Participation in a Prepaid Legal Service Plan
Opinion rules that a lawyer may not participate in a prepaid legal services plan unless all the conditions for participation are met and participation does not otherwise result in a violation of the Rules of Professional Conduct.
Estate Plans is a prepaid legal service plan registered with the North Carolina State Bar. In its solicitation letter, Estate Plans states that it provides various "plans of protection" from the most basic, consisting of a will, trust documents, power of attorney, health care power of attorney, and living will, to more comprehensive estate planning services. For a yearly fee, the solicitation letter claims clients would have access to "qualified local attorneys" who would draft these legal documents for about half the price the client would normally pay.
In addition, Estate Plans also claims to be "approved" by the State Bar.
May a lawyer participate in Estate Plans and provide legal services to persons covered under the plan?
No. A lawyer may only participate in a prepaid legal service plan if the plan meets the conditions of participation in Rule 7.3(d)(2). A prepaid legal services plan is "any arrangement by which a person, firm, or corporation, not authorized to engage in the practice of law, in exchange for any valuable consideration, offers to provide or arranges the provision of legal services that are paid for in advance of the need for the service." Rule 7.3(d)(1).
For a lawyer to ethically participate with a prepaid legal services plan, the following conditions must be satisfied:
(A) The plan must be operated by an organization that is not owned or directed by the lawyer;
(B) The plan must be registered with the North Carolina State Bar and comply with all applicable rules regarding such plans;
(C) The lawyer must notify the State Bar in writing before participating in a plan and must notify the State Bar no later than 30 days after the lawyer discontinues participation in the plan;
(D) After reasonable investigation, the lawyer must have a good faith belief that the plan is being operated in compliance with the Revised Rules of Professional Conduct and other pertinent rules of the State Bar;
(E) All advertisements by the plan representing that it is registered with the State Bar shall also explain that registration does not constitute approval by the State Bar; and
(F) Notwithstanding the prohibitions in paragraph (a), the plan may use in-person or telephone contact to solicit memberships or subscriptions provided:
(i) The solicited person is not known to need legal services in a particular matter covered by the plan; and
(ii) The contact does not involve coercion, duress, or harassment and the communication with the solicited person is not false, deceptive, or misleading.
Estate Plans has failed to meet at least one of the conditions for participation by a North Carolina lawyer. Although Estate Plans may represent that it is registered with the North Carolina State Bar, it may not state or imply that the State Bar has approved its plan. Rule 7.3(d)(2)(E). Under these circumstances, a lawyer must inform Estate Plans that it cannot participate in the plan unless its solicitation letter complies with Rule 7.3(d)(2)(E). Even if a prepaid services plan was at one time operating in compliance with the Rules of Professional Conduct, a lawyer participating in such a plan has an ongoing duty to determine that the plan continues to operate in accordance with the Rules.
Estate Plans claims that its legal services plan can save clients money because the clients meet directly with its employees, who are qualified estate planning consultants, rather than a lawyer. It is unclear whether or to what extent the client has contact with the lawyer drafting the estate planning documents.
May a lawyer participate with Estate Plans under these circumstances?
Rule 5.4(c) states that a lawyer "shall not permit a person who recommends, engages, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services." The lawyer also has an obligation to provide competent representation and to communicate with the client to the extent necessary to do so. Rules 1.1 and 1.4.
The lawyer need not be present during communications with a prospective insured relative to participate in the plan. However, the lawyer must communicate with the insured client in order to fulfill the duties described above. If a third party decides what services the lawyer ultimately will provide to the client, then the lawyer has been deprived of the ability to exercise independent judgment to determine what services may be appropriate under the circumstances in violation of Rule 5.4(c). In addition, the lawyer needs to make sure he has received and has given enough information to the client so that he can provide competent representation. Certainly, there is no issue with a third party recording intake information; however, the lawyer must be able to engage in a dialogue with the client in order to elicit the information necessary to provide competent representation. See 2003 FEO 7.
A lawyer believes the initial packet provided by Estate Plans to clients contains information that may be misleading.
May the lawyer participate with Estate Plans under these circumstances?
No. If a lawyer believes the information Estate Plans is providing to the client is misleading, then he should not participate in the plan.