Recent Developments In Legal Services Marketing And The Ethical Concerns That Arise From Each
Articles
Colorado Professional Liability Handbook
Ross W. Pulkrabek, Esq., Starrs Mihm & Pulkrabek LLP
The modern age of legal services marketing began in the late 1970s following rulings by the United States Supreme Court in Bates v. State Bar of Arizona and Ohralik v. Ohio State Bar Association. In Bates, the United State Supreme Court ruled that the First Amendment prohibits states from enacting blanket bans on lawyer advertising. In Ohralik, the Court ruled that states may prohibit in-person solicitation of new clients. Since Bates and Ohralik several court decisions (most notably Shapero v. Kentucky Bar Association , holding that states may not ban targeted direct-mail solicitation of clients) and legions of state bar association ethics opinions have been issued defining what a lawyer may and may not do when “beckoning business” or “proposing a commercial transaction.” This chapter addresses recent developments in legal services marketing and some the ethical concerns arising from each.
Perspective On The Growth In Legal Services Promotion
Today, 1.1 million attorneys are practicing law, according to the American Bar Association. In 1975, there were just 400,000. Competition for legal services has increased dramatically. Formal efforts to both attract and retain clients now are accepted and requisite for all lawyers and law firms.
In the early 1980s, legal services promotion was largely confined to print and broadcast advertising and was directed at consumers for personal injury cases, workers compensation and Social Security Disability awards, households facing bankruptcy, those needing simple wills, uncontested divorce, and, for some, basic incorporations. Today, formal marketing programs are in place at most all corporate, transactional and defense firms.
Once unthinkable, these programs include television and print advertising campaigns targeting the in-house counsel and top-level executives. These are the most sophisticated consumers of legal services, who assign cases involving the most complex issues—international tax structuring, mass torts, class action defense, securities filings, mergers and acquisitions. The law firm marketing efforts targeting such individuals replaced what previously had been scattered and largely unmeasured efforts at business development.
Larger law firms now have internal highly-trained marketing staff or employ outside marketing consultants. They have written strategic marketing plans, and use the subjective components of their compensation systems to reward attorneys for new client development and contributions to marketing management.
Some firms have designated partners to oversee marketing. Others have established marketing committees. The vast majority set marketing budgets and carefully track attorney marketing efforts, recognizing the need to maximize effectiveness of both the time and money spent. Regional and national firms have entire departments dedicated to marketing. These marketers manage databases, handle public relations, develop print and broadcast advertising, create Internet marketing campaigns, multi-disciplinary industry sales and service teams and practice groups plans, among other discrete tasks. The “Chief Marketing Officer” of a large multi-office law firm can be paid several hundred thousand dollars annually.
The requirement for formal marketing lead to the creation of what is now called the Legal Marketing Association (LMA) in the early 1980s, a group with more than 3,000 dues-paying members as of 2008. LMA holds twice-annual national conventions and has several dozen state and local chapters.
The total dollar amount spent annually on legal services promotion is unknown. The industry’s growth, however, is easily seen and has been quite public. The largest business news publisher in the nation, American City Business Journals, operator of 40 weekly newspapers nationwide, reported that the financial industry was its single largest source of revenue in the mid-90s. By the turn of the century that position had been taken over by law firms. The same is true for law firms that have consumer-direct business models, such as personal injury, bankruptcy, family law. Lawyers now are the single greatest source of revenue for yellow pages publishers. More than $500 million was spent for domestic television advertising by lawyers in 2007.
Colorado Rules Of Professional Conduct Bearing Upon Marketing
Section 7 of the Colorado Rules of Professional Conduct specifically addresses marketing activities by lawyers and law firms. The most pertinent rules are as follows:
Rule 7.1. Communications Concerning a Lawyer's Services
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(a) A lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services. A communication is false or misleading if it:
- (1) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading;
(2) compares the lawyer's services with other lawyers' services, unless the comparison can be factually substantiated; or
(3) is likely to create an unjustified expectation about results the lawyer can achieve;
(c) Unsolicited communications concerning a lawyer's services mailed to prospective clients shall be sent only by regular U.S. mail, not by registered mail or other forms of restricted delivery, and shall not resemble legal pleadings or other legal documents.
(d) Any communication that states or implies the client does not have to pay a fee if there is no recovery shall also disclose that the client may be liable for costs. This provision does not apply to communications that only state that contingent or percentage fee arrangements are available, or that only state the initial consultation is free.
