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Council Actions

At its meeting on July 27, 2018, the State Bar Council adopted the ethics opinions summarized below:

2018 Formal Ethics Opinion 1
Participation in Website Directories and Rating Systems that include Third Party Reviews

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. The State Bar Council adopted 2018 FEO 1 after the Ethics Committee made non-substantive revisions to Opinion #6 at its meeting on July 26, 2018.

2018 Formal Ethics Opinion 2
Duty to Disclose Adverse Legal Authority

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.

2018 Formal Ethics Opinion 3
Use of Suspended Lawyer’s Name in Law Firm Name

Opinion rules that the name of a lawyer who is under an active suspension must be removed from the firm name within a reasonable period of time.

2018 Formal Ethics Opinion 6
Shifting Cost of Litigation Cost Protection Insurance to Client

Opinion rules that, with certain conditions, a lawyer may include in a client’s fee agreement a provision allowing the lawyer’s purchase of litigation cost protection insurance and requiring reimbursement of the insurance premium from the client’s funds in the event of a settlement or favorable trial verdict.

Ethics Committee Actions

At its meeting on July 26, 2018, the Ethics Committee withdrew proposed 2017 Formal Ethics Opinion 6, Participation in Platform for Finding and Employing a Lawyer, due to the discontinuation of the online service at issue in the inquiry. The committee sent Proposed 2018 Formal Ethics Opinion 5, Ex Parte Communications with a Judge Regarding Scheduling or Administrative Matter, back to subcommittee for further study based upon comments received about the proposed opinion during the prior quarter. The committee also received an inquiry concerning Bitcoin and other cryptocurrency and sent the inquiry to subcommittee for study. The committee approved two new opinions for publication, which appear below.

Proposed 2018 Formal Ethics Opinion 7
Online Review Solicitation Service
July 26, 2018

Proposed opinion rules that, subject to certain conditions, a lawyer may participate in an online service for soliciting client reviews that collects and posts positive reviews to increase the lawyer’s ranking on internet search engines.

Repsight.com is an online service that offers to help lawyers accumulate more positive client reviews. Repsight contends that positive client reviews give law firms added credibility with potential customers and help increase search rankings in Google searches. For a monthly fee, Repsight will contact a client via text or email to solicit a review from the client. The number of contacts made by Repsight is based on the amount of the monthly fee.

After completing legal services for a client, the lawyer will log in to Repsight.com and enter the client’s email address or phone number and presses the “send” button. Repsight then sends the client a text or an email thanking the client for the client’s business and asks the client to click a button to rate the lawyer’s services. The client then chooses between 1 and 5 stars, with 5 stars being the highest rating. If the client rates the lawyer 3 stars or less, Repsight redirects the client to a private feedback form. The lawyer will receive the client’s comments, but the comments will not be posted on the lawyer’s Google review page. If the client gives the lawyer a 4- or 5-star review, the client is redirected to the lawyer’s Google review page (with 5 stars already populated) so that the client can leave the lawyer a positive review.

Inquiry #1:

May a lawyer participate in the Repsight service?

Opinion #1:

Yes, if certain conditions are met.

A client’s name and contact information are confidential and may not be revealed unless the client gives informed consent. Rule 1.6(a). Before the lawyer may provide a client’s contact information to Repsight, the lawyer must obtain the client’s informed consent. “Informed consent” denotes the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation appropriate to the circumstances. Rule 1.0(f).

To obtain the client’s informed consent and to avoid misrepresentation, the lawyer must explain to the client that the lawyer uses Repsight. The lawyer is also obligated to disclose Repsight’s process, to wit: the lawyer pays a monthly fee for Repsight services; the lawyer will provide the client’s name and contact information to Repsight after the representation has concluded; Repsight will contact the client regarding the review; only 4- and 5-star reviews will be posted on Google and other internet search engines; and 3 stars or less reviews will be shared with the lawyer, but will not be posted by Repsight or the lawyer anywhere on the internet. See Rule 1.4; Rule 8.4(c).

Inquiry #2:

If a lawyer obtains the client’s informed consent to provide the client’s contact information to Repsight, must the lawyer post or direct Repsight to post all reviews, including reviews of 3 stars or less?

