Ethics Opinon 1978-5
LEGAL ETHICS AND UNLAWFUL PRACTICE COMMITTEE, SAN DIEGO
COUNTY BAR ASSOCIATION
has developed a concept for a "public interest law
firm" (hereinafter the "Service") whereby
the Service advertises to the general public that its office
is available to the public for the performance of "diagnostic"
legal services. The attorney envisions the Service as being
the equivalent to the practice of a general practitioner
in the medical profession in that the Service will engage
in an initial 20 minute consultation with the client and
thereafter makes a recommendation regarding the approach
to a solution. The attorney for the Service either suggests
self help, agency help or further action by an attorney.
In the case where the decision is that an attorney should
handle the matter, the attorney for the Service will either
handle the matter himself or, when the matter is outside
his area of expertise, refer the client to outside counsel
in the particular area.
attorney contemplates that the Service will maintain a referral
relationship with many attorneys in the Bar Association
to whom these particular matters are referred. These "referee"
attorneys will be attorneys in private practices of their
own but will be included in the Service's list of attorneys
to whom it refers matters; based upon their previous request
that they be so included. There is no indication that any
fee will be paid by these attorneys to be included on this
referee list. In the case where a matter is referred out
from the Service, the Service will share fees with the referee
attorney based upon the Service's part in follow-up and
diagnosis as well as continuing support services actually
performed by the service.
time of the diagnostic review of the client's problem, if
the Service makes the determination that the matter must
be handled by an attorney (either the attorney running the
Service or one of its referee attorneys), the Service has
the client sign a "Fee Agreement and Power of Attorney"
(hereinafter the "Agreement"). The Agreement is
entered into between the client and the service and establishes
the method or rate of compensation for the total services
to be performed, whether they be rendered by the Service
or the referee attorney. Specifically this Agreement will
authorize legal work to be performed at a specific rate
or fixed amount of compensation. The Agreement discloses
that, where the Service attorney remains associated with
the client's case, the client agrees that the Service shall
receive 20% of the fee paid the referee attorney.
circumstances present the following questions for consideration:
the Service constitute a 'lawyer referral service' subject
to compliance with the Minimum Standards for a Lawyer Referral
Service in California promulgated by the Board of Governors
of the State Bar of California?
"Does the method of fee sharing contemplated in the
proposed "Fee Agreement and Power of Attorney"
violate Rule 2-108 "Division of Fees Among Lawyers"?
Service as presented would constitute a lawyer referral
service and thus is subject to compliance with the Minimum
Standards for a Lawyer Referral Service in California (see
the attached copy). Further, the fee sharing as presented
would violate Rule 2-108 of the Rules of Professional Conduct
of the State Bar of California in both its present and proposed
STATUTES AND CANONS
Minimum Standards for a Lawyer Referral Service in California
(hereinafter the "Minimum Standard) are attached hereto.
2-108 of the Rules of Professional Responsibility of the
State Bar of California in its present and proposed form
is set out as follows:
2-108. Division of fees Among Lawyers Financial Arrangements
A member of the State Bar shall not divide a fee for legal
services with another person licensed to practice law who
is not a partner or associate of his or her law firm or
law office unless,
The client consents to employment of the other person licensed
to practice law after a full disclosure that a division
of fees will be made; and
The division is made in proportion to the services performed
or responsibility assumed by each; and
The total fee charged by all persons licensed to practice
law is not increased solely by reason of the provision for
division of fees.
A member of the State Bar shall not compensate, give or
promise anything of value to any person licensed to practice
law for the purpose of recommending or securing employment
of the member or the member's firm by a client, or as a
reward for having made a recommendation resulting in employment
of the member or securing employment of the member or the
member's firm by a client, or as a reward for having made
a recommendation resulting in employment of the member or
the member's firm by a client." (Underlined portion
represents the new provisions proposed by the Board of Governors'
Committee on Professional Responsibility, tentatively approved
on April 28, 1978.)
State Bar of California has recognized the general public's
need for accessible legal services and to that end has established
a policy that all communities shall be served by lawyer
referral services, ". . . to make legal services more
available to the general public by providing a way in which
any person may be referred to a member of the Bar consistent
with the relevant circumstances, such as they type and degree
of difficulty of the legal problem presented by such person,
and his or her spoken language, geographical convenience
and financial ability to pay for desired services."