(e) A lawyer shall not knowingly permit, encourage or assist in any way employees, agents or other persons to make communications on behalf of the lawyer or the law firm in violation of this Rule or Rules 7.2 through 7.4.
(f) In connection with the sale of a private law practice under Rule 1.17, an opinion of the purchasing lawyer's suitability and competence to represent existing clients shall not violate this Rule if the lawyer complies with Rule 1.17(d).
Rule 7.2. Advertising
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(a) Subject to the requirements of Rules 7.1 and 7.3, a lawyer may advertise services through written, recorded or electronic communication, including public media.
(b) A lawyer shall not give anything of value to a person for recommending the lawyer's services except that a lawyer may:
- (1) pay the reasonable costs of communications permitted by this Rule;
(2) pay the usual charges of a not-for-profit lawyer referral service or legal service organization.
(3) pay for a law practice in accordance with Rule 1.17; and
(4) refer clients to another lawyer or a nonlawyer pursuant to an agreement not otherwise prohibited under these Rules that provides for the other person to refer clients or customers to the lawyer, if (i) the reciprocal referral agreement is not exclusive, and (ii) the client is informed of the existence and nature of the agreement.
Rule 7.3. Direct Contact with Prospective Clients
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(a) A lawyer shall not by in-person, live telephone or real-time electronic contact solicit professional employment from a prospective client when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain, unless the person contacted:
- (1) is a lawyer; or
(2) has a family, close personal, or prior professional relationship with the lawyer.
- (1) the prospective client has made known to the lawyer a desire not to be solicited by the lawyer; or
(2) the solicitation involves coercion, duress or harassment.
- (1) no such communication may be made if the lawyer knows or reasonably should know that the person to whom the communication is directed is represented resented by a lawyer in the matter; and
(2) if a lawyer other than the lawyer whose name or signature is contained in the communication will actually handle the case or matter, or if the case or matter will be referred to another lawyer or law firm, any such communication shall include a statement so advising the prospective client.
- (1) include the words "Advertising Material" on the outside envelope, if any, and at the beginning and ending of any recorded or electronic communication, unless the recipient of the communication is a person specified in paragraphs (a)(1) or (a)(2);
(2) not reveal on the envelope or on the outside of a self-mailing brochure or pamphlet the nature of the prospective client's legal problem.
A copy of or recording of each such communication and a sample of the envelopes, if any, in which the communications are enclosed shall be kept for a period of four years from the date of dissemination of the communication.
Rule 7.4. Communication of Fields of Practice
- (a) A lawyer may communicate the fact that the lawyer does or does not practice in particular fields of law or that the lawyer is a specialist in particular fields of law. Such communication shall be in accordance with Rule 7.1.
(b) A lawyer admitted to engage in patent practice before the United States Patent and Trademark Office may use the designation "Patent Attorney" or a substantially similar designation.
(c) A lawyer engaged in admiralty practice may use the designation "admiralty," "proctor in admiralty" or a substantially similar designation.
(d) A lawyer shall not state or imply that a lawyer is certified as a specialist in a particular field of law, unless:
- (1) the lawyer has been certified as a specialist by an organization that has been approved by an appropriate state authority or that has been accredited by the American Bar Association; and
(2) the name of the certifying organization is clearly identified in the communication.
Rule 7.5. Firm Names and Letterheads
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(a) A lawyer shall not use a firm name, letterhead or other professional designation that violates Rule 7.1. A trade name may be used by a lawyer in private practice if it does not imply a connection with a government agency or with a public or charitable legal services organization and is not otherwise in violation of Rule 7.1.
(b) A law firm with offices in more than one jurisdiction may use the same name or other professional designation in each jurisdiction, but identification of the lawyers in an office of the firm shall indicate the jurisdictional limitations on those not licensed to practice in the jurisdiction where the office is located.
(c) The name of a lawyer holding a public office shall not be used in the name of a law firm, or in communications on its behalf, during any substantial period in which the lawyer is not actively and regularly practicing with the firm.
(d) Lawyers may state or imply that they practice in a partnership or other organization only when that is the fact.
