Ethics Opinon 1977-5
1. Should the members of the Permanent Committee of the Lawyer Referral Service (hereinafter "LRS") and the Board of Directors of the San Diego County Bar Association (hereinafter "Association") and the members of their respective firms be disqualified from receiving referrals during the period in which they serve as a committee member and/or director?
2. Briefly describe the rules of operation of an LRS.
A. Minimum Standards for a Lawyer Referral Service in California
The Board of Directors of the State Bar of California (hereinafter "State Bar") have adopted the "Minimum Standards for a Lawyer Referral Service in California" (hereinafter "Standards") effective May 14, 1976. It is the policy of the State Bar that every community in California be served by an LRS. (Standards § 1.1) The State Bar is empowered to authorize a local bar association to establish and operate an LRS. Such authorization will be granted if the State Bar is satisfied that the written application submitted by the local bar association establishes that the proposed LRS will conform to the Standards. (Standards § 2.1) The LRS is to be supervised by a committee or board of directors (hereinafter the "Committee") which is empowered to make all management decisions. However, such decisions are subject to review or modification by the board of directors of the local association. (Standard § 3.1) Committee members are chosen by the local bar association and may include nonlawyer public representatives; provided, however, that at least 50% of such members are active members of the State Bar. (Standards § 3.2)
Membership on any panel established by the LRS is to be open to all active members of the State Bar who regularly practice and maintain an office in the area served. (Standard § 4.1)
The LRS is to establish a variety of panels which cover the specialized areas of the law (e.g., criminal law, family law, patents and trademarks, etc.). (Standards §§ 5.1, 5.2)
Each LRS is required to develop and maintain an active publicity program which is designed to inform the general public of the existence, purpose, and benefits of the LRS. (Standards § 7.1) The LRS is funded through registration fees and referral fees received from the panel registrants (Standards §§ 8.1, 8.2) Extensive records covering the operation of the LRS must be maintained by same. Each year the LRS is required to file with the State Bar a report on its activities. (Standards §§ 9.1, 9.2)
The Standards also provide three directives with respect to referral procedures. First, the Committee is required to establish procedures which assure that each referral is made in a fair and impartial manner. Second, no referrals are to be made on the basis of race, sex, age, religion or national origin. Third, the referrer is prohibited from making referrals to himself, his associates or employees.
B. Rules of Operation of the Lawyer Referral Service of the San Diego County Bar Association
The revised "Rules of Operation of the Lawyer Referral Service of the San Diego County Bar Association" (hereinafter "Rules") became effective January 1, 1977. The Rules provide for the establishment of a Permanent Committee to administer the Association's LRS. The Permanent Committee is comprised of seven lawyers. These seven lawyers include the Treasurer of the Association with the approval of the Board of Directors of same. The President and Board Liasion of the Association are ex-officio members of the Permanent Committee, however, such members are not entitled to vote. (Rules Section 3 of Article Two.) The LRS is operated by a Director and four referrers who are hired and supervised by the Permanent Committee, subject to the approval and continuing jurisdiction of the Directors of the Association. The Director need only make monthly reports to the Permanent Committee if the same are requested by the Chairman of such Committee. Referrals are generally made on a rotation basis, except that geography (i.e. distance between client and attorney) and fluency in a foreign language are also considerations. (Rules Section 4 of Article Two.) The person requesting a referral is given one name from the panel pertaining to the type of legal problem which such person has. The Association's LRS currently has 22 separate panels covering a variety of specialized areas of the law. The largest panel is "Family Law" which has 246 registered attorneys. The smallest panel is "Condemnation" which has only two attorneys.
An attorney who wishes to become a registrant with the LRS is required to file an application with the same. The Permanent Committee reviews each application to determine the eligibility of such applicant for the requested panel membership. (Rules Section 4 of Article Three.)
Each registrant with the LRS is required to keep a record which contains: (i) the name of each client referred to him or her, (ii) the date of the reference, (iii) the general nature of the matter referred and (iv) the total fee received. Upon receipt of the fee or a portion thereof, or upon disposition of the matter, the attorney must report to the LRS and submit the appropriate pro rata payment of fees collected. The LRS is permitted to request written reports from time-to-time from registrant attorneys handling referred matters. (Rules Section 11 of Article Three.)