Opinion #2:

No, provided the lawyer does not deceive the client about the treatment of negative reviews and adequately explains that reviews of 3 stars or less will not be posted on the internet. See Rule 8.4(c).

Inquiry #3:

When a client gives a lawyer a negative review, the lawyer may contact the client to address the client’s concerns. If after the communication the client agrees to change the negative review and provide a 4- or 5-star review, may the lawyer direct Repsight to contact the client to obtain and post the revised review?

Opinion #3:

Yes, subject to certain conditions. There can be no quid pro quo for the revised review. See Rule 7.2(b). Also, the lawyer may not solicit, encourage, or assist in the posting of fake, false, or misleading reviews. See Rule 8.4(c). Finally, the lawyer may not threaten, bully, or harass the client to provide a positive 4- or 5-star review. See Rule 8.4, cmt. [5]. See generally 2018 FEO 1.

Proposed 2018 Formal Ethics Opinion 8
Advertising Membership in Marketing Company with Misleading Title
July 26, 2018

Proposed opinion rules that a lawyer may not advertise membership in an organization that designates members as “lawyers of distinction” if the organization does not have verifiable standards for admission.

“Lawyers of Distinction” describes itself as a private lawyer vanity and marketing company. A “Benefits of Membership” video on the marketing company’s website states that “Lawyers of Distinction” is “a private organization that acknowledges lawyers in the United States who have demonstrated excellence in the practice of law.” Advertising material for the company states that “membership is limited to the top 10% of attorneys in the United States.” Nominees are selected through peer nomination, selection committee research, or self-nomination. Lawyers do not pay for the nomination.

Upon approval of his or her nomination, the lawyer may “accept” membership by paying a membership fee of $475 to $775 per year. With a payment of $475, the lawyer receives a customized rosewood plaque. With the payment of $775, the lawyer receives a personalized crystal statue. The plaques and statues display the “Lawyers of Distinction” logo, the year, the lawyer’s name, and the statement “Recognizing Excellence in [area of law].” The member has the opportunity to purchase additional rosewood plaques at the cost of $100 per plaque or $175 per crystal statue. Either membership option entitles the lawyer to display the “Lawyers of Distinction” licensed logo on the lawyer’s website and other promotional materials for the year. In addition, all members are included in the “Lawyers of Distinction” directory, and the company publicizes member names year-round through press releases and online announcements.

Pursuant to the company’s website:

Lawyers of Distinction members have been selected based upon a review and vetting process from our Selection Committee. Nomination does not guarantee membership. All prospective members are subject to final review after submitting their application before confirmation of membership. Lawyers do not pay for this nomination. These potential candidates who meet the criteria of our screening process have demonstrated a high degree of peer recognition and professional competence. Attorneys may nominate other peers they feel warrant recognition or self-nominate. These candidates undergo the same rigorous review process. Lawyers of Distinction uses its own independent criteria, including both objective and subjective factors, in determining if an attorney can be recognized as a Lawyer of Distinction in the United States in their respective field. This designation is based upon the proprietary analysis of the Lawyers of Distinction organization alone and is not intended to be endorsed by any of the 50 United States Bar Associations or The District of Columbia Bar Association. Lawyers of Distinction shall not confirm membership to more than 10% of attorneys in any given state. Any references to “excellent,” “excellence,” or “distinguished” are meant to refer to the Lawyers of Distinction organization and not to any named member individually.

A “selection process” video on the company website states: “Lawyers cannot simply pay to join. Members are selected through peer nomination, selection committee research, or self-nomination.” In order to self-nominate, a lawyer need only enter his name, address, law firm website, email, and area of practice into an online membership application. The lawyer/applicant then immediately chooses and pays for a particular membership. The application form provides that in the event the Membership Committee rejects an application for any reason, the application fee will be refunded in full. The application form also states that, once a lawyer’s application has been approved for a yearly membership, the member may continue to be a member without the need for a nomination in successive years. The membership is renewed annually unless the lawyer notifies Lawyers of Distinction of non-renewal. There are no qualification requirements for annual membership renewal.

Inquiry #1:

May North Carolina lawyers advertise their membership in “Lawyers of Distinction”?