Top Marketing Tactics And The Ethical Issues Posed By Each
As legal services marketing has matured, the amount of money spent, as a percentage of annual fee volume and in terms of attorney time spent, has increased year by year. Not including attorney and staff time, business and commercial litigation firms spend roughly 3% of annual fee volume on marketing expenses. That kind of investment has prompted law firm management to request data showing what efforts are most likely to bring in work from new and existing clients. The data indicates that some of the more effective marketing tactics which corporate, transactional and defense firms employ include the following:
- Web sites
- Trade and community groups
- Seminars and speeches
- Law firm networks
Surveys show that lawyers who target consumers also can effectively employ these tactics; however, such lawyers often focus their marketing on yellow pages, radio and television advertising to develop cases.
There is general agreement that each of these tactics beckons business or proposes a commercial transaction. Accordingly, lawyers must assume that when using these techniques they are subject to the state ethics rules.
A discussion of issues emerging from the newest of tactics, use of social media Webs ites, FaceBook, MySpace and LinkedIn also is included below. Nearly 40% of online adults have a profile on one or more of these sites. Some lawyers report a regular flow of profitable litigation and business matters as a result. (There are several hundred social media sites. One was recently launched by the American Bar Association, another by Martindale-Hubbell. We address the most widely known social sites in this writing.)
Below we review how lawyers effectively employ these tactics to build their book of business and the ethical issues that may arise.
Web sites
Nearly all law firms now have Web sites. The adoption of Colo. RPC 7.5(a) permitting the use of trade names eliminates any lingering doubt as to the permissibility of domain names like “coloradodivorcelawyers.com.” Of course, domain names may not be misleading or likely to create unjustified expectations about the results the lawyer can achieve.
Most firm sites urge persons who may be interested in legal services to “Contact Us”. A best practice is to have every lawyer’s biography include that lawyer’s individual email address. The address should be coded to enable visitors to open a pre-addressed email form by clicking on the address. Many firms that obtain work directly from consumers—family law, criminal defense, immigration, among others— go one step further. They have potential case intake forms posted on their site. On these forms, persons interested in obtaining legal services are requested to outline their claims and submit them to the lawyer for consideration.
Regardless of whether such a person contacts the lawyer through email or complete a form on a website, a legitimate argument can be made that he or she is a “prospective client” as defined under Rule 1.18 of the Colorado Rules of Professional Conduct. If so, the lawyer is prohibited from using or revealing information submitted by that prospective client, even though no client-lawyer relationship ensues. Moreover, if the lawyer has received information that could be significantly harmful to the prospective client’s interests, the lawyer and every member of the firm may be disqualified from representing a client who is adverse to the prospective client in any substantially related matter. In view of the potential for disqualification, firms should give consideration to printing a disclaimer next to any email address or contact form, requesting that only non-confidential information such as a name, address, telephone number, and brief description of the type of case be provided. A disclaimer may provide lawyers and firms some protection against disqualification; however, the more strongly worded and prominent the disclaimer, the more likely it is to discourage inquiries, thus frustrating the purpose of providing the email address or intake form.
Many firms post alerts about changes to the law or include checklists about issues affecting individuals and businesses. Such materials should be dated to avoid misleading viewers to believe that dated materials are current. Likewise, if articles or checklists about legal issues are specific to a particular jurisdiction, the website should identify that fact clearly. It is a best practice to include a disclaimer that the articles or checklists do not constitute legal advice and that the reader should consult an attorney with respect to particular legal issues.
Finally, law firm Web sites are advertisements. Accordingly, each page of the website must include the name, address, and telephone number of the lawyer or law firm responsible for the site’s content.
Trade and community groups
The law is, and many argue always will be, a business based on the marketing of personal relationships. Groups like these are fertile ground for maintaining and creating individual relationships. Best practices taught by marketing professionals include adding the group’s members to a firm’s contact database list to receive legal alerts, invitations to networking events, seminars and webinars, and a firm’s personnel announcements. Lawyers are encouraged to attend meetings, sit on committees, and take leadership positions. Between official meetings of the group, lawyers are told they should make contact and have lunch or coffee with those they meet through membership. The goal is to get clients, directly or by obtaining a referral.
In-person or telephone solicitation of business from non-lawyers is permissible only after a “close personal, or prior professional relationship” has been established. The official comments to Rule 7.3 of the Colorado Rules of Professional Conduct imply that “prior professional relationship” refers to a prior client-lawyer relationship. Accordingly, a lawyer should not presume that participation in a trade or community group creates a “prior professional relationship” with members of that group.