(See paragraph 1.2 of the Minimum Standards.) To facilitate
and implement this policy, the State Bar of California has
adopted specific rules and regulations regarding the minimum
standards for the operation of such referral services. These
rules appear to be carefully calculated to satisfy the public's
need for available legal services while at the same time
protecting the public from the abuses and evils traditionally
associated with client solicitation, capping and fee sharing
arrangements between attorneys (see specifically paragraphs
8.1 and 8.2 of the Minimum Standards).
the facts as presented, the function of the proposed Service
is to provide a needed place in the community for intermediate
income people to inquire and receive a diagnostic analysis
of their legal problem and be directed to one or more attorneys
capable of handling their matter. There appears to be no
discernible distinction between the functions to be performed
by the proposed Service and a "lawyer referral service"
as contemplated by the State Bar of California. Accordingly,
we conclude that the proposed Service would constitute a
"lawyer referral service" and as such, will be
subject to the Minimum Standards.
clear that if the Service receives a flat 20% fee (as is
set out in its proposed "Fee Agreement and Power of
Attorney") that arrangement violates Rule 2-108 in
both its present and proposed form. The rule requires that
the division of fees must be in proportion to the services
performed or the responsibility assumed by each attorney.
A flat fee of 20% does not necessarily bear any relationship
to the services performed or responsibilities assumed by
Rule 2-108 requires that the total fee charged by all attorneys
in the matter should not be increased solely by reason of
the provision for the division of fees. Although the language
of the provision in the proposed Agreement is somewhat ambiguous,
it appears that there is substantial danger that the total
fee charged by all the attorneys will be increased solely
by reason of the involvement of the Service. For example,
it appears that if the referee attorney is billing the client
on an hourly basis, the client is also obligated to pay
20% of the amount billed to the Service if it remains associated
with the case. It is apparent that the intent of Rule 2-108
is that the total fee paid by the client to all attorneys
involved with his matter should not exceed the amount paid
to a single attorney if he were handling the entire matter
himself. It appears to this Committee that under the fee
arrangement as proposed by the service, this objective will
not be accomplished.
be additionally noted that Rule 2-108 requires that the
client must consent to the employment of the additional
attorney after a full disclosure that the division of fees
will be made. Because of the ambiguity in the language and
structure of the proposed Agreement, we are unable to conclude
that the proposed agreement will effectively make the required
this Committee has considered whether the conduct of the
Service as proposed would constitute a violation of proposed
subdivision (B) to Rule 2-108, if the referee attorneys
pay a fee or provide any other consideration to the service
for making the referral to them. Proposed paragraph (B)
provides that no such compensation shall be given by any
member of the State Bar to any other member of the State
Bar for the purpose of recommending or securing employment
or as a reward for having done so.
at the outset that there is no factual information available
to the Committee to indicate that any such fee is contemplated
by the proposed Service. Under these circumstances clearly,
no violation of Subdivision (B) could result.
Minimum Standards (paragraph 8.1) contemplate and authorize
the payment of an initial Registration Fee from referee
attorneys to be placed on appropriate panels. Accordingly,
so long as any membership fees (and fee sharing arrangements)
are conducted by the Service in accordance with the provisions
of the Minimum Standards, neither the initial fee nor subsequent
sharing of fees would result in a violation of the Rules
of Professional Conduct. Absent a full compliance with the
Minimum Standards, any initial fee (i.e., for membership
on the Services' list of "referee" attorneys)
would constitute a violation of proposed subdivision (B)
to Rule 2-108.
opinion is advisory only. It is not binding upon the State
Bar, the Board of Governors, its agents or employees.
* * * * * * * *
FOR A LAWYER REFERRAL SERVICE IN CALIFORNIA
Effective May 14, 1976,
Amended December 16, 1978, Amended April 3, 1982
of the State Bar
It is the policy of the State Bar of California that every
community be served by a Lawyer Referral Service (hereinafter
referred to as "Service"). Where the size of the
community or the number of lawyers serving it makes the
establishment of a separate Service impractical, the State
Bar encourages the establishment of a regional Service embracing
two or more such communities.
The purpose of the Service shall be to make legal services
more available to the general public by providing a way
in which any person may be referred to a member of the Bar
consistent with relevant circumstances, such as the type
and degree of difficulty of the legal problem presented
by such person, and his or her spoken language, geographical
convenience and financial ability to pay for desired services.
to Operate a Service
A Service may be established, sponsored, and supervised
or operated upon specific authorization by the Board of
Governors of the State Bar, provided, however, that each
Service operating as of the effective date of these Minimum
Standards pursuant to the Standards previously in effect
since January 19, 1973, shall automatically be authorized
to continue such operation if the Service complies with
Sections 3 through 9 hereof on or before January 1, 1977.
to establish and operate a Service shall be granted only
to a bar association that meets the requirements specified
in Article VI, Section 4, subdivision A(1), (3), (4), (5),
(6), (8) and (9) of the Rules and Regulations of the State
Bar, or to a legal aid plan or program for the furnishing
of services to indigents or to a nonprofit organization
formed for charitable or other public purposes which furnishes
legal services to persons only in respect of their civic
or political or constitutional rights and not otherwise
in furtherance of such charitable or other public purposes
of such organization. Such authorization shall be considered
on the basis of a written application which contains an
adequate showing that the proposed Service will conform
to these Minimum Standards.
