Ethics Advisory Opinion 14-03

Utah State Bar
Ethics Advisory Opinion Committee

Opinion Number 14-03

Issued April 22, 2014


1.         Do the Utah Rules of Professional Conduct prohibit referral agreements between two attorneys that require one of the attorneys (the “Referring Attorney”) to refer to the other (the “Receiving Attorney”) all clients that have a certain specified type of products liability claim?


2.         The Committee concludes that an agreement between two attorneys which requires the Referring Attorney to refer to the Receiving Attorney all clients that have a certain specified type of claim may likely violate various provisions of the Utah Rules of Professional Conduct (the “Rules”).


3.         The Referring Attorney, licensed to practice in the State of Utah, and the Receiving Attorney, licensed to practice elsewhere, enter into an agreement governed by Utah law (the “Agreement”) to jointly pursue certain kinds of products liability claims (the “Claims”) of individuals located in the State of Utah.  The Agreement provides in relevant part:

  1. Referring Attorney will generate the cases by placing advertising and/or arranging for medical testing and diagnosis of prospective clients and would be entitled to reimbursement from the Receiving Attorney for the costs of doing so.
  2. In return for the Receiving Attorney’s agreement to pay those expenses, the Referring Attorney would be required to exclusively refer to the Receiving Attorney all clients having such Claims who contact the Referring Attorney.  The Referring Attorney would not be allowed to represent such clients himself or to refer such clients to any other attorney.
  3. The Referring Attorney will place advertising, accept incoming calls from potential clients, obtain medical records from potential clients, arrange for medical testing, and perform certain other related tasks, before turning the clients over to Receiving Attorney for further action.
  4. The Receiving Attorney will decide in his sole discretion the venue, jurisdiction, timing, counts, and content of complaints or petitions, joinder of plaintiffs and/or defendants, and any other strategic issues relating to the Claims.
  5. The Referring Attorney will ask clients to sign new fee agreements directly with the Receiving Attorney, identifying the Receiving Attorney as the clients’ attorney, will inform the clients of the division of fees between the two attorneys, and will inform the clients of any other matters deemed by either attorney to be required by the Rules of Professional Conduct.
  6. The Referring Attorney will not be required to perform any services except those specified in the Agreement or required by the Utah Rules or by any other ethical rules governing the Claims or any resulting cases.
  7. The Receiving Attorney will pay the Referring Attorney specified portions of the fees recovered by the Receiving Attorney for the clients on their Claims.



4.         The fee sharing agreement between the two attorneys is governed by Rule 1.5, which provides that there may be a division of fees between lawyers in different firms, but on the following condition:

(e)(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;

(e)(2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and

(e)(3) the total fee is reasonable.

Ethics Advisory Opinion No. 08-02

Opinion No. 08-02
Issued March 11, 2008
¶ 1. Issue:
Under what circumstances may an attorney who has represented a party in conjunction with a proceeding to appoint a guardian for an adult incapacitated person represent the guardian that is subsequently appointed as a result of that proceeding?

