Rules, Procedure, Comments
All opinions of the Ethics Committee are predicated upon the North Carolina Rules of Professional Conduct. Any interested person or group may submit a written comment – including comments in support of or against the proposed opinion – or request to be heard concerning a proposed opinion. The Ethics Committee welcomes and encourages the submission of comments, and all comments are considered by the committee at the next quarterly meeting. Any comment or request should be directed to the Ethics Committee at ethicscomments@ncbar.gov no later than December 30, 2023.
Council Actions
At its meeting on October 27, 2023, the State Bar Council adopted the ethics opinion summarized below:
2022 Formal Ethics Opinion 4
Billing Considerations for Overlapping Legal Services
Opinion rules that a lawyer may provide services to multiple clients simultaneously and explores various billing structures for overlapping services.
Ethics Committee Actions
At its meeting on October 26, 2023, the Ethics Committee considered a total of six inquiries, including the opinion noted above. Two inquiries were returned to subcommittee for further study, including an inquiry exploring a lawyer’s professional responsibility when using artificial intelligence in a law practice and an inquiry addressing a lawyer’s ability to obligate a client’s estate to pay the lawyer for any time spent defending the lawyer’s work in drafting and executing the client’s will. One inquiry concerning a lawyer-mediator’s ability to draft an agreement to participate in mediation between two pro se parties was withdrawn. The committee also approved the publication of two new proposed formal ethics opinions, which appear below.
Proposed 2023 Formal Ethics Opinion 3
Installation of Third Party’s Self-Service Kiosk in Lawyer’s Office and Inclusion of Lawyer in Third Party’s Advertising Efforts
October 26, 2023
Proposed opinion identifies a waivable conflict of interest for a lawyer to have a third-party business install a self-service kiosk in the lawyer’s office and receive a referral fee, and further concludes that a lawyer may be included in the business’s advertising efforts upon compliance with Rule 7.4.
Inquiry #1:
Lawyer’s practice consists mostly of representing clients on charges of driving while intoxicated (DWI). Lawyer has been approached by a third-party business (Company) that offers ignition lock services that are often ordered by the court in DWI cases. Company wants to rent a space in Lawyer’s law office to install a self-service kiosk that would allow Lawyer’s DWI clients to sign up for an ignition lock serviced by the business. Company would pay a monthly rental fee to Lawyer to have the kiosk installed in Lawyer’s law office. The kiosk would be entirely supported by Company, and Lawyer would have no ownership interest or control over the kiosk or the Company.
May Lawyer permit Company to rent space in Lawyer’s law office and install the ignition lock self-service kiosk for Lawyer’s clients to use?
Opinion #1:
Yes, provided Lawyer discloses to client(s) his financial interest in Company placing the ignition lock kiosk in Lawyer’s office and obtains the client’s informed consent confirmed in writing prior to the client’s use of the service.
The rental fee to be paid to Lawyer creates for Lawyer a financial interest in the kiosk. Lawyer’s financial interest creates a personal conflict of interest for Lawyer under Rule 1.7(a) if Lawyer’s client chooses to use the kiosk. In 2010 FEO 13, the Ethics Committee opined,
Lawyer has an ethical duty to avoid conflicts created by his own personal interests. See Rule 1.7(a)(2). Rule 1.7(b) provides that a lawyer shall not represent a client with respect to a matter if the lawyer’s professional judgment on behalf of the client may be materially limited by the lawyer’s own personal interest. Comment [10] to Rule 1.7 specifically states that a lawyer may not allow related business interests to affect representation, “for example, by referring clients to an enterprise in which the lawyer has an undisclosed financial interest.” Rule 1.7(b) allows a lawyer to represent a client despite a conflicting personal interest if the lawyer reasonably believes his representation of the client will not be affected and the client gives written consent after disclosure of the existence and nature of the possible conflict and the possible adverse consequences of the representation.
2010 FEO 13.
Lawyer must explain his financial interest to each client who wants to obtain ignition lock services through the kiosk and obtain the client’s informed consent confirmed in writing. Rule 1.7(b). As part of obtaining informed consent, Lawyer must explain that should there be a problem with the ignition lock, such as the production of a false positive that is reported to the DMV, Lawyer’s personal financial interest will prevent Lawyer from representing the client in a proceeding where Lawyer must take a position against or adverse to Company. In addition, Lawyer must explain that if the client violates the conditions of the ignition lock, Lawyer will also have a conflict that prevents further representation, and Lawyer will have to withdraw. After the aforementioned full disclosure, Lawyer may represent the client if the client consents to the conflict per Rule 1.7(b).