Authority to operate a Service may be withdrawn by the Board
of Governors if, after notice and an opportunity to be heard,
it determines that the Service or its sponsor has violated
any of these Minimum Standards. The Board of Governors may
also issue such other remedial orders as it deems appropriate
under the circumstances.
by the Lawyer Referral Committee
The Service shall be supervised in its establishment and
operation by a committee or board of directors (hereinafter
referred to as a "Lawyer Referral Committee")
having full authority to make all decisions necessary to
the conduct of the Service. Such decisions are subject to
review or modification by the Service's sponsor(s).
Members of the Lawyer Referral Committee shall be appointed
by the sponsor(s) and may include non-lawyer public representatives.
At least 50% of the Committee members must be active members
of the State Bar of California.
The Lawyer Referral Committee shall meet at regular intervals.
At least annually, the Committee shall review the operating
records kept by the Service pursuant to Section 9.1 of these
Standards, supplemented by a sampling of information as
to whether appointments have been kept, whether the client
was satisfied with the lawyer's handling of the case and
whether the fee was within the client's means. Based on
its review, the Committee shall make such alterations in
the operation of the Service as it deems necessary.
Where two or more Services operate within the same county,
their respective Lawyer Referral Committees shall seek to
make cooperative arrangements in order to improve their
collective capability for serving the public. Consideration
should particularly be given to joint efforts for providing
and Approval of Panel Attorneys
Membership on any panel operated by the Service shall be
open to all active members of the State Bar of California
who regularly practice and maintain an office in the area
served, except that the Service may impose additional requirements
of experience or special education and training with respect
to "special qualifications" panels established
and operated in conformity with Section 5.2 of these Standards,
provided that the number of years an attorney has been admitted
to practice shall not be the sole criterion or qualification
for "special qualifications" panels. Membership
on a panel may not be made contingent upon membership in
a sponsoring association; however, a separate charge may
be made to non-members of the sponsoring association to
reimburse the association for services rendered by it to
Each applicant for panel membership shall agree in writing
to abide by all rules and regulations of the Service which
shall include the requirement that each panel member submit
any fee dispute arising between such member and a client
referred by the Service, if the client so elects, to binding
arbitration by a Fee Arbitration Committee or other body
established or approved by the sponsor.
Each Service shall establish a uniform procedure for review
of refusals to admit to, and decisions to suspend or remove
from, membership on any panel. In every case where a Service
refused to admit an attorney to a panel or suspends or expels
an attorney from a panel, the Service must give the attorney
a written statement of the reasons for its decision and
offer the attorney a meaningful opportunity to be heard
in his or her defense.
Every panel member shall be provided by the Service with
a copy of the Minimum Standards for a Lawyer Referral Service
in California that are then in effect at the time they become
a member of the Service. Additionally, the Service shall
continue to provide every panel member with copies of all
changes that the Board of Governors thereafter may make
to said Minimum Standards.
Each Service shall establish such number and variety of
panels as the Lawyer Referral Committee determines will
best enable the Service to make referrals that are responsive
to individual client needs (see Section 1.2).
Each Service is encouraged to establish "special qualifications"
panels representing different fields of law and limited
to attorneys found to be experienced or to have special
education or training in the respective fields, provided
that the number of years an attorney has been admitted to
practice shall not be the sole criterion or qualification
for "special qualifications" panels, and provided
further that an attorney who is certified by the California
Board of Legal Specialization as a specialist in a particular
field shall be qualified for membership on the panel for
such field by virtue of his or her certification. For each
"special qualifications" panel, the Lawyer Referral
Committee shall establish and file with the State Bar standards
and procedures for:
determining the qualifications for membership on the panel;
reviewing the qualifications of a member to remain on or
to be removed from the panel; and
appealing decisions to suspend or remove a member from the
panel (see Section 4.3 of these Standards).
