleading. The committee concluded that advertisements failing to disclose the client's obligation to pay costs regardless of outcome are misleading and not permitted.

Currency note

This opinion was issued in 1988, before the 2006 revisions to the Washington Rules of Professional Conduct. The rules then numbered RPC 7.1 (false or misleading communications) and RPC 1.8(e) (a client's liability for litigation costs) correspond to Model Rules 7.1 and 1.8(e) and were later amended. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

Common questions

Q: Can a contingent-fee ad just say "no recovery, no fee"?

A: Per the opinion, not without disclosing the client's potential liability for costs. The committee was of the opinion that omitting the client's obligation to pay litigation costs regardless of outcome makes the advertisement false and misleading under RPC 7.1.

Q: Why is leaving out the costs information misleading?

A: Because, as the committee read RPC 7.1, a communication is misleading if it omits a fact necessary to keep the statement as a whole from being materially misleading. A "no fee if no recovery" message can suggest a no-lose proposition to a layperson who does not know that "fees" and "costs" differ.

Q: What authority did the committee rely on?

A: It cited Zauderer v. Office of Disciplinary Counsel (U.S. Supreme Court), which held a state may require disclosure of a client's liability for costs in such advertisements, and Loni v. The State Bar of California (California Supreme Court), which found omitting additional charges from a solicitation misleading.

Background and rules framework

The opinion applies the rule then numbered Washington RPC 7.1, corresponding to Model Rule 7.1, which makes a communication false or misleading if it omits a fact necessary to make the statement, considered as a whole, not materially misleading. It connects that rule to RPC 1.8(e), corresponding to Model Rule 1.8(e), under which a client remains ultimately liable for litigation costs. The committee read the two together to require that a contingent-fee advertisement disclose the client's potential responsibility for costs.

Citations and references

Rules of Professional Conduct:

• Washington RPC 7.1 (false or misleading communications; omission of a necessary fact), corresponding to Model Rule 7.1.
• Washington RPC 1.8(e) (client's ultimate liability for litigation costs), corresponding to Model Rule 1.8(e).

Cases:

• Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 105 S. Ct. 2265, 85 L. Ed. 2d 652 (1985), a state may require disclosure of a client's liability for costs in contingent-fee advertising.
• Loni v. The State Bar of California, 704 P.2d 183 (Cal. 1985), omitting a necessary fact from a solicitation about charges is misleading.

See also

• WSBA Ethics Op. 1150: a group advertising program and phone responses that must not mislead (RPC 7.1)
• WSBA Ethics Op. 1153: donated legal-service certificates and RPC 7.1's bar on misleading advertising
• WSBA Ethics Op. 1175: using the word 'Courthouse' in a firm address under RPC 7.1

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=262

Original opinion text

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

Advisory Opinion: 1182
Year Issued: 1988
RPC(s): RPC 7.1 ,1.8(e), 88-3
Subject: Misleading Contingent-Fee Advertisements Prohibited [Published Informal Opinion 88-3]

[Formerly published as Published Informal Opinion 88-3. All Informal Opinions are consolidated in this database.]

Question: Does a lawyer advertisement which offers legal services on a contingent-fee basis and which states that there will be no fee charged if nothing is recovered for the injured person, but which omits the information stating that the client would be responsible for any costs incurred in connection with the representation, violate RPC 7.1?

Short Answer: Yes, because it is false and misleading in that it omits a fact necessary to make the statement considered as a whole not materially misleading.

Discussion: An inquiry has been received regarding the propriety of placing advertisements which state that a lawyer will perform legal services on a contingent-fee basis and that the client(s) will be charged no fee if nothing is recovered on their claim. The advertisements, however, do not state that there may be litigation costs that would be chargeable to the client irrespective of the outcome of the case. The question presented is whether the failure to include the fact that, although no fees may be due, a client may be responsible for costs, constitutes a false or misleading advertisement.

This specific question was considered by the United States Supreme Court in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 105 S. Ct. 2265, 85 L. Ed. 2d 652 (1985). In that case, the lawyers advertisement informed the public, "if there is no recovery, no legal fees are owed by our clients." The advertisement made no mention of the distinction between "legal fees" and "costs." The Supreme Court said, "[T]o a layman not aware of the meaning of these terms of art, the advertisement would suggest that employing appellant would be a no-lose proposition in that his representation in a losing cause would come entirely free of charge." The Court held, "[T]he assumption that substantial numbers of potential clients would be so misled is hardly a speculative one" and that "a possibility of deception is ... self-evident." The Court found that the state could require that lawyers disclose information regarding the clients liability for costs. See, Zauderer at 652-653.

Similarly, in Loni v. The State Bar of California, 704 P.2d 183 (1985), the California Supreme Court held that it was misleading to send a solicitation letter to a prospective client which stated, "FILING FEE: The cash money that you need to apply for an ORDER FOR DEBT RELIEF is sixty dollars. This one filing fee protects both husband and wife." The solicitation letter did not disclose that in addition to the $60 filing fee, ten additional monthly payments of $60 would be charged. The Court held, "[A] necessary fact has been omitted and the rule [prohibiting omission of facts necessary to make material not misleading] violated." (At 194).

RPC 7.1 provides that a communication is false or misleading if it omits a fact necessary to make the statement considered as a whole not materially misleading. Upon the basis of the authority cited, it appears that the omission, in the type of advertisement referred to, of the fact that a client will be obligated for costs and expenses of litigation, as required by RPC 1.8(e), would mean that a consumer of legal services would not receive necessary information. Therefore, it is the conclusion of the Committee that such advertisements which fail to disclose the client`s obligation to pay costs regardless of the outcome of the litigation are misleading and therefore not permitted under the Rules of Professional Conduct.