Inquiry #2:
May Lawyer recommend Company to his clients for ignition lock services?
Opinion #2:
Yes, provided Lawyer’s recommendation of Company is in the client’s best interest and is derived from Lawyer’s independent judgment, and provided Lawyer discloses to clients his financial interest in receiving rent from Company and obtains the client’s written informed consent pursuant to Rule 1.7(b). See Opinion #1.
Here, although Lawyer does not have a direct financial interest in Company’s business, Lawyer has a financial interest in receiving additional rent from Company which presumably will continue if Lawyer’s clients sign up for Company’s services through the kiosk in Lawyer’s office. As such, Lawyer has a personal conflict of interest in recommending Company to clients pursuant to Rule 1.7(a)(2). However, Lawyer can resolve these conflicts by first determining that, in Lawyer’s independent and professional judgment, recommending Company’s services best serves the client’s interests and the client will not be adversely affected by Lawyer’s personal interest in continuing the relationship with Company; and second by making the appropriate disclosures and obtaining the client’s written informed consent in a manner that satisfies the requirements of Rule 1.7(b).
The disclosures required by this opinion and Opinion #1 are closely related. Accordingly, for efficiency and clarity, Lawyer may consider providing a client with the necessary disclosures in a single written document that satisfies the requirements outlined in this opinion and in Opinion #1.
Inquiry #3:
May Lawyer receive a referral fee from Company for each client that signs up for Company’s services via the kiosk in Lawyer’s office?
Opinion #3:
Yes, provided Lawyer’s recommendation of Company is in the client’s best interest and is derived from Lawyer’s independent judgment, and provided Lawyer discloses to clients his financial interest in receiving a referral fee from Company based on the client’s use of Company’s services and obtains the client’s written informed consent pursuant to Rule 1.7(b). See Opinions #1 and #2; 2010 FEO 13.
Inquiry #4:
May Lawyer participate in Company’s efforts to market their product, which includes listing Lawyer’s name and contact information in the Company’s list of providers or affiliates?
Opinion #4:
Yes, provided Lawyer complies with Rule 7.4.
Intermediary organizations are organizations that engage in “referring consumers of legal services to lawyers or facilitating the creation of lawyer-client relationships between consumers of legal services and lawyers willing to provide assistance.” Rule 7.4(a). When participating in an intermediary organization, a lawyer must make reasonable efforts to ensure that the intermediary organization’s efforts comply with the professional obligations of the lawyer, including the following:
(1) The intermediary organization does not direct or regulate the lawyer’s professional judgment in rendering legal services to the client;
(2) The intermediary organization, including its agents and employees, does not engage in improper solicitation pursuant to Rule 7.3;
(3) The intermediary organization makes the criteria for inclusion available to prospective clients, including any payment made or arranged by the lawyer(s) participating in the service and any fee charged to the client for use of the service, at the outset of the client’s interaction with the intermediary organization;
(4) The function of the referral arrangement between lawyer and intermediary organization is fully disclosed to the client at the outset of the client’s interaction with the lawyer;
(5) The intermediary organization does not require the lawyer to pay more than a reasonable sum representing a proportional share of the organization’s administrative and advertising costs, including sums paid in accordance with Rule 5.4(a)(6); and
(6) The intermediary organization is not owned or directed by the lawyer, a law firm with which the lawyer is associated, or a lawyer with whom the lawyer is associated in a firm.
Rule 7.4(b). If a lawyer discovers that an intermediary organization in which the lawyer participates is noncompliant with Rule 7.4(b), the lawyer must either seek to correct the noncompliance or withdraw from participating in the intermediary organization. Rule 7.4(c).
In this scenario, Company is acting as an “intermediary organization” in that its marketing efforts are “referring consumers of legal services to [Lawyer] or facilitating the creation of lawyer-client relationships between consumers of legal services and lawyer[.]” Rule 7.4(a). Accordingly, Lawyer is tasked with ensuring that Company complies with Rule 7.4(b); if Lawyer discovers that Company is not in compliance with the Rules, Lawyer must seek to correct Company’s efforts or withdraw from participating in Company’s marketing efforts pursuant to Rule 7.4(c).
The Ethics Committee welcomes feedback on the proposed opinion; feedback should be sent to ethicscomments@ncbar.gov.
Proposed 2023 Formal Ethics Opinion 4
Use of a Lawyer’s Trade Name for Keyword Advertisements in an Internet Search Engine
October 26, 2023
Proposed opinion rules that the intentional selection of another lawyer’s unique firm trade name in a keyword advertisement campaign is prohibited, but that prohibition does not apply when the trade name is also a common search term.
