No ethics opinions were adopted by the State Bar Council this quarter.
Ethics Committee Actions
At its meeting on January 25, 2018, the Ethics Committee voted to return proposed 2017 Formal Ethics Opinion 6, Participation in Platform for Finding and Employing a Lawyer, to a subcommittee for further study. Proposed 2016 Formal Ethics Opinion 1, Contesting Opposing Counsel’s Fee Request to Industrial Commission, continues to be tabled pending the conclusion of appellate action in a case that is relevant to the proposed opinion. Four new proposed opinions were approved for publication and appear below.
Proposed 2018 Formal Ethics Opinion 1
Participation in Website Directories and Rating Systems that Include Third Party Reviews
January 25, 2018
Proposed opinion explains when a lawyer may participate in an online rating system, and a lawyer’s professional responsibility for the content posted on a profile on a website directory.
May a lawyer “claim her profile” or set up a profile on a website directory or business listing service such as Google’s My Business, LinkedIn, or Avvo and provide information for inclusion in the profile?
Yes, if the information provided by the lawyer and as presented in the profile is truthful and not misleading. Rule 7.1(a).
May a lawyer pay to be included in a website directory of lawyers?
Yes. A lawyer may pay the reasonable costs of advertisements. Rule 7.2(b).
May a lawyer provide profile information to a website that will use the information to rate the lawyer in an online lawyer rating system?
Yes, if the information provided by the lawyer is truthful and not misleading. Rule 7.1(a). In addition, no money may be paid by the lawyer for a rating and, before voluntarily providing information to a rating system, the lawyer must determine that the rating system uses objective standards that are verifiable and would be recognized by a reasonable lawyer as establishing a legitimate basis for evaluating the lawyer’s services. See, e.g., 2003 FEO 3 and 2007 FEO 14.
If a lawyer participates in a website directory, is the lawyer professionally responsible for claims on the website about participating lawyers such as statements that the participating lawyers are “top rated,” “excellent,” or “the best”?
The lawyer is professionally responsible for statements or claims made specifically about the lawyer or the lawyer’s services and may not participate in any communication specifically about the lawyer that is false or misleading in violation of Rule 7.1.
Pursuant to Rule 7.1(a)(3), a communication is false or misleading if it “compares the lawyer’s services with other lawyers’ services, unless the comparison can be factually substantiated.” Further explanation of this prohibition is set out in comment  to Rule 7.1, which states that “[a]n unsubstantiated comparison of the lawyer’s services or fees with the services or fees of other lawyers may be misleading if presented with such specificity as would lead a reasonable person to conclude that the comparison can be substantiated.”
In this instance, the website is describing all of the lawyers who participate in the directory in these superlative terms without specifically referencing any one lawyer. It is reasonable to conclude that online consumers understand that the use of such superlatives is a subjective characterization made for advertising purposes. Moreover, the superlatives are not presented with such specificity as to lead a reasonable consumer to conclude that the comparison can be factually substantiated. Therefore, a participating lawyer is not professionally responsible for such claims or characterizations by the website and is not prohibited from participation on this basis alone. To the extent RPC 135 (1992) is inconsistent with this opinion, it is overruled.
A website directory that permits lawyers to “claim their profiles” also allows consumers—usually present and former clients—to post “reviews” of a lawyer on the lawyer’s profile page. May a lawyer ask present or former clients to post reviews on her profile page?
Yes, as long as there is no quid pro quo, and the lawyer does nothing more than ask the client to post an honest review of her abilities and services. Rule 7.2(b) (a lawyer shall not give anything of value to a person for recommending the lawyer’s services). Under no circumstances may a lawyer solicit, encourage, or assist in the posting of fake, false, or misleading reviews. Rule 8.4(c).
When a client is pleased with the lawyer and her services, the client’s posted review on the lawyer’s profile or webpage may contain hyperbolic accolades such as the lawyer was “the best,” “awesome,” “the smartest,” “the toughest,” etc. Rule 7.1(a)(2) and (3) prohibit a lawyer from engaging in misleading communications that create unjustified expectations or that compare a lawyer’s services with the services of other lawyers unless the comparison can be factually substantiated. Is a lawyer required to monitor the content of third party reviews on a website profile or listing that the lawyer has claimed and to seek the removal of any review that does not meet this standard?