Opinion #1:

No. Rule 7.1(a) prohibits a lawyer from making false or misleading communications about himself or his services. A communication is misleading if it creates unjustified expectations about the results a lawyer can achieve or makes a comparison with the services of another lawyer that cannot be factually substantiated. See Rule 7.1(a)(2) and (3).

In 2007 FEO 14, the Ethics Committee considered the permissibility of lawyers advertising inclusion in lists with titles that imply that the named lawyers are “super,” “the best,” “elite,” or a similar designation. The Ethics Committee concluded that an advertisement stating that a lawyer is included in a listing in a publication (such as North Carolina Super Lawyers) is not misleading or deceptive provided the relevant conditions from 2003 FEO 3 are satisfied. 2003 FEO 3 states that a lawyer may only advertise membership or participation in an organization with a self-laudatory name or designation (such as the Million Dollar Advocates Forum) if the following conditions are satisfied:

(1) the organization has strict, objective standards for admission that are verifiable and would be recognized by a reasonable lawyer as establishing a legitimate basis for determining whether the lawyer has the knowledge, skill, experience, or expertise indicated by the designated membership;

(2) the standards for membership are explained in the advertisement or information on how to obtain the membership standards is provided in the advertisement;

(3) the organization has no financial interest in promoting the particular lawyer; and

(4) the organization charges the lawyer only reasonable membership fees.

The Ethics Committee cannot identify any verifiable strict, objective standards for admission to Lawyers of Distinction in effect that would be recognized by a reasonable lawyer as establishing a legitimate basis for determining whether the lawyer has the knowledge, skill, experience, or expertise indicated by the designated membership. The company website includes a “selection process” page that appears to state objective standards for admission; these “indicators of professional achievement” purportedly independently investigated by the company include: experience, honors/awards, case results, specialty certifications, professional activities, educational background, pro bono and community service, scholarly lectures, and other outstanding achievement.  However, it is unclear how the company selection committee can consider these factors based on the limited information provided by a self-applicant. Similarly, the selection process also purports to include an ethics review and background check. However, it is unclear how consent would be obtained from a peer nominated or selection committee nominated lawyer. In the case of self-applicants, the application process does not request consent from the applicant to either of these confidential inquiries. Accordingly, the Ethics Committee cannot conclude that “Lawyers of Distinction” satisfies the standards set out in 2003 FEO 3 and 2007 FEO 14. Therefore, advertising membership in “Lawyers of Distinction” is misleading and a violation of Rule 7.1.

Inquiry #2:

May North Carolina lawyers become members of the “Lawyers of Distinction” marketing company if they do not personally advertise their membership?

Opinion #2:

No. Advertising materials for the company state that it publicizes member names year-round through press releases and online announcements in The New York Times, USA Today, Fox News, CNN, Huffington Post, and on social media, including Facebook and Twitter. The advertising material also states that membership rosters are advertised nationally in print through the New York Times, Bar journals, The National Bar Journal, Trial Magazine, and numerous other outlets. Therefore, even if a lawyer does not advertise the membership in his or her own promotional materials, the lawyer will appear on membership rosters published by the company that identify the lawyer as a “Lawyer of Distinction,” which is misleading as set out in Opinion #1. Furthermore, the company’s disclosure statement that “designation is based upon the proprietary analysis of the Lawyers of Distinction organization alone and is not intended to be endorsed by any of the 50 United States Bar Associations or The District of Columbia Bar Association” and that “[a]ny references to ‘excellent,’ ‘excellence,’ or ‘distinguished’ are meant to refer to the Lawyers of Distinction organization and not to any named member individually” is insufficient to correct the misleading nature of the company’s publication of a membership roster identifying the lawyer as a “Distinguished Attorney.”

The company’s advertising materials contain other misrepresentations. The company states that it “shall not confirm membership to more than 10% of attorneys in any given state.” Based upon the company’s promise to cut off membership once membership reaches 10% of the lawyers in a particular state, publications of the membership roster, as well as press releases prepared by the company, misleadingly state that the members represent the “top 10% of lawyers in the United States.”

Because the company’s advertising materials are misleading, a North Caolina lawyer may not participate in the company’s marketing. 

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