Inquiry #1:
Lawyer A is a family lawyer in Durham. Lawyer A is setting up a keyword advertising campaign through an internet search engine. The campaign will allow Lawyer A to select specific words or phrases that will trigger Lawyer A’s advertisements for Lawyer A’s law firm website when a consumer uses the search engine to identify potential services.
Lawyer A is aware of the Ethics Committee’s prior opinion in 2010 FEO 14, where the committee concluded that it is a violation of the Rules of Professional Conduct for a lawyer to select another lawyer’s name as a keyword for use in an Internet search engine company’s search-based advertising program.
Lawyer B also has a law firm in Durham and offers competing services to Lawyer A. Lawyer B’s law firm practices under the unique trade name of “Strike Three Divorce Lawyers.” In light of 2010 FEO 14, Lawyer A will not select Lawyer B’s name as a keyword to trigger Lawyer A’s advertisements through the search engine. However, Lawyer A wants to select Lawyer B’s unique law firm trade name as a keyword to trigger Lawyer A’s advertisements.
Do the Rules of Professional Conduct permit Lawyer A to select Lawyer B’s unique law firm trade name as a keyword for Lawyer A’s keyword search engine advertising campaign?
Opinion #1:
No. As previously stated by the Ethics Committee,
It is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. Rule 8.4(c). Dishonest conduct includes conduct that shows a lack of fairness or straightforwardness. See In the Matter of Shorter, 570 A.2d 760, 767-68 (D.C. App. 1990). The intentional purchase of the recognition associated with one lawyer’s name to direct consumers to a competing lawyer's website is neither fair nor straightforward.
2010 FEO 14. Here, Lawyer A is intentionally purchasing the recognition associated with Lawyer B’s unique law firm trade name to direct—if not divert—consumers to Lawyer A’s website. Doing so creates confusion for consumers who are specifically looking for Lawyer B’s website based upon a search of Lawyer B’s specific and unique law firm trade name to the detriment of the consumer. As such, the conduct is “neither fair nor straightforward” and is, therefore, dishonest in violation of Rule 8.4(c).
Inquiry #2:
Same facts as Inquiry #1, except Lawyer B’s law firm trade name is “Durham Family Lawyers.” Lawyer A wants to select the generic and geographically based phrase “Durham family lawyers” as a keyword phrase for the keyword advertising campaign because Lawyer A expects the phrase would be a common search term employed by consumers looking for family law services in Durham. Lawyer A is aware that Lawyer B’s law firm trade name is the same as the intended keyword phrase for the advertising campaign.
Do the Rules of Professional Conduct permit Lawyer A to select a generic and geographically based phrase that also serves as a common search term if Lawyer B has already registered the term as a trade name?
Opinion #2:
Yes. The Ethics Committee’s conclusion in 2010 FEO 14 focused on “[t]he intentional purchase of the recognition associated with one lawyer’s name” for the purpose of directing or diverting consumers to the purchasing lawyer’s website. 2010 FEO 14. Inherent in this conclusion is the recognition that a lawyer’s name is unique and serves as a critical identifier for consumers searching for that particular lawyer’s services. As such, the intentional attempt to trade on such a specific, unique aspect of a lawyer’s identity and services was “neither fair nor straightforward,” and could reasonably lead to confusion by consumers as to where they could learn about, locate, or contact the specific person they sought. See id.
In this scenario, Lawyer B has selected a generic and geographically based trade name that also serves as a reasonably common search term for consumers seeking legal services. The trade name is not unique in the lexicon of consumers to specifically and exclusively identify Lawyer B; as such, it is not dishonest for Lawyer A to purchase the generic and geographically based trade name that serves as both a common consumer search term and that happens to be a competing lawyer’s trade name. To hold otherwise would be to hinder the ability of all consumers seeking legal services to discover all available options through the search of a common search term. Additionally, prohibiting Lawyer A from selecting a generic and geographically based trade name that also serves as a reasonably common search term for consumers would result in a “trade name land rush” of sorts, whereby lawyers would attempt to register the most common, generic search terms as trade names for the purpose of freezing out competitors from using common search terms in keyword advertising campaigns. Such protection for common search term trade names would benefit one lawyer or law firm to the significant disadvantage of the public employing common terms in their search for legal services. Accordingly, Lawyer A is not prohibited from selecting a generic and geographical phrase that also serves as a reasonably common search term for consumers in a keyword advertising campaign despite Lawyer B’s prior registration of the term as a law firm trade name.
The Ethics Committee welcomes feedback on the proposed opinion; feedback should be sent to ethicscomments@ncbar.gov.