¶ 2. Conclusion: The representation of a court-appointed guardian by an attorney who has also represented one of the parties to the proceeding for the appointment of the guardian must be analyzed under Rules of Professional Conduct, Rules 1.7 and 1.9, the same way an attorney would analyze any conflict of interest between two current clients or between a current and former client. If the facts and circumstances of the case raise the specter of a direct or material adversity, or if the representation of another client creates a material limitation on the lawyer’s ability to represent the guardian effectively in light of the fiduciary, statutory and court imposed obligations on the guardian, the attorney should either avoid the joint representation or exercise great care in obtaining the informed written consent of both affected clients. If there is an on-going proceeding involving both the former client and the prospective new client (the guardian), the conflict may not be waived and the representation of the guardian must be avoided.
¶ 3. Background: The issue addressed by this opinion arises in the context of a request under Utah Code Ann. § 75-5-303 (1988) for the appointment of a guardian of an incapacitated person. Under that section, the incapacitated person herself or “. . . any person interested in the incapacitated person’s welfare may petition for a finding of incapacity and appointment of a guardian.1 Once the guardian is appointed, he or she may retain counsel to advise with respect to the conduct of the guardian’s duties.
¶ 4. The nature of the proceedings leading to the appointment of a guardian involve several parties, including the person (usually a relative) requesting the appointment. This person is frequently represented by counsel. The person for whom guardianship is required to be represented by counsel. The proceedings seeking the appointment may be largely consensual or they may be contested. Conflicts in the proceedings will primarily arise in two different contexts:
a) the party to the guardianship wishes to be appointed guardian, and other parties in interest object in favor of an unrelated third party guardianship or
b) the person for whom the guardianship is sought objects to the appointment.
Additional conflicts other may arise, depending on the nature of the guardianship proceeding and the identity of the parties to it, but should nonetheless be resolved as set forth below.
¶ 5. Analysis: If an attorney who has represented one of the parties in a contentious guardianship proceeding wishes to subsequently represent the person appointed as guardian, he or she must determine whether there is an impermissible conflict of interest in the subsequent representation. Resolution of the question is dependent on the facts of each given situation.
¶ 6. The conflict scenarios set forth above raise an issue under Utah Rule of Professional Conduct Rule 1.7 (Conflict of Interest: Current Clients) and Utah Rule of Professional Conduct Rule 1.9 (Duties to Former Clients), depending on whether the attorney continues to represent the party his or her previous client or whether the attorney withdraws from the prior representation. (more…)

Ethics Advisory Opinion No. 07-01

Issued March 9, 2007
¶ 1. Issue:
May a lawyer purchase the exclusive right to referrals generated from the membership base of an organization whose members from time to time may have need of the legal services offered by that lawyer?

¶ 2. Opinion: The proposed arrangement, which contemplates the exclusive funneling of referrals to one lawyer or firm, is not permitted, as it violates Rule 7.2(b), which prohibits a lawyer from giving anything of value to a person for recommending the lawyer’s services. The fact that the recommendation is made by an organization does not change the outcome here.
¶ 3. Facts: A Utah for-profit organization provides an array of services to its members, including assistance in finding legal representation for its members for various circumstances, including immigration, criminal defense and personal injury following an automobile accident. This organization has solicited a Utah law firm to purchase the exclusive right to receive referrals generated by its membership base, for members who need legal consultation following an automobile accident.
¶ 4. Analysis: Rule 7.2(b) of the Utah Rules of Professional Conduct sets out the basic rule that applies to the issue presented:
(b) A lawyer shall not give anything of value to a person for recommending the lawyer’s services; except that a lawyer may:
(1) pay the reasonable costs of advertisements or communications permitted by this Rule;
(2) pay the usual charges of a legal service plan or a lawyer referral service;
(3) pay for a law practice in accordance with Rule 1.17; or
(4) divide a fee with another lawyer as permitted by Rule 1.5(e).1
This fundamental rule is elaborated upon by Comment [5] to the Rule, which further states: “Lawyers are not permitted to pay others for channeling professional work.”2 Under the plain language of this Rule and the explanatory comment, a lawyer would be prohibited from purchasing exclusive referral rights from the organization, because that would constitute paying another person for recommending the lawyer’s services.3
¶ 5. Rule 7.2(b) contains several exceptions to this blanket prohibition. Subsection 7.2(b)(2) permits a lawyer to “pay the usual charges of a legal service plan or lawyer referral service.” This provision of the Utah Rules of Professional Conduct differs from the American Bar Association Model Rule, which permits a lawyer to pay the usual charges of a legal service plan or a “not-for-profit or qualified” lawyer referral service.4 It would be inappropriate to conclude, however, that the difference between the Utah Rule and the ABA Model Rule was intended to permit a lawyer to avoid the prohibition of Rule 7.2(b) through the use of an organization that is not, in fact, a “lawyer referral service” in even the most colloquial sense of the term.
¶ 6. Comment [6] to Rule 7.2 defines a lawyer referral service as “an organization that holds itself out to the public to provide referrals to lawyers with appropriate experience in the subject matter of the representation.” At a minimum, Rule 7.2(b)(2) requires that the lawyer referral service be available to the public and that it provide referrals to multiple lawyers and law firms, not to a single lawyer or a single law firm. (more…)