Most users of the Internet understand that reviews by third parties generally contain statements of opinion, not fact. To the extent that a third party review is a statement of opinion about the lawyer or her services, the lawyer is not professionally responsible for the statement and does not have to disclaim the review or take action to have the review removed or redacted from the lawyer’s profile or webpage. If a review contains a material misstatement of objective fact, however, the lawyer must take action to have the review removed or edited to delete the misstatement, or to post a disclaimer. For example, the lawyer must take action to remove, redact, or disclaim a review that falsely states that the lawyer obtained a million dollar settlement for the reviewer.
Lawyer A, at the urging of a marketing firm, initially claimed her website profile or set up business pages on a number of websites like Facebook. However, she tired of posting to the profiles and pages, and soon ceased to visit the majority of them altogether. Most of the profiles and website pages allow for third party reviews that Lawyer A no longer reads.
Is Lawyer A responsible for the content of the reviews posted on these website profiles and pages?
No, a lawyer is professionally responsible only for third-party content about the lawyer of which the lawyer is aware or reasonably should be aware. The lawyer is not required to monitor online profiles or pages if the lawyer does not visit the website, post to that website, or otherwise actively participate in the website. If a lawyer has abandoned a profile or webpage and the lawyer is unaware of the content of the reviews posted on the profile or webpage, the lawyer has no professional responsibility relative to that content. However, if the lawyer becomes aware, or reasonably should be aware, that material misstatements of fact are included in reviews posted on her profile or webpage, the lawyer is professionally responsible and must take action to have the offensive content removed or an explanatory disclaimer posted.
A lawyer determines that third-party generated content on her profile on an online directory contains material misstatements of fact and that she is professionally responsible for seeking to remove or disclaim the misstatements. When she asks the website to remove the content or post an explanatory disclaimer, the website refuses to do so. What should the lawyer do?
The lawyer must withdraw from participation in the website and seek to have the lawyer’s profile or page on the website removed.
Is a lawyer required to seek the removal of negative reviews that the lawyer perceives to be false or misleading?
Because there is no risk of creating unjustified expectations, there is no duty to correct or seek removal of a negative review posted on a lawyer’s profile or website page. Nevertheless, the lawyer may seek removal of negative reviews to protect the lawyer’s reputation. Lawyers are cautioned to avoid disclosing confidential client information when responding to a negative review. See Rule 1.6(a).
For a monthly fee, a website offers a premium service called “Pro” that is promoted as enabling a lawyer to “upgrade” the lawyer’s profile on the website. This service provides the following benefits according to the website: no competitive ads will be shown on the lawyer’s profile page; the lawyer’s contact information is shown in a search result; the lawyer can see who is contacting her by phone, email, or on her website; the lawyer can select the best reviews and promote them at the top of the profile page; and the lawyer can write her own headline at the top of her profile. In addition, under the lawyer’s photo, whether it appears on the lawyer’s profile page or in a search result, the word “Pro” appears. On search results, a sidebar states that “Pro” indicates that information is “verified.” May a lawyer subscribe to this service?
Yes, if the information on the profile page continues to be truthful and not misleading. To avoid misleading users, if only selected reviews can be read by a user, there must be an explanation that the lawyer has selected the best reviews to promote. If there is an implication that the selected reviews are the only reviews that the lawyer has received or, if the lawyer has received unfavorable reviews and the profile page falsely implies that the “promoted reviews” are typical, there must be an explanation.
If it is clear from the context that the “Pro” designation appears under the lawyer’s photo because the lawyer has purchased the premium service, the placement of this word under the lawyer’s photo is not misleading. If it is not clear from the context, use of the designation implies that lawyers in the directory who have not purchased the service are not “Pros.” This is a comparison of the lawyer’s services with the services of other lawyers that cannot be factually substantiated. An explanation posted by the participating lawyer or by the website is required.
Proposed 2018 Formal Ethics Opinion 2
Duty to Disclose Adverse Legal Authority
January 25, 2018
Proposed opinion rules that a lawyer has a duty to disclose to a tribunal adverse legal authority that is controlling as to that tribunal if the legal authority is known to the lawyer and is not disclosed by opposing counsel.
