Professional Responsibility: Groupon for lawyer services

from Prof. Alberto Bernabe's blog:  Professional Responsibility: Groupon for lawyer services: "As you know, ABA Model Rule 5.4 prevents a lawyer from sharing fees with non-lawyers other than in some limited cases. This is also true in most, if not all jurisdictions. Do lawyers violate this rule if they try to attract clients by sharing a percentage of the fee with the service that provides the means for the lawyers to communicate with the possible clients?

This is the business model of the daily coupon system now known as "Groupon" which offers customers discounted deals for future services.

Given the slow economy, many lawyers are looking for ways to attract new clients so it was inevitable that someone would think of using groupon to do so thus raising the question regarding fee-sharing.

At least two states have now published ethics opinions on the issue and both found that using groupon as an advertising method would not violate the rules that ban sharing fees with a non-lawyer. The North Carolina State Bar so concluded in its Formal Ethics Opinion 10: Lawyer Advertising on Deal of the Day or Group Coupon Website (July 14, 2011) (available here) and the South Carolina Bar did so in its Ethics Advisory Opinion 11-05 (available here). The Virtual Law Practice blog comments on them here."

'via Blog this'

Republicans reward business with lawsuit limitations

“I remember the days when the attorneys didn’t advertise,” says Larry Mocha, an Oklahoma businessman who has been lobbying for state and federal lawsuit limitations for 20 years. “Now you’ve got them on TV advertising that they’ll file a lawsuit for nothing.”

from Stateline - the Pew Center for the States

Republicans reward business with lawsuit limitations:

"For the last two decades, Larry Mocha has had a simple request for lawmakers in his home state of Oklahoma: make it harder for people to file lawsuits against businesses.
Mocha, the 65-year-old owner of APSCO, Inc., a small, Tulsa-based company that makes truck parts, has a personal reason for his pursuit. In the late 1980s, he faced a pair of lawsuits from people claiming that faulty parts made by Mocha’s firm had led to personal injuries. Mocha strongly denied the accusations, but he never had a chance to prove himself in court because his insurance company — fearful of a big payout if a jury sided with the plaintiffs — forced him to settle, costing the insurer $600,000. Later, the insurance company dropped him altogether, even though he insists he never did anything wrong in the first place"

Ohio court investigating lawyer who tipped Tressel - Forbes.com

Ohio court investigating lawyer who tipped Tressel - Forbes.com: "Ohio court investigating lawyer who tipped Tressel
By ANDREW WELSH-HUGGINS , 06.13.11, 01:17 PM EDT

COLUMBUS, Ohio -- The Ohio Supreme Court is investigating possible misconduct by the attorney who first tipped Ohio State's football coach to NCAA violations by his players.

Coach ( COH - news - people ) Jim Tressel's decision not to alert university officials to the tip from lawyer Christopher Cicero ultimately led to Tressel's resignation under pressure for failing to report the violations immediately.
State Disciplinary Counsel Jonathan Coughlan  alleged in a filing Friday that Cicero violated professional conduct rules by revealing information from interviews with a potential client."

NJ Ethics Committee Blocks Surety's Demand that Attorney Protect Surety

The New Jersey Supreme Court's Advisory Committee on Professional Ethics  reviewed an inquiry  from an attorney who represents the administrator of an estate.  Opinion 719, published today, is binding in New Jersey, though any party affected (or bar association) may petition the state's Supreme Court for review.


The Administrator was required by the Surrogate to obtain a surety bond.  The Administrator, however, had poor credit and the surety companies to whom he applied set conditions  for issuance of the bond.  The conditions included an agreement by the attorney that the attorney  will remain involved in the matter; will pay the bond premiums; will protect the interests of the surety as well as the client administrator; will  provide legal services “for the benefit of the surety”; will exercise joint control over estate assets; and will  notify the surety if the client administrator breaches his or her fiduciary duty.  The inquirer asked whether he may, consistent with the Rules of Professional Conduct, comply with such conditions.  The Committee finds that compliance with these conditions is prohibited by the Rules of Professional Conduct:

An attorney who complies with these requirements becomes a co-fiduciary with the client administrator.  The attorney may not, consistent with the Rules of Professional Conduct, provide legal services to a client administrator under these circumstances. 

Milavetz: bankruptcy lawyers can give practical advice without running afoul of statute

Back in June I discussed the Milavetz case which challenged the 2005 Bankruptcy Reform Act amendments:

11 U.S.C. 526 (a) (4) forbids advising someone to take on more debt in contemplation of bankruptcy. But that could bar advice to a client to prudently buy a reliable car - to get to work, or to refinance a mortgage at a lower rate to pay off credit card debt. Such considerations led the 8th Circuit to find a constitutional violation, citing Erwin Chemerinsky, Constitutional Issues Posed in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, 79 Am. Bankr. L.J. 571, 579 (Summer 2005).

The United States Supreme Court has now  decided the Milavetz case, which presented this question:

(1) Do provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act regulating attorneys’ advice to clients and mandating certain advertisement disclosures violate the First Amendment? Milavetz, Gallop & Milavetz, P.A., et al. v. United States, 541 F.3d 785 (8^th Cir. 2008)

 I am pleased to report that the decision is pretty close to my prediction, which was 

1) NO.  11 U.S.C. 526 (a) (4) prohibits only pre-filing borrowing that is intended to defraud creditors, not, for example, refinancing a loan in order to reduce interest rates on debt preparatory to filing a plan of reorganization under Chapters 13 or 11. 

As Renee Knake observed at Legal Ethics Forum, the key passage in Justice Sotomayor's majority opinion is:

After reviewing these competing claims, we are persuaded that a narrower reading … is sounder,  although we do not adopt precisely the view the Government advocates. The Government's sources show that the phrase “in contemplation of” bankruptcy has so commonly been associated with abusive conduct that it may readily be understood to prefigure abuse. …[W]e think the phrase refers to a specific type of misconduct designed to manipulate the protections of the bankruptcy system … [and] conclude that [it] prohibits [an attorney] only from advising a debtor to incur more debt because the debtor is filing for bankruptcy, rather than for a valid purpose..