Each Service is encouraged to establish other separate panels
including, but not limited to: a free-service-to-indigents
panel, a reduced-fee panel, an inmate assistance panel,
a legal services for the aged panel, or an attorney-to-attorney
The Lawyer Referral Committee shall establish procedures
assuring that each referral is made by the Service in a
fair and impartial manner to a member of the appropriate
panel. To the extent feasible, such procedures shall be
designed to respond to all circumstances of the client,
including the type and degree of difficulty of the legal
problem presented, geographical convenience, language needs
and the ability to pay for desired services.
No referral shall be made on the basis of race, sex, age,
religion or national origin.
No referral shall be made by the referrer to himself, his
associates or employees.
Each Service shall develop and maintain an active publicity
program through communications media designed to inform
the general public in the area served of the existence,
purpose and advantages of the Service. Each Service should
also make specific arrangements for receiving referrals
from legal aid programs, criminal justice agencies, hospitals,
jails, employers, and other appropriate public and private
agencies and institutions in the area served.
The form and content of all publicity shall be dignified
and shall not be misleading. In particular, any Service
operating with special qualifications panels pursuant to
Section 5.2 of these Standards may publicize that it will
make referrals to attorneys "experienced" in particular
substantive areas, but shall not use such terms as "specialist"
or "special qualifications" that may be confused
with specialty certification conferred by the California
Board of Legal Specialization unless such panels contain
only the names of certified specialists. All advertising
shall identify the sponsor(s) of the Service.
No publicity about the Service shall identify the attorneys
participating in it, except that this shall not prohibit
a participating attorney from acting as a spokesperson for
the Service if authorized by the Lawyer Referral Committee.
Fees and Use of Proceeds
A Lawyer Referral Service may require that:
each panel member pay to the Service a registration fee,
"referral" fee (computed on a percentage basis
or otherwise), or other like participating fee, or any two
or more of such fees, as a condition to panel memberships;
each applicant pay a registration fee, initial consultation
fee, or other like referral fee, or any two or more of such
fees, as a condition to referral;
however, that no Service may require any fee which is, or
any combination of fees which are, either in conflict with
statutory or other legal provisions for the award of attorney
fees or unreasonable, whether those fees be required of
applicants, panel members or both. The primary criterion
for determining whether a Service has failed to comply with
this provision shall be whether the fee or combination of
fees in question increases an applicant's cost for legal
services beyond that which he or she would normally pay,
or decrease the quantity or quality of services which he
or she would otherwise receive, absent involvement of the
The proceeds derived from the operation of the Service may
be used only for the following:
payment of the actual expenses of operating, conducting,
promoting and developing the Service, including expenditures
for capital purposes for the Service, as determined on a
reasonable accounting basis and with provision for reasonable
support of activities or programs
for the furnishing of legal services to persons and entities
financially unable to pay for all or part of such services
or conducted by a legal aid plan or program for the furnishing
of services to indigents or by a nonprofit organization
formed for charitable or other public purposes which furnishes
legal services to persons only in respect of their civic
or political or constitutional rights and not otherwise
in furtherance of such charitable or other public purposes
of such organization, or
designed to educate members of the public with respect to
the law, the judicial system, the legal profession, or the
need, manner of obtaining and availability of legal services,
designed to advance the science of jurisprudence, improve
the administration of justice, or aid in relations between
the Bar and the public; or
support of other activities in the public interest.
event shall proceeds from the Service be used to defray
the costs of operating the sponsoring association (other
than those properly apportionable as expenses for the purposes
described in subsections (a), (b) and (c) hereof) or be
used solely for the benefit of the members of such association
or members of the State Bar.
Each Service shall maintain records of its operation including
at least the following information:
the name, address and pertinent qualifications of each panel
member, and the number and types of matters referred to
such panel members;
the name, address and type of matter presented by each client
referred, the name of the panel member to whom the referral
was made, the date the referral was made and the date the
case was resolved or otherwise closed as reported by the
the total fee charged as shall be reported by the panel
member in the event such member is required to pay a forwarding
fee to the Service.
The Lawyer Referral Committee of each Service shall annually
file with the State Bar, on a form to be supplied by it,
a report on the activities of the Service and of the Committee.
Such report shall include at least the following:
statistics derived from the operating records required by
Section 9.1 hereof and what, if any, alterations have been
made in the conduct of the Service by the Lawyer Referral
Committee pursuant to Section 3.3 hereof;
a detailed accounting of all income to the Service (and
sources thereof), all expenses related to the operations
or promotion of the Service, the amount of current reserves
held by the Service, and the specific disposition over the
past two years of any reserves and/or surpluses derived
from the Service.
State Bar shall have the right at any time to conduct an
independent audit or investigation of any Service at State
Bar expense, and the Service and its sponsoring association
shall have the obligation to cooperate fully therewith.
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.