Rule 3.3(a)(2) provides that a lawyer shall not knowingly “fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel.”
Is the duty of disclosure set out in Rule 3.3(a)(2) limited to appellate court decisions in the relevant jurisdiction, or is a lawyer also required to inform the tribunal of rulings entered in lateral and lower courts?
Rule 3.3, Candor Toward the Tribunal, sets forth the duties of lawyers as officers of the court “to avoid conduct that undermines the integrity of the adjudicative process.” Rule 3.3, cmt. . Preserving the integrity of the adjudicative process is consistent with the principle of stare decisis.
As an officer of the court, a lawyer has a duty to assist the tribunal in fulfilling its duty to apply the law fairly and properly. Therefore, a lawyer must not allow the tribunal to be misled by false statements of law and “must recognize the existence of pertinent legal authorities.” Rule 3.3, cmt. . As explained in Rule 3.3, cmt. , the “underlying concept is that legal argument is a discussion seeking to determine the legal premises properly applicable to the case.”
The comments to Rule 3.3 reference “pertinent legal authorities” and “legal premises properly applicable” to the case. These phrases indicate that the lawyer’s duty is to disclose to the tribunal legal authority that is controlling as to that tribunal. Controlling legal authority may be statutory or prior judicial precedent.
Therefore, pursuant to Rule 3.3(a)(2), a lawyer has a duty to disclose to a tribunal considering a matter legal authority that is controlling as to the tribunal if the authority is directly adverse to the position of the lawyer’s client, is known to the lawyer, and is not disclosed by opposing counsel. The lawyer’s knowledge of the adverse authority may be inferred from the circumstances. See Rule 1.0(g).
Proposed 2018 Formal Ethics Opinion 3
Use of Suspended Lawyer’s Name in Law Firm Name
January 25, 2018
Proposed opinion rules that it is false and misleading for the name of a lawyer who is under an active disciplinary suspension to remain in the firm name.
Lawyer is a named partner in a law firm. Pursuant to an order issued by the Disciplinary Hearing Commission, Lawyer is actively suspended from the practice of law. Must Lawyer’s name be removed from the law firm name during the suspension period?
Pursuant to Rule 7.5, a law firm “shall not use a firm name, letterhead, or other professional designation” that is false or misleading. A firm name is misleading if it contains a material misrepresentation of fact or omits a fact necessary to make the firm name considered as a whole not materially misleading. Rule 7.1(a).
The inclusion of the suspended lawyer’s name in the firm name materially misrepresents the lawyer’s status with the law firm. The presence of the suspended lawyer’s name suggests to the public that the lawyer is authorized to practice law with the firm.
A suspended lawyer may not be associated with her former firm during the suspension period. The Discipline and Disability of Attorneys Rules of the State Bar require a suspended lawyer to withdraw from all pending matters before the effective date of the suspension. 27 N.C. Admin. Code 1B, Rule .0128(b). Moreover, Rule 5.5(g) prohibits a lawyer from employing a suspended lawyer as a law clerk or legal assistant if that individual was associated with the law firm at any time on or after the date of the misconduct that resulted in suspension. See also Rule 5.5(b) (a lawyer who is not admitted to practice law in North Carolina is not permitted to “hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction”).
It is false and misleading for a suspended lawyer to be held out as authorized to practice law during a period of active suspension. Therefore, from the effective date of the active disciplinary suspension until the active suspension ends, the suspended lawyer’s name must be removed from the firm name, firm signage, letterhead, all forms of advertisement, and the firm website.
Does the answer to Inquiry #1 change if Lawyer is under a stayed disciplinary suspension?
Yes. If Lawyer’s disciplinary suspension is stayed, she is permitted to practice law. Therefore, inclusion of Lawyer’s name in the firm name, firm signage, letterhead, all forms of advertisement, and the firm website is not false or misleading in violation of Rule 7.1, and does not violate other State Bar rules.
Should the suspension become active and Lawyer is no longer permitted to practice law, Lawyer’s name must be removed from the firm name, firm signage, letterhead, all forms of advertisement, and the firm website. See Opinion #1.
