Ethics Advisory Opinion 14-04

Utah State Bar
Ethics Advisory Opinion Committee
Revised Opinion Number 14-04 (see Dissent)
Issued November 12, 2014

ISSUE

1.         What are the ethical limits to participating in attorney rating systems, especially those that identify “the Best Lawyer” or “Super Lawyer”?

OPINION

2.         Rule 7.1 of the Utah Rules of Professional Conduct (the “URPC”) prohibits false or misleading communications concerning a lawyer or a lawyer’s services. An unsubstantiated comparison of lawyers is false or misleading if it would lead a reasonable person to conclude that the comparison can be substantiated. Advertisement of a rating, or of inclusion in a ranking list as being “super” or “best” or the like, by a comparing organization is permissible where the comparing organization has made an appropriate inquiry into the lawyer’s fitness, the lawyer does not pay to receive the rating itself (although she may pay for an investigation in accordance with Rule 7.2), the comparing organization’s methodology or standard used to determine the rating or ranking is fully disclosed and explained and conveniently available to the public, and the communication disclaims the approval of the Utah Supreme Court and/or the Utah State Bar. The factual basis for the comparison of the rated or listed lawyer’s services to the services of other lawyers must be verifiable in order to pass muster under Rule 7.1. Any advertisement must state that the lawyer was included in a “super” or other such list or ranking rather than describe the lawyer as being a “super lawyer” or the “best lawyer.”  The statements that a lawyer is “super” or the “best” cannot be factually substantiated and are inherently misleading.

3.         Rule 7.2 of the Utah Rules of Professional Conduct prohibits giving “anything of value to a person for recommending the lawyer’s services; except that a lawyer may: . . . pay the reasonable costs of advertisements or communications permitted by this Rule. . . .” Rule 7.2(b)(1). A lawyer who pays an entity to list her as the “best lawyer” in an area or to otherwise compare her favorably to other lawyers violates Rule 7.2 because she is giving something of value to another to recommend the lawyer’s services.  She is not paying the reasonable costs of advertising. Similarly, trading votes with another in a survey to determine the “best lawyer” is giving something of value for the other person to recommend the lawyer’s services and violates Rule 7.2. “[A]nything of value” would also include monies paid to a public figure or celebrity to recommend a lawyer. It is permissible for a lawyer to pay a fee to a comparing organization to conduct an investigation into the lawyer’s fitness, but the outcome of the investigation must be independent of the fee.

BACKGROUND

4.         Certain websites, advertisers and companies offer services in which they list lawyers as the “best” in a particular locale, practice area, city, etc. Sometimes these entities determine who they will list as the “best” simply by including whoever signs up (and pays them) first. Other times companies will run on-line voting contests to determine which lawyers, restaurants, and businesses are the “best” in the area based solely on the number of votes cast, a system that can be easily manipulated by lawyers with large staffs or multiple email addresses. Other entities purport to have more scientific or valid methods of identifying outstanding lawyers, in which they investigate each lawyer’s fitness before deciding whether to rate the lawyer favorably. Still other entities investigate and approve of law firms or lawyers who have good business practices (e.g., have current business licenses and Utah State Bar licenses, have not been publicly disciplined, etc.), separate and apart from the lawyers’ legal experience, skill, and expertise, or lack thereof, which they do not investigate or evaluate. The Committee has been asked to opine as to when these arrangements violate the Rules of Professional Conduct.
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Ethics Advisory Opinion 14-05

Utah State Bar
Ethics Advisory Opinion Committee
Opinion Number 14-05
Issued December 22, 2014

ISSUE

  1. When an Attorney (A) is representing another Lawyer (L) in a legal malpractice or disciplinary action, and Lawyer L undertakes to represent a client in a matter adverse to a client of Attorney A, what are the ethical considerations?

OPINION

2.         Attorney A representing a Lawyer L in a disciplinary or legal malpractice matter may face a concurrent conflict of interest if the Lawyer L (client) represents an individual who is an opposing party to a client represented by Attorney A.  A concurrent conflict of interest would arise if there is a significant risk that Attorney A’s representation of Lawyer L be will materially limited by her responsibilities to the client being sued by Lawyer L’s client; or if there is a significant risk that Attorney A’s representation of a client against Lawyer L’s client will be materially limited by her representation of Lawyer L.  Whether this situation poses a serious risk of materially limiting Attorney A’s representation requires analyzing the factual situations presented.