Seminars and speeches
Lawyers are encouraged to ask clients and potential clients, in advance of either a speech or seminar, to let them know what issues the clients or potential clients think are important to address in the presentation. At the event, lawyers should ask attendees to contact them afterward “if they have any questions.” Speaking at seminars is not ordinarily viewed as “solicitation,” even though obtaining business may be the speaker’s ultimate goal.
The lawyer may advertise the seminar through in-person, telephone, or written communications. In-person or mail advertisement may not convey the lawyer’s availability to accept professional employment.
At the seminar, the lawyer should not give individual advice to attendees. The lawyer may provide business cards or firm brochures to attendees who request them. The lawyer also may set out business cards or other advertising material available at a table, where attendees may pick them up voluntarily.
Law firm networks
Dozens of firms have created marketing and educational alliances in recent years. Some alliances include only firms within Colorado. Others are national and international in scope and allow only one firm per major city as members. It is expected and often a condition of membership that members refer cases to others in the alliance. The number of referrals sent to other members is often formally monitored by the group. Firms that handle referrals poorly, or which do not regularly refer work to other members, are replaced by competitors.
The Colorado Rules of Professional Conduct permit lawyer referral networks, provided that the agreement to refer business is nonexclusive and the client is informed of the existence and nature of the agreement. Specifically advertising that a firm is a member of a “strategic alliance” or “network” of firms has the potential to be misleading. Clients or prospective clients may not understand the significance of the firm’s participation in the network and may be led to believe that other member firms will provide assistance of the matter or otherwise make their resources available. Any advertising of the firm’s membership in a network of firms should disclose the import of that membership to clients or prospective clients.
Matters that a firm should consider disclosing to clients or potential clients include the nature of the relationship between members of the network, the extent to which professionals from other member firms may provide legal services to the client, whether other member firms will share in fees paid by the client, whether the firm shares profits with other member firms, whether member firms share training programs or strategies, and whether member firms conduct other common operations. Disclosures should be made prior to entering into an engagement with the client, preferably in writing, and may be made as an addendum to the engagement letter.
Social media
It is considered a best practice for all lawyers in a firm to have profiles on one or more social media sites. At this writing, LinkedIn is designed to be and is considered the leading site for professionals who want to develop and manage a network of professional contacts on the Internet. In contrast, Facebook and MySpace are designed as social networks and the age of those profiled there is younger. Despite these differences, all can result in business.
Stories abound of younger professionals who have permanently harmed their reputations with inappropriate comments about themselves, colleagues, competitors, their employers and clients on the Internet. Indiscretions have occurred on social networking sites and in emails and blog posts. Clients, employers and those making and accepting referrals look for Facebook, LinkedIn and MySpace profiles before contacting lawyers. This has prompted many firms to create policies about social media profiles for their attorneys and staff.
Social networking sites universally offer ways to interact with other members, including instant messaging, chat groups, forums or newsgroups, and email. Rule 7.3(a) prohibits the solicitation of prospective clients using “real-time electronic contact” unless the prospective client is another lawyer or “has a family, close personal, or prior professional relationship with the lawyer.” The Rules of Professional Conduct do not attempt to define which types of online activities constitute “real-time electronic contact” and which do not; however, the official comments to Rule 7.3 of the Colorado Rules of Professional Conduct suggest that “real-time” communications are those that present a risk that the client may feel pressured to engage the lawyer immediately, without an opportunity to reflect upon the solicitation and alternatives, or avoid the solicitation altogether.
Forms of online electronic communication that involve cotemporaneous exchanges between a limited number of persons, such as instant messaging or participation in Internet “chat” rooms, fairly clearly qualify as real-time electronic contact. On the other hand, there is a general consensus that activities such as posting an entry in an online forum or newsgroup usually do not rise to the level of real-time electronic contact. Such communications do not have the same degree of immediacy as traditional in-person or telephone communications, normally are subject to editing by a moderator, generally are not directed at a particular individual. However, participation in online forums can reach the level of real-time electronic contact if the lawyer is seeking to initiate an unsolicited dialog with a particular prospective client. On the spectrum of “real-time electronic contact,” email falls somewhere between instant messaging and forum posts. Whether a particular email exchange would qualify as “real-time electronic contact” depends on the circumstances. The general consensus is that email is more analogous to traditional mail correspondence than it is to in-person or telephone communication. One can imagine, however, a situation in which the lawyer and prospective client are exchanging emails at a pace that approaches instant message or chat room communication.
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