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ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS
Formal Opinion 2000-4 Formal Opinion 2000-2
Formal Opinion 2000-3 Formal Opinion 2000-1
 

THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK

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FORMAL OPINION 2000-1

Topic: Plan to solicit bids by lawyers to perform legal services on internet website; advertising, solicitation, and  participation in a referral plan; duties with regard to advertising fees, client confidentiality, unauthorized practice of law, and conflicts of interest.

Digest: Lawyers may respond to an invitation to bid on legal projects through an internet website where client's invitation is not initiated by lawyer, where only the client is charged a fee, no legal fees are shared with the service provider, and responding lawyers are not pre-screened, approved, or otherwise regulated by the plan.

Code: DR 2-101; DR 2-103; EC 2-15; DR 3-101(B); DR 4-101(B); DR 5-105 (E); DR 5-107(B).

Question
May a lawyer ethically respond to an invitation to submit bids for legal projects over the internet sponsored by a profit-making business  (the “Provider ”) that would facilitate the posting by potential clients of legal projects on the company’s website?   An attorney wishing to provide legal services for a project would submit a profile, including the attorney’s experience in the subject matter of the representation, the estimated date of completion and the legal fees to be charged.  Under this arrangement, the only fee charged would be imposed on the clients, who would be charged for obtaining access to this information.  The participating attorneys would not be assessed a fee, share any legal fees with the Provider, or be pre-screened, approved, or otherwise regulated or controlled by the Provider.

Opinion

Introduction
A growing aspect of the “information revolution” is ready access to information about professional services, including lawyers and law firms.  The internet has become part of this revolution.   As a result, consumers of legal services can now  obtain more information to assist them in choosing an attorney without having to rely on a word-of-mouth referral or the yellow pages.   Plans like the one that is the subject of this opinion are proliferating on the internet.  Accordingly, we take this opportunity to consider the ethics issues raised by an attorney's participation in the proposed enterprise.

The Proposed Plan
A business has created an “international attorney comparison” website that would allow potential clients to post legal projects on the website.  Attorneys interested in providing legal representation in connection with a posted project are invited to submit profiles.   The attorney profile would include the attorney's qualifications,  the date on which the attorney expects to complete the project and the attorney's proposed fee for the project.  The potential client could use the attorney profiles received to compare responding attorneys and their respective proposals and assist in deciding whether to retain one of them.

The only fee that would be charged would be imposed solely on the potential client, who would be charged for access to the information.  Participating attorneys would not be charged any fee, nor would the Provider and the attorney share any fees.  The fee charged to the potential client by the Provider would be for using the website to receive information provided by the attorneys, and would be separate from any fee the attorney would charge the client for providing legal services, which would be billed directly to the client.

None of the attorneys submitting profiles would be screened or otherwise approved by the Provider and the Provider would not in any way direct or regulate the attorney’s professional representation.  However, the Provider  proposes to assist responding attorneys in avoiding any potential conflicts by giving them the name of the potential client and the name of any adverse party before any response is submitted.

Advertising and Solicitation
It is well established that a lawyer or law firm may advertise and/or solicit legal business through traditional means, such as newspapers or radio,  subject to the rules regulating lawyer advertising and solicitation.[1a]   We conclude that the use of the internet as the medium by which a lawyer communicates advertising does not alter this basic conclusion.

In any event, where,  as here, a request for representation is initiated by the client, not the lawyer, the Committee concludes that the act of responding to a request over the internet for representation does not, standing alone,  constitute “advertising” or “solicitation” as these terms are used in the New York Lawyer’s Code of  Professional Responsibility (the “Code”).[2a]  Although the Provider contemplates that participating lawyers will contact prospective clients directly over the internet, the process at issue here is initiated by, or on behalf of, the clients who, in effect, have “solicited” those attorneys who are interested to submit a bid on the project.  As such, it is not functionally different than any other bidding process that has become increasingly common in selecting counsel.  Indeed, such procedures often occur following the publication of a Request for Proposals (“RFP”) by a government or other organization, or, for that matter, any project that is posted on a (real) bulletin board.[3a]  Indeed, some courts presiding over class actions recently have conducted “auctions,” inviting lawyers to submit qualifications and bids.  See, e.g.,  In re Cendant Corp. Litig., 182 F.R.D. 144, 150 (D.N.J. 1998) (“There is an emerging trend in common fund class actions for courts to simulate the free market in the selection of class counsel.  The use of an auction to select counsel in a securities class action was pioneered. . . .”);  In re Auction Houses Antitrust Litig., Civ. Action No. 00 Civ. 0648 (LAK), 2000 WL 460355 (S.D.N.Y. April 20, 2000).

