On May 10, 2018, the California Supreme Court approved a comprehensive set of New Rules of Professional Conduct (New Rules) for California lawyers, which take effect November 1, 2018. Many attorneys are contemplating what the New Rules will mean for them in their everyday practice. In his article “What New Rules? I Barely Know the Old Ones,” Ed McIntyre discussed some of the key changes and highlighted areas where the practice of litigation will see significant changes.
The changes wrought by the New Rules are not restricted to the litigation arena. With the attention that internet-based marketing companies are drawing these days, it is worthwhile to consider whether the implementation of the New Rules will change the analysis an attorney must perform when considering whether to use such a marketing company.
In short: no.
California Rule of Professional Conduct 1-320(A) and (B) and New Rule 5.4(a) and (b), with some exceptions, prohibit a California lawyer or law firm from “directly or indirectly” sharing legal fees with non-lawyers or an organization that is not authorized to practice law. Similar to Rule 1-320(B), New Rule 7.2(b) provides that “A lawyer shall not compensate, give, or promise anything of value to a person for the purpose of recommending or securing the services of the lawyer or the lawyer’s law firm,” so an attorney must decide if the use of the marketing company is tantamount to sharing fees.
If the marketing company and the attorney agree to an arrangement whereby the company splits fees with the attorney in order to create an attorney-client relationship between the consumer and the attorney for the provision of legal services, the attorney is well-advised to be wary and proceed with extreme caution, lest he or she run afoul of these rules. This rationale also holds true for marketing companies that require an attorney to pay membership fees in order for the marketing company to recommend or endorse the attorney to members of the public.
Paying registration, referral, or participation fees to a certified lawyer referral service, as contemplated by Rule 1-600 and New Rule 5.4(e), does not violate the prohibition on splitting fees with non-attorneys as set out in Rule 1-320(A)(4) and New Rule 5.4(a)(4). However, the payment of a fee to a lawyer referral service that does not qualify under the State Bar Rules is a violation of Rule 1-320(B) and New Rule 5.4(a)(4).
Attorneys who do not consider these rules and analyze their applicability to internet-based marketing schemes may find themselves in violation of both the existing Rules of Professional Conduct and the New Rules. When considering whether to use an internet-based marketing program, attorneys must evaluate that program to ensure it complies with the Rules and New Rules. Attorneys must not rely on the marketing company to thoroughly investigate all aspects of the program to ensure that attorneys are in compliance with their ethical duties.
Not all internet-based marketing companies will be structured in a way that violates the rules — both current and new. Some marketing companies will be aware of the Rules of Professional Conduct applicable to attorneys and will take steps to ensure they can offer a marketing platform that California attorneys may use without worry. It is wise, however, to be circumspect in the selection of such a program.