3.        Lawyer L may also face a concurrent conflict of interest if this dual relationship creates a significant risk that Lawyer L’s representation of his client against Attorney A will be materially limited.  Here, too, the factual context will be determinative.

4.         Even if such a concurrent conflict of interest is created, it may be possible for all affected clients to give informed consent, confirmed in writing, to the conflict.

5.         Because the risk that representation may be materially limited due to this situation will often be due to a personal conflict of interest, in many cases other lawyers in the firms of Attorney A and Lawyer L will be able to be involved in the representation without creating a conflict of interest.

BACKGROUND

6.         Some Attorneys (A) undertake to represent other lawyers in legal malpractice or disciplinary actions.   In most such cases, the Lawyer (L) facing discipline or a malpractice action continues to practice law.   As a result Lawyer L may undertake to represent a client in a matter in which the opposing party is represented by Attorney A and/or Attorney A’s firm.

7.         The scenario presents questions both for Attorney A who is representing the Lawyer L in a disciplinary or malpractice action, and for Lawyer L who is representing a client in a case where his personal Attorney A is representing the opposing party.

ANALYSIS

8.         Ethical rules prohibit conflicts of interest in order to protect client confidentiality and promote loyalty. Rule 1.7 of the Utah Rules of Professional Conduct governs concurrent conflicts of interests and provides:

“(a) . . . A concurrent conflict of interest exists if:  (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.”

The scenario described above is not one of direct adversity – neither Attorney A nor Lawyer L is representing a client who is “directly adverse to another client.”
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Ethics Advisory Opinion 14-03

Utah State Bar
Ethics Advisory Opinion Committee

Opinion Number 14-03

Issued April 22, 2014

ISSUE

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?

 OPINION

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”).

FACTS

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.

 ANALYSIS

 

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.
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Ethics Advisory Opinion 14-02

Utah State Bar
Ethics Advisory Opinion Committee 

Opinion Number 14-02 

Issued January 14, 2014

ISSUE

1.         Is an Agreement between a non-lawyer Marketer and a Law Firm where the Marketer conducts telephone marketing to solicit and refer clients to Law Firm in violation of the Rules of Professional Conduct where the payment to the Marketer matches a percentage of the fees paid to the Law Firm by the clients referred to the Law Firm by the Marketer?

2.         If the Agreement is in violation of the Rules of Professional Conduct must the Attorney retained by Marketer to enforce the Agreement inform the appropriate professional authority pursuant to Rule 8.3(a)?

OPINION

3.         The Agreement, which requires payment to the non-lawyer Marketer to be based on a percentage of the fees paid to the Law Firm by the clients referred to the Law Firm by the Marketer, violates Rule 7.2(b) and Rule 5.4 of the Rules of Professional Conduct.

4.         The question of whether it should be apparent to the Attorney retained by Marketer to enforce the Agreement, that the Agreement violates Rule 7.2(b) and/or Rule 5.4 of the Rules of Professional Conduct, in a manner that triggers a duty to inform the appropriate professional authority under Rule 8.3(a), is a fact specific inquiry undertaken by the lawyer presented with a Rule 8.3(a) question.  The Committee expresses no opinion as to whether these specific facts do in fact trigger any obligation of the Attorney under Rule 8.3(a).

FACTS

5.         A Marketer has an agreement with a Law Firm to conduct telephone marketing to solicit and refer clients to the Law Firm.  Marketer is paid by Law Firm, but Marketer receives payment which matches a percentage of the fees paid to the Law Firm by the clients who retain the Law Firm and were referred to the Law Firm by the Marketer.  If the Law Firm is not paid in full by the clients referred by the Marketer, Law Firm’s payment to Marketer is reduced.  An agency of another State requires the Law Firm to refund a substantial portion of fees paid to the Law Firm by residents of that State.  Law Firms payments to the Marketer were reduced correspondingly.

6.         Marketer then retains an Attorney to enforce payments – without reductions – under the agreement between the Law Firm and the Marketer.

ANALYSIS

7.         Rule 7.2(b) states that:  “A lawyer shall not give anything of value to a person for recommending the lawyer’s services[.]”  The comments to Rule 7.2 indicate that:  “Lawyers are not permitted to pay others for channeling professional work.”  [Comment 5].  Here, the arrangement between a Law Firm and Marketer violates the plain language of Rule 7.2(b) and it is not readily apparent from the facts of this matter that any exception to the plain language of Rule 7.2(b) is applicable.