Participation in a Lawyer Referral Plan
We also conclude that a lawyer’s involvement in responding to an invitation to bid pursuant to the plan described here, would not violate the provision in DR 2-103(B) proscribing participation in certain for-profit referral plans.  Because no fee is paid by the lawyer to the Provider to obtain employment, the plan at issue, therefore, lacks the essential element regulated by DR 2-103(B).[4a]  In this respect, it resembles other plans considered and approved by both the New York County Lawyers Association and the New York State Bar Association.

In N.Y. County 721 (1997), the New York County Lawyers Association considered a network of lawyers, law students, and legal workers that sponsored an internet home page through a local internet provider.  The provider allowed the organization to include an on-line “Attorney Referral Board” as part of its home page, at no extra charge to the lawyers.  When an internet user (i.e., potential client) clicked on the Attorney Referral Board, the screen showed a directory of legal subject areas which was in turn linked to a brief description of each area of law and a listing of attorneys who practice in each area.  The County Lawyers determined that this plan is permitted under DR 2-103(B), stating:

We do not view the listing described by the inquirer as a prohibited for-profit referral service because the user will select the attorneys whom he or she chooses to contact... and no payment is to be made to the internet provider on the basis of matters actually generated by the listings.

Similarly, the State Bar Association in N.Y. State 659 (1994) determined that, consistent with DR 2-103(B),  a lawyer may allow a car dealer to give car buyers an “information package” which includes the lawyer’s advertising materials as long as the lawyer does not pay the auto dealer a fee to distribute the materials, does not discuss the lawyer’s advertisement with customers, and the advertising materials comply with DR 2-101.

Like the plans considered above, the plan at issue here involves no payment by the lawyer to the Provider.   Under the circumstances, we conclude that the internet plan described to us does not come within the purview of DR 2-103(B).

Other Issues

1)                 Confidentiality, Conflicts of Interest
A number of ethics committees have addressed the problem of an attorney’s use of the internet to communicate with clients or prospective clients.  The starting point, of course, is DR 4-101(B) which prohibits a lawyer from knowingly revealing client confidences or secrets and requires a lawyer to use reasonable care to protect client confidences and secrets.  We do not believe that there is anything inherently improper about using the internet as a means generally to communicate with a client, especially given recent laws precluding unauthorized interception of internet transmissions.  See The Electronic Communications Privacy Act, 18 U.S.C.  2510 et seq.  Of course, a lawyer may come into possession of certain highly confidential or especially sensitive information that warrants more protection than the internet currently is able to provide and which should be communicated through another more secure means.  We agree with the recent decision by the New York State Bar Association which concluded that, based on recent steps taken to criminalize the unauthorized interception of e-mail, “lawyers may in ordinary circumstances utilize unencrypted internet e-mail to transmit confidential information without breaching their duties of confidentiality under Canon 4 to their clients . . .”  N.Y. State 709 (1998).  In reaching this conclusion, however, the New York State Bar  Association cautioned that circumstances may exist in which a particular e-mail transmission is at such heightened risk of interception or is of such an extraordinarily sensitive nature, that a more secure means of communication than unencrypted internet e-mail should be chosen.  Id.; cf. N.Y. City 1994-11; N.Y. City 1998-2.  Although it is possible that the profiles could contain at least some information that might be considered to be a “confidence,” such as the anticipated cost of the legal project, there is nothing that would appear to be especially sensitive warranting extraordinary protection.  Accordingly, we believe that use of the internet is appropriate to convey the profiles contemplated by the Provider.