The Association's LRS has an unwritten rule which provides that Permanent Committee members are disqualified from receiving referrals while they serve on such Committee. The Directors of the Association and the members of the Permanent Committee have no direct contact with the day-to-day operations of the LRS. The four women who make referrals were hired by the Director of the LRS. The Director attempts to avoid any favoritism in the referral procedures by asking each applicant for the position of referrer whether such applicant is related to any attorney in San Diego County. If there is a strong relationship between the applicant and an attorney in San Diego County such applicant will not be hired. The Director estimates that approximately 30 people would be disqualified from receiving referrals if a rule is adopted which disqualifies members of the Permanent Committee and Directors of the Association and the members of their respective firms from receiving referrals during the period in which such persons serve as a committee member and/or director.
C. Policy of Other Lawyer Referral Services
The LRS of the Southwest Los Angeles Bar Association has a written rule which prohibits referrals to members of the committee which administers its LRS. However, said rule has been waived each year that the LRS has been in operation. It should also be noted that the Southwest Los Angeles Bar Association only has fifty members.
There is an unwritten rule that no referrals may be made to members of the governing committee of the LRS of the Los Angeles County Bar Association; but, attorneys from such committee member's firms are not disqualified. A committee member who wishes to remain on a panel(s) may obtain a waiver of the rule against referrals by filing a request for same with the Board of Trustees of the Bar Association. In the past, a waiver has been requested and granted in at least one instance.
The Orange County Bar Association's LRS has eleven members serving on its governing committee. Three members serve as a liasion for the Board of Governors of the Association. Three members are selected at large and are not registrants with the LRS. Three other members actually serve on one or more panels. Finally, two nonattorney members are appointed by and from the Lawyers Wives Organization. Therefore, eight members of the governing committee are not registrants with the LRS. Consequently, the Director of the Orange County Bar Association's LRS believes that through its system for selecting members to serve on the governing committee it can avoid favoritism, and therefore, the three members who are registrants with the LRS need not be disqualified from receiving referrals.
The Committee members of the governing committee of the LRS of the Long Beach Bar Association are permitted to receive referrals during the time they serve on such committees. The Director of such LRS believes that committee members are sufficiently removed from the actual referrals to avoid any favoritism.
CONCLUSION AND PROPOSAL
The Rules of Professional Conduct of the State Bar of California do not address the narrow question presented to the Legal Ethics and Unlawful Practices Committee (hereinafter "Ethics Committee"). The Standards prepared by the State Bar provide only minimal guidance. Section 6.1 of the Standards states that referrals shall be made in a fair and impartial manner. Although referrals by the LRS are made on a rotation basis, it is the opinion of the Ethics Committee that the members of the Permanent Committee, as presently constituted, are so closely connected to the operations of the Association's LRS that it would be inappropriate for such persons or the members of their firms to receive referrals. On the other hand, the directors of the Association are sufficiently removed from the operations of the LRS and, thus, the Ethics Committee believes that it would not be inappropriate for such directors and the members of their firms to receive referrals.
However, to avoid even the appearance of impropriety and to assure that referrals are made in a fair and impartial manner, the Ethics Committee recommends that the Board of Directors of the Association adopt the following two proposals for restructuring the LRS.
It is hereby recommended that the Permanent Committee be comprised of nine members: the treasurer of the Association, six lawyers appointed by the President and two nonlawyers appointed by the President from the public at large. The six lawyers should consist of two persons who are active participants in the LRS and four persons (including their respective firms) who do not so participate. The President and the Board Liasion should remain as ex officio members of the Permanent Committee. It is believed that by permitting membership of a limited number of persons who receive referrals, that the Bar at once may receive the benefit of their current experience with the referral process yet, on the other hand, minimizes the potential for favoritism by the proposed new structure.
To further eliminate the possibility of favoritism in referrals, the Ethics Committee hereby recommends that the following procedures be established for the Permanent Committee. First, membership on the Permanent Committee should be for a term of not more than one or two years. Second, the Permanent Committee should hold regular monthly meetings. Finally, at such monthly meetings, the Director of the LRS should make a presentation concerning the activities of the LRS during the preceding month.
If the aforementioned proposals are adopted by the Board of Directors of the Association, the permanent committee will benefit from the input of attorneys active in the LRS and from the participation of lay persons who are leaders in the community. In addition, the proposed procedural changes will strengthen the effectiveness of the Permanent Committee.
Disclaimer: This opinion was issued by the Legal Ethics Committee of the San Diego County Bar Association. It is advisory only and is not binding upon any member of the SDCBA, any other member of the State Bar of California, the State Bar of California or its Board of Governors, or any persons or tribunals charged with regulatory responsibilities. The SDCBA, its officers, directors, agents, and the Legal Ethics Committee members assume no responsibility or liability in rendering this opinion.