Ethics Opinion No. 273
Adopted June 23, 1973
Legal Ethics Committee
An attorney has advised that an incorporated motor club desires to provide its members with an “additional service” consisting of providing each member of the club with one telephone conference with an attorney designated by the club for advice concerning any traffic citation or traffic problem which the member might have. The attorney’s fee for such telephone conference would be paid by the motor club at a rate agreed to between club and attorney. The motor club anticipates designating at least one attorney in each county in Oklahoma, and perhaps more than one.
We are not informed concerning the nature of the other services provided its members by the motor club, but we assume that such services include towing service in the event of breakdown, assistance with mechanical problems and other automotive difficulties at reduced rates or no charge. We further assume that the motor club provides such services in consideration of the member’s payment of fixed dues to the club. We are informed by the office of the Secretary of State that the motor club in question is a business corporation organized for profit.
The primary question presented is whether an attorney’s participation or cooperation in a plan to provide prepaid legal services, under which the members or beneficiaries of the plan will be limited in their choice to an attorney or attorneys designated by the sponsor of the plan, is ethically proper.
A secondary question raised by the inquiring attorney, in the event the plan as proposed would involve ethical impropriety, is what variation or amendment of the plan would permit the motor club to provide such legal service to its members without impropriety.
In the Committee’s opinion a lawyer’s participation as a “designated attorney” under the proposed plan would be an unethical violation of the Code of Professional Responsibility, DR 2_103(D):
“A lawyer shall not knowingly assist a person or organization that recommends, furnishes, or pays for legal services to promote the use of his services or those of his partners or associates.”
DR 2_103(D) provides specific exceptions to the quoted rule for cooperation with legal aid or public defender offices, military legal assistance offices, lawyer referral services under bar association auspices, representative bar associations,1 or:
“(5) Any other non-profit organization that recommends, furnishes, or pays for legal services to its members or beneficiaries, but only in those instances and to the extent that controlling constitutional interpretation at the time of the rendition of the services requires the allowance of such legal service activities, and only if the following conditions, unless prohibited by such interpretation, are met:
(a) The primary purposes of such organization do not include the rendition of legal services.
(b) The recommending, furnishing, or paying for legal services to its members is incidental and reasonably related to the primary purposes of such organization.
(c) Such organization does not derive a financial benefit from the rendition of legal services by the lawyer.
(d) The member or beneficiary for whom the legal services are rendered, and not such organization, is recognized as the client of the lawyer in that matter.”
The motor club under the proposed plan by making known its “designation” of an attorney would effectively recommend him to its members: It expressly contemplates furnishing and paying for his legal services in telephone consultation with the members having traffic citations or “traffic problems”.
The motor club is not a non-profit organization. This alone removes it from the scope of DR 2_103(D)(5). The primary purposes of the motor club are not stated in the inquiry but, assuming that the rendition of legal services is not among them, it appears doubtful that recommending, furnishing and paying for one prepaid telephone conference with a lawyer concerning a traffic citation or traffic problem is incidental and reasonably related to the primary purposes of a motor club as those purposes are generally understood. Since the legal service would be among those services furnished in consideration of the payment of dues to the motor club, it could hardly be said that the club does not derive a financial benefit from the rendition of legal services by the lawyer. For these reasons we do not believe that the proposed plan falls within the exception set forth in DR 2_103(D)(5).
The inquiring attorney has suggested that participation in such a plan would not be illegal or unethical in light of recent United States Supreme Court decisions. Such decisions apparently are alluded to in DR 2_103(D)(5) in providing that its exception applies “only in those instances and to the extent that controlling constitutional interpretation at the time of rendition of the services requires the allowance of such legal service activities.”
The following decisions may be regarded as currently controlling constitutional interpretations with reference to lawyer referral: United Transportation Union v. State Bar of Michigan, 401 U.S. 576 (1971); United Mine Workers v. Illinois Bar Association, 389 U.S. 217 (1967); Brotherhood of Railroad Trainmen v. Virginia, 377 U.S. 1, reh. den. 377 U.S. 960 (1964); and NAACP v. Button, 371 U.S. 415 (1964). All hold that the First and Fourteenth Amendments provide a protection to recommendations of attorneys for employment which overrides the State’s interest in regulating the legal profession.