Lawyer is administratively suspended for failure to pay State Bar membership dues and/or failure to satisfy the continuing legal education (CLE) requirements of State Bar membership. Must Lawyer’s name be removed from the firm name?
Yes, if the administrative suspension continues for more than 45 days.
Whenever a member of the North Carolina State Bar fails to fulfill an administrative obligation of membership in the State Bar, the member is subject to administrative suspension. 27 N.C. Admin. Code 1D, Rule .0903. However, unlike a disciplinary suspension, administrative suspensions can be cured within a relatively short period of time. See 27 N.C. Admin. Code 1D, Rule .0904(f) (reinstatement by Secretary of the State Bar). As noted in the Scope section, the Rules of Professional Conduct are rules of reason. Rule 0.2, Scope. It would be impractical and expensive for a firm to remove a lawyer’s name from the firm name, firm signage, letterhead, all forms of advertisement, and the firm website if the administrative suspension is of limited duration. Therefore, provided Lawyer is reinstated to active status within a reasonable period of time, it is not a violation of Rule 7.1 or Rule 7.5 for Lawyer’s name to remain in the firm name, firm signage, letterhead, all forms of advertisement, and the firm website. It is presumed that a reasonable period of time, for the purposes of seeking and obtaining reinstatement from administrative suspension, is 45 days or less.
Proposed 2018 Formal Ethics Opinion 4
Offering Clients On-site Access to Financial Brokerage Company for Legal Fee Financing
January 25, 2018
Proposed opinion rules that a lawyer may offer clients on-site access to a financial brokerage company as a payment option for legal fees so long as the lawyer is satisfied that the financial arrangements offered by the company are legal, the lawyer receives no consideration from the company, and the lawyer does not recommend one payment option over another.
Lawyer would like to associate with a financial brokerage company (Company) that would assist clients in obtaining legal fee financing. Company is not a lending institution. Company would act as a broker to find lenders willing to finance the client’s legal fees. Company charges Lawyer an initial setup fee of $1,500 and a monthly fee of $99 for maintaining the payment webpage and administration. Lawyer also pays a merchant fee of 4.99 % on the amount of the financed legal fee. The loan brokerage service would be explained to clients as a "payment option" along with any other options such as credit card, check, cash, etc.
Company provides a loan application for clients who wish to pursue a loan for legal fees. Approved clients receive offers from competing banks, and are free to pick the offer that works best for them, or to decline all offers. If the client accepts an offer, the loan amount is paid from a third-party lender directly to the client. The client pays the fees to Lawyer in accordance with the fee agreement.
The company maintains that the program helps lawyers get paid and also removes the cost barrier for clients who are seeking legal representation.
May Lawyer associate with Company under the proposed arrangement?
Yes, under certain circumstances. Many law firms currently accept credit card payments for legal fees or offer in-house payment plans. In 2000 FEO 4, the Ethics Committee concluded that a lawyer may refer a client in need of money for living expenses to a finance company if the lawyer is satisfied that the company's financing arrangement is legal, the lawyer receives no consideration from the financing company for making the referral, and, in the lawyer's opinion, the referral is in the best interest of the client. The lawyer may not allow his own financial interests to interfere with his duty to act in the best interests of his client. Rule 1.7(a) (concurrent conflict exists if representation of client is materially limited by personal interest of lawyer). For example, in 2006 FEO 2, the Ethics Committee concluded that a lawyer may not refer a client to a company that pays a cash lump sum to a client in exchange for the client’s interest in a structured settlement merely as a means of paying the lawyer for his legal services.
A lawyer does not put his own financial interests ahead of those of his client by providing payment options to a client who requires financial assistance in paying the lawyer’s legal fees. However, given the lawyer’s self interest in being paid in full for his services, the lawyer may not recommend one payment option over another. Therefore, Lawyer may offer clients on-site access to Company as a payment option for Lawyer’s legal fees—along with any other potential payment options—so long as Lawyer is satisfied that the financial arrangements offered by Company are legal, Lawyer receives no consideration from Company, and Lawyer does not recommend one payment option over another.