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Abstract 98/99-10

Summary of Facts Provided

A for-profit corporation (the "Corporation") has invited a lawyer to participate in an attorney referral network. In exchange for a monthly participation fee of $2,500, the Corporation would refer "leads" (names and addresses of patients seen at chiropractic and physical therapy clinics, and names and addresses of people involved in automobile accidents) to a limited number of attorneys; referrals would be exclusive and would be divided among lawyers participating in the network based on the leads’ zip codes. The Corporation would mail a form letter to each of those leads on Corporation letterhead, and the letter would include the following statements: (1) "We make sure that you receive all the benefits you deserve." (2) "We handle cases like yours—on a contingency (percentage) basis, which means that the referral attorney does not get paid unless you get paid." (3) "If you want to receive the most complete medical care and money for which you are entitled from your injury, call your team at [Corporation] . . . and we will schedule a ‘Free Consultation’ with the right attorney for you." (4) "[Corporation] and our referral service is FREE to you. We charge NO FEE to you for our service whatsoever."

Issues and Conclusions

May the lawyer participate in the Corporation’s referral network? No. The Committee believes that the lawyer’s participation in the program would violate the Colorado Rules of Professional Conduct.

Colorado Rule of Professional Conduct 1.5(a) unequivocally prohibits referral fees. Rule 7.2(c) prohibits a lawyer from providing anything of value to a for-profit organization in exchange for referrals. Under these rules and the comment to Rule 7.2, the $2,500 per month payment for leads is unethical. See People v. Zimmerman, 938 P.2d 131 (Colo. 1997); CBA Formal Op. 83 (adopted Nov. 18, 1989, addendum issued July 24, 1993) [23 The Colorado Lawyer 329 (Feb. 1994)].

Although the letter would be from the Corporation, not the lawyer, it would be mailed on the lawyer’s behalf, and the lawyer therefore may be responsible for its content. The form letter to prospective clients contains statements which violate several rules governing attorney communications concerning legal services. Colo. RPC 7.1(e), 8.4(a), (c).

Rule 7.1(a) prohibits misleading communications about the lawyer or the lawyer’s services, including statements that are "likely to create an unjustified expectation about results the lawyer can achieve." The form letter is or may be misleading in its statements or suggestion that (a) the Corporation itself will perform the work for the client, (b) the participating attorney is a part of the Corporation, and (c) the participating attorney is competent to handle the matter. Also, statements such as "[w]e make sure that you receive all the benefits you deserve" and "WE CAN HELP YOU" are likely to create an unjustified expectation about the results the lawyer can achieve. The form letter also violates Rule 7.1(d) which requires "[a]ny communication that states or implies the client does not have to pay a fee if there is no recovery" to "also disclose that the client may be liable for costs."

Rule 7.2(d) requires "[a]ny advertisement made pursuant to this Rule" to "include the name of at least one lawyer responsible for its content." Rule 7.3(d) requires any communication governed by Rule 7.3 to include the words "this is an advertisement" in a clear and conspicuous form on the outside of the envelope and at the beginning and end of any written communication. The form letter is from the Corporation and not the lawyer, but it is on the lawyer’s behalf; however, it does not identify the lawyer or include the "advertisement" legend. Therefore, it also does not comply with Rules 7.2(d) and 7.3(d).

Rule 7.3(c) prohibits solicitation of legal work from a client whom the lawyer knows or reasonably should know is represented by another lawyer in the matter. According to the Corporation’s proposal to the lawyer, some of the leads are already represented by counsel. If the form letter were sent to those leads, the mailing would violate Rule 7.3(c).

Finally, if the Corporation would be involved in providing services to clients, and if the lawyer does not adequately supervise the Corporation and its lay employees, the lawyer might be in violation of Rule 5.5(b) which prohibits a lawyer from assisting a person who is not a member of the Colorado bar in the unauthorized practice of law. In that regard, the lawyer must be sensitive to his duty of confidentiality under Rule 1.6. Because the Corporation would screen and process incoming calls from prospective clients, the lawyer is responsible for assuring that the Corporation’s non-attorney personnel are properly trained to perform their screening work and to comply with the requirements of Rule 1.6. See CBA Formal Op. 83.