Saturday, October 9, 2021

It’s Open Season on Soliciting Business Owners


In 2020 Elmer Fudd and Yosemite Sam were disarmed, while the Colorado Rules of Professional Conduct armed business lawyers in a way heretofore unimaginable.

An extraordinary thing happened
to the Colorado Rules of Professional Conduct six months before everyone was ordered home to their COVID bunkers: the prohibition on soliciting potential business clients was virtually abolished.  More incredibly, two years later, hardly anyone in the legal community seems to have noticed.  But I’m getting ahead of the story by about 40 years.  To appreciate what happened in September 2020 some perspective is necessary.

I have been fascinated with attorney advertising and solicitation ethics rules since law school.  In 1981, in lieu of taking a final exam in Professional Responsibility, my friend John Gray and I opted to create a series of unethical attorney radio commercials which systematically violated every rule in the then-effective ABA Code of Professional Responsibility.  This was a lot easier under the old CPR.  In the era preceding Bates v. State Bar of Arizona the Code was virtually a laundry list of “Thou Shalt Not”s.  The Code could have been shortened to simply “Just Say No” and saved a lot of ink.  Other than permitting inclusion of certain enumerated information in a “lawyer’s directory” and sanctioning public speaking engagements on general legal topics, advertising was verboten.

The Code’s rules regarding solicitation were even more strict.  DR 2-103 provided, “A lawyer shall not, . . . , recommend employment, as a private practitioner, of himself, his partner, or associate to a layperson who has not sought his advice regarding employment of a lawyer.”  Any lawyer with the temerity to violate this edict was barred from accepting employment by DR 2-104: “A lawyer who has given unsolicited advice to a layman that he should obtain counsel or take legal action shall not accept employment resulting from that advice.”  Very few exceptions to the Code’s anti-solicitation rules applied.  Only two pertained to most lawyers: (1) a lawyer could accept employment from a “close friend, relative, [or]former client,” or (2)  which resulted from public speaking or writing – but only if the lawyer did “not emphasize his own professional experience or reputation and does not undertake to give individual advice.”

The Code’s rules reflected the mores of a time when the Bar viewed itself as a profession rather than a business and, significantly, of a time when there were substantially fewer lawyers and plenty of business to go around.  Advertising and solicitation were considered unseemly.  It was believed that the public gained little useful information about the selection of a lawyer from a 30-second commercial, a slick tagline, or a memorable moniker.  The ban on in-person solicitation also reflected the still-persistent belief that lawyers are silver-tongued Svengalis from whom the public must be protected by keeping them at a safe distance.

The Supreme Court’s decision in Shapero v. Kentucky BarAssociation, striking down a rule prohibiting lawyers from sending solicitation letters to potential clients, had surprisingly little effect on the in-person solicitation ban.  Colorado’s adoption of the ABA’s Model Rules of Professional Conduct in 1993 also largely left the anti-solicitation rule intact. 

An overhaul of the Colorado solicitation rules in 1997 continued the general prohibition on “in-person” and “live telephone contact” where “a significant motive for the lawyer’s doing so [was] the lawyer’s pecuniary gain,” though an exception for attorneys having a “family or prior [legal] professional relationship” with a client remained.  In January 2008, “lawyer[s]” were added as a class of persons an attorney may solicit by “in-person, live telephone or real-time electronic contact,” as were persons with whom a lawyer has a “close personal . . . relationship,” the latter having been an exception under the Code, but not explicitly included in earlier versions of the Rules.

No further changes were made to Colorado’s advertising and solicitation rules until September 10, 2020, when the Colorado Supreme Court repealed and replaced Rules 7.1 – 7.5 in their entirety to align with revisions made by the ABA House of Delegates at its 2018 annual meeting.  Among other changes, the 2020 revisions added a third class of persons a lawyer may solicit by “live person-to-person contact when a significant motive for the lawyer’s doing so is the lawyer’s or law firm’s pecuniary gain,” specifically “person[s] who routinely use[] for business purposes the type of legal services offered by the lawyer.”  Colo. RPC 7.3(b)(3). 

The concurrent reversal of the ABA’s position that real-time chat and text messaging constitute solicitation garnered considerable commentary.  In contrast, the substantial and largely unexplained expansion of persons who may be solicited for business law services has produced virtually none.  This is stunning, since, as the Illinois State Bar Association observed, by this addition “almost any person who has ever hired an attorney might become fair game for in-person solicitation.”  Letter from the Ill. State Bar Ass’n to the Am. Bar Ass’n Standing Comm. on Ethics & Pro. Resp. (Feb. 28, 2018), quoted in Ashley M. London, SomethingWicked This Way Thumbs: Personal Contact Concerns of Text-Based AttorneyMarketing, 58 HOUS. L. REV. 99, 141 n.234  (2020).

As justification for this eye-opening erosion of the anti-solicitation rule, Comment [5] to revised Rule 7.3 offers this:

There is far less likelihood that a lawyer would engage in overreaching against a former client, or a person with whom the lawyer has a close personal, family, business or professional relationship . . . .  Nor is there a serious potential for overreaching when the person contacted is a lawyer or is known to routinely use the type of legal services involved for business purposes.