None of these decisions is applicable here because in each case the organization recommending or soliciting the employment by its members of a lawyer selected by the organization, and in some instances paying him and controlling the litigation, was a nonprofit organization. It seems apparent that DR 2_103(D)(5) was written with this line of authority in mind. Other distinctions between these decisions and the matter under consideration appear to exist but need not be reached for purposes of this opinion.
State court decisions concerning the propriety of lawyer reference by automobile clubs are collected in 11 ALR 3d 1206, 1216; the latest of these cases was decided in 1936, long before the adoption of the Code of Professional Responsibility. Divergent results were reached, and Oklahoma does not appear to have considered the question.
It also appears that a lawyer’s participation in the proposed motor club plan would conflict with DR 2_101(B), which prohibits a lawyer’s publicizing himself as a lawyer by any commercial means, or authorizing or permitting others to do so in his behalf except as permitted in DR 2_103. A lawyer could hardly permit the motor club to designate him as the attorney who would render legal advice to a member of the club without violating this prohibition, and none of the exceptions of DR 2_103 apply; the most nearly applicable has been discussed above at length.
In addition DR 2_103(E) prohibits a lawyer’s acceptance of employment when he knows or it is obvious that the person who seeks his services does so as a result of conduct prohibited under DR 2_103, so that a further but closely related ethical violation would occur if the lawyer accepted employment by the club member to render legal services, in addition to the initial telephone conference, with regard to the original traffic citation or traffic problem, or with other matters arising out of or connected with that citation or problem.
In Formal Opinion 332 issued in February 1973 the Standing Committee on Ethics and Professional Responsibility, American Bar Association, held that a lawyer may ethically participate in any plan to provide prepaid legal services that meets certain interim standards2 of the American Bar Association and that provides for freedom of choice of attorneys even though such plan does not conform to the requirements of the exception to DR 2_103(D).
Under Formal Opinion 332, in order to permit ethical cooperation by lawyers, the motor club’s plan would not be required to conform to the requirements of the exception to DR 2_103(D) if the plan provided for freedom of choice of attorneys by the club members. It does not do so. The designation by the club of one attorney, or any number of attorneys, in a given county would not provide the required freedom of choice of attorneys. Formal Opinion 332 clearly contemplates an “open panel”, where the choice of the attorney is left entirely to the member or beneficiary.
The answer to the secondary question presented is implicit in what is said above. So long as the motor club retains its character as an organization for profit, its plan does not conform to the requirements of the exception to DR 2_ 103(D). So long as the plan does not provide an “open panel” of attornneys for selection by the club’s members it is not exempt from conformity with DR 2_ 103(D) under Formal Opinion 332. In order for lawyers ethically to render legal services under the motor club’s plan, the club must become a non-profit organization3 or the choice of lawyer must be left entirely to the member.
In the event the plan were amended to provide an “open panel” of lawyers, it also would be necessary that the plan comply with the interim standards quoted and that the motor club and lawyers rendering services under the plan take care to avoid the possible conflicts discussed in Formal Opinion 332.
1 The motor club obviously is not within any of these categories.
2 The interim standards to be met by all plans providing prepaid legal services, adopted by the House of Delegates at its August, 1972 annual meeting are:
(1) The entire plan shall be reduced to writing and a description of its terms shall be distributed to the members or beneficiaries thereof;
(2) The plan and description shall:
(a) State clearly and in detail the benefits to be provided, exclusions therefrom and conditions thereto;
(b) Describe the extent of the undertaking to provide benefits and reveal such facts as will indicate the ability of the plan to meet the undertaking;
(c) Provide that there shall be no infringement upon the independent exercise of professional judgment of any lawyer furnishing service under the plan;
(d) Specify that a lawyer providing legal service under the plan shall not be required to act in derogation of his professional responsibilities; and
(e) Set forth procedures for the objective review and resolution of disputes arising under the plan;
(3) There shall be a periodic written report not less often than annually disclosing to members or beneficiaries of the plan, to this Association and to the bar of any state in which benefits are paid a summary of the operations of the plan including, but not limited to, all relevant financial data, the number of members or beneficiaries receiving legal services, and the kinds of benefits provided;
(4) Each plan should provide for an advisory group including members of the bar and beneficiaries of the plan which shall meet periodically to review and evaluate the organization and operation of the plan and to offer suggestions for its improvement.
3 Even if the motor club were a non-profit organization, all of the conditions and limitations of DR 2_103(D)(5) would apply. No opinion is expressed as to whether it would be possible for those conditions and limitations to be met.