Although well meaning, the Provider’s stated intention prospectively to provide interested attorneys with the names of the potential client and any adverse parties does raise a confidentiality concern.[5a]   To be sure, providing such information to prospective lawyers would facilitate the requisite conflicts checks.  See DR 5-105(E).[6a]   However,  providing this information to a lawyer  prematurely could  result in divulging confidences and secrets that could harm the client, such as the identity of a client who contemplates filing a possible lawsuit—information that might impel an adversary to sue preemptively.  The Provider, therefore, should establish procedures to avoid prematurely revealing on the internet information about the client’s identity in connection with the invitation for bids, unless precautions are taken to assure that the client would not be better off waiting until a tentative selection of counsel is made before the identities of the client and others who may be involved are revealed.

2)                 Unauthorized Practice
We also note that a response by a lawyer to a client posting a legal project on the internet who resides outside of New York can raise issues about whether the provision of legal advice or assistance to such a client comports with DR 3-101(B), governing unauthorized practice.  DR 3-101(B) states that a lawyer “shall not practice law in a jurisdiction where to do so would be in violation of regulations in that jurisdiction.”   This will depend on whether the particular legal services to be provided  would constitute the unauthorized practice of law in the other jurisdiction.  Although it is beyond the scope of this Committee’s jurisdiction to determine whether lawyers licensed in New York may lawfully provide legal services to clients who reside in other states or countries, we caution lawyers who respond to invitations over the internet to be familiar with the laws of the other jurisdictions governing unauthorized practice.[7a]



[1a]       See Shapero v. Kentucky State Bar Assn., 486 U.S. 466, 473 (1988); In re: Koffler, 51 N.Y.2d 140, 432 N.Y.S.2d 872, 875 (1980) (direct mail solicitation of potential clients by lawyers is constitutionally protected commercial speech).  The only caveat, which applies as well to advertising, is that communications to prospective clients must not contain any statements or claims that are false, deceptive or misleading and should otherwise conform to the limitations imposed by DR 2-101(C) concerning references to credentials, other clients, and legal fees.  See infra, note 4.

[2a]        See DR 2-101; DR 2-103.

[3a]        We express no view as to whether a more targeted type of plan would involve “solicitation” requiring ethical regulation.

[4a]       DR 2-103(B) provides as follows: A lawyer shall not compensate or give anything of value to a person or organization to recommend or obtain employment by a client, or as a reward for having made a recommendation resulting in employment by a client, except that a lawyer may pay the usual and reasonable fees or dues charged by a qualified legal assistance organization or referral fees to another lawyer as permitted by DR 2-107.

 [5a]     We note that the service has pledged not to direct or regulate in any way the attorney's professional judgment. Such a policy, if followed, would obviate any potential issue raised by the proscription against third party interference set forth in DR 5-107(B), which states:

Unless authorized by law, a lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal service for another to direct or regulate his or her professional judgment in rendering such legal services, or to cause the lawyer to compromise the lawyer's duty to maintain the confidences and secrets of the client under DR 4-101(B).

[6a]       In New York, DR 5-105(E) requires that lawyers and law firms maintain an accurate record-keeping system of current and prior engagements, and must check those records before undertaking a new matter to assure that there will be no violation of the conflicts rules because of a current or past representation.  See DR 5-105; DR 5-108.  In N.Y. State 709  (1998), the State Bar opined that practicing law for clients in conjunction with the internet “does not give rise to any exemption from the fundamental obligation to avoid conflicts and not to undertake a new representation without checking to assure that it does not create an impermissible conflict,”(citing N.Y. State 664 (1994) (requiring conflicts check by lawyer providing specific legal advice to clients by means of  “900 ” telephone service)).

[7a]       In Birbower, Montabano, Condon & Frank v. Superior Court, 70 Cal. Rpt. 2d 304 (Cal. Sup. Ct. 1998), the California Supreme Court held that a New York law firm that represented a California company in an arbitration proceeding engaged in the unauthorized practice of law in violation of a California statute.  Another jurisdiction might have taken a different view than that of California regarding the New York law firm's conduct.


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