8.         The comments to Rule 7.2 recognize the limited exceptions to this prohibition and mimic the language of Rule 7.2(b)(2) in indicating that:  “A lawyer may pay the usual charges of a legal service plan or a lawyer referral service. . . . A lawyer referral service . . . is an organization that holds itself out to the public to provide referrals to lawyers with appropriate experience in the subject matter of the representation.”  [Comment 6].  “At a minimum, Rule 7.2(b) 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.”  [Opinion 07-01].  Here, there is no indication that the Marketer is in fact a “lawyer referral service.”[1]
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Ethics Advisory Opinion 14-01

Utah State Bar
Ethics Advisory Opinion Committee 

Opinion Number 14-01

 Issued January 15, 2014

ISSUE

1.         Under what conditions is it appropriate for a personal injury lawyer to “outsource the calculation, verification and resolution of alleged health insurance liens and subrogation/reimbursement claims” and pass the outsourced resolution fee to the client as a “cost.”  There are two questions posed to the committee.  First, can the lawyer appropriately outsource the lien resolution?  Second, is the treatment of the lien resolution fee appropriately treated a “cost” to the client?

 OPINION

2.         It is ethical for a personal injury lawyer to engage the services of a lien resolution company that can provide expert advice or to associate with a law firm providing this service.

3.         If properly disclosed in the retention agreement, fee resolution services may be included as “costs” to the client provided the resolution services are professional services equivalent to accountants or appraisers.

4.         If the services provided constitute the practice of law, the personal injury lawyer and the lien resolution company must comply with the fee splitting requirements of Rule 1.5(c) and (d).  Then, the lawyer cannot treat the lien resolution fee as a cost to the client. If the services constitute the practice of law, it may be proper for a lien resolution company to collect a contingency fee.

 BACKGROUND

5.         The federal or state government pays many, if not most, seriously injured plaintiffs’ medical bills through Medicaid[1] or Medicare.[2]  Insurers, industrial unions and other private third-party payers have subrogation rights to monies collected from solvent third parties.  Finally, in Utah, Utah Code Annotated 38-7-1 et seq provides for hospital liens on judgments, settlements or compromise in certain accident cases.[3]

6.         In straightforward simple cases, little difficulty arises.  However, in order to settle complicated injury cases, plaintiff’s counsel must account for these liens. This may require substantial expertise. Counsel must ascertain the correct amount payable for each lien.[4]  The assistance of experts in lien resolution advances the laudable goal of fair resolution to both the client and the lien holder.

7.         In recent years, third party entities have held themselves out as “Lien Resolution” companies.  The services offered are often a significant value enhancement for the client.  Many plaintiffs’ personal injury lawyers might lack the necessary competence in reading medical bills for the purpose of attributing costs to the plaintiff’s general health as opposed to the accident.

8.         The issue of whether such services should be treated as “costs” or as “attorney’s fees” depends upon the factual nature of the work performed.  One company describes its services as addressing “Medicare conditional payments, Medicaid, Tricare[5], Veterans Affairs, FEHBA[6], ERISA[7], Private Insurance and Hospital/Provider lien claims.”[8] The services offered include reporting to the appropriate government agency, calculation of the amounts due, verification of the accuracy of the lien, and final resolution of the claim.  This firm charges a flat fee for simple Medicaid/Medicare resolution.  It charges a contingency fee based upon percentage of saving in cases that are more complex.

9.         Other lien resolution companies describe their staff as medical billing specialists, nurses and attorneys familiar with federal law beyond the knowledge possessed by the ordinary plaintiff’s personal injury lawyer. They claim that their services include a determination of the personal injury lawyer’s affirmative obligation to notify healthcare plans.  They “will assess the healthcare plans’ rights of recovery and audit the reimbursement claims to ‘carve out’ items unrelated to injury/settlement.”  They will then pursue administrative remedies, such as damage allocation, waiver and compromises to ensure the appropriate ‘net recovery’ for the claimant.  If the claim is not resolved administratively and goes to adjudication, they provide legal authority and support for the personal injury attorney in dealing with the agency.  Those companies charge a flat fee based upon the amount of the total settlement or verdict.    They characterize their service as providing the personal injury lawyer with sufficient facts and familiarity with the law.  This allows the personal injury lawyer the ability to negotiate liens on equal terms with the lienholder’s lawyer.  In essence, they believe that they are providing expert advice coupled with specialized legal resources for the personal injury attorney.
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