While the Comment’s assumption is likely true regarding former clients and other lawyers, it buries the lead and soft-sells the sweeping change of excluding businesspersons from those protected from in-person solicitation. 

An honest explanation of this sea change is that the Rules continue to evolve to accommodate the reality that the practice of law is no longer merely a “profession” – it’s big business and highly competitive.  It tacitly recognizes that virtually every marketing lunch hosted by a lawyer ends with an “ask” for legal work.  Rule 7.3 and Rule 1.6(a) (“A lawyer shall not reveal information relating to the representation of a client”) are routinely violated long before the check arrives.

This is not to denounce the revision.  A rule which is routinely more honored in the breach than the observance engenders disrespect for all rules.  Moreover, the perception of lawyer-as-Svengali—still reflected in Comment [2] (“[in-person solicitation] subjects a person to the private importuning of the trained advocate in a direct interpersonal encounter”)—is not merely patronizing, but laughable in a business setting.  While those who require legal services because they have suffered a sudden and personal calamity may need protection from “the private importuning of [a] trained advocate,” businesspersons—at least the kind coveted by business lawyers—rarely do.  There’s a reason why a Google search for “legal industry ‘years behind’” returns over a half-million hits.  Big Business is more than a match for Big Law – it both literally and figuratively eats Big Law’s lunch.

Regardless of one’s feelings about this change, the message is clear: It’s now open season on soliciting business owners.  A businessperson with legal hiring authority won’t ever have to pay for lunch in this state again.

 Originally published in Colorado Law Week (27 August 2021)

Sunday, September 12, 2021

Rule 1.5 is Alive!


Image by pasja1000 from Pixabay

If Colo. RPC 4.2 is the ethics rule every lawyer knows by heart, Rule1.5
is the rule every lawyer should commit to studying, for it concerns a subject near and dear to every attorney’s heart and financial well‑being: legal fees.

During a time in which other ethics rules – notably those concerning advertising and solicitation – have contracted, Rule 1.5 has grown exponentially.  Since its adoption in 1993, it has been amended no fewer than seven times: in 2000, 2001, 2002, 2007, 2008, 2011, and 2016.

This history reflects Rule 1.5’s status as an ethics laboratory for the Colorado Supreme Court.  It now weighs in at a beefy eight sections and 37 subsections.  Within its bounds one will find not only the original rule prohibiting unreasonable fees, but also the contingent fee rule and forms (recently relocated from Chapter 23.3), the Sather rule (prohibiting nonrefundable fees and retainers), the flat fee rule, the prohibition on referral fees, the “engagement retainer fee” rule (what in law school was called a “general retainer”), and the requirements that the basis or rate of fees and expenses must be communicated to new clients in writing, and that changes in fees or expenses must be promptly communicated to all clients in writing.  

In short, there’s a lot of important meat on the bone of Rule 1.5 that every lawyer should digest, since the penalty for failing to understand its intricacies and observe its strictures is the risk of professional discipline.  As if an additional incentive was necessary, failure to adhere to Rule 1.5 is also a basis for voiding one’s fee agreement.

For those who relish the prospect of studying the Rules of Professional Conduct with the same zeal as pumping out a septic tank I have bad news and good news.  The bad news is that Rule 1.5 has just been amended again (Rule Change 2021(18), adopted 9 September 2021, effective 1 January 2022.)  The good news is that, for lawyers who pay heed to this most recent change, the Colorado Supreme Court has done the Bar a great service by mandating a practice I have been preaching all lawyers should voluntarily commit to for years.  The revised rule will require that, in addition to communicating the basis or rate of fees or expenses to clients, attorneys must also communicate “the scope of the representation.”  Amended Colo. RPC 1.5(b)(2).  Can I get an “Amen?”

As I sermonized in an earlier blog, Hello Goodbye: The Alpha and Omega of the Attorney-Client Relationship, “There is no longer any excuse for not having a well-written scope of representation clause.”  Now there really is no excuse.  The failure to “communicate to [a] client in writing . . . the scope of the representation, except when the lawyer will perform services that are of the same general kind as previously rendered to a regularly represented client,” could soon get one grieved. 

Moreover, as I preached in The Rules of Unwritten Engagement, the failure to take advantage of Rule1.2(c)’s ability and right to “limit the scope or objectives, or both, of the representation”[1]  is equivalent to writing a blank check of liability payable to the order of your client.  An unwritten scope of services has terms – you just won’t like them:

Image by Monika Robak from Pixabay

1.   Scope of Services.  We shall provide all legal services you have requested of us, may request of us in the future, claim to have requested, thought about requesting, or should have requested, whether or not you actually request such services and regardless of whether we could have conceivably known or remotely anticipated your need for such services.  Our work for you will be unlimited in scope, as will our liability for neglecting any such work or any deadlines, laches, or statutes of limitation associated therewith.  After we complete the work, we assume full and continuing responsibility to advise you on all matters affecting the work we have performed or should have performed for you, forever.

The amendment to Rule 1.5(b) has converted an attorney’s right and ability to limit the scope of representation, as well as professional liability, into a duty – one every lawyer should happily comply with.  Happy New Year.

[1] Provided “the limitation is reasonable under the circumstances and the client gives informed consent.”