Ethics Opinion Articles - NC State Bar Journal

You've Got Mail

By Thomas L. Lunsford II

Several weeks ago I was involved in a minor automobile accident about a block from my house in Raleigh. A neighbor rolled through a stop sign and I hit her broadside. Fortunately, neither of us was injured, but both cars were damaged. One of Raleigh's finest confirmed that I was not at fault. Since there were apparently no personal injuries, no one was cited. We exchanged insurance information and vowed never again to meet under such circumstances. The following day I drove my still operable car to the local claims center maintained by the other driver's insurance company and prepared to be hornswoggled, or at least insulted. Much to my amazement, the folks there promptly and courteously cut me a check for the evident damage. This same check I ultimately negotiated in favor of a guy who runs a body shop downtown in full satisfaction of my bill. Case closed? Not really, not according to the correspondence I received from many of you, my fellow lawyers.

Within a few days of my accident I received at least a dozen letters from you offering your legal services in regard to any "claims" I might have for personal injuries. Although the letters were not identical, there were many similarities. The personalized greeting, "Dear Lowell" was particularly nice. And I was touched by your solicitude. Almost everyone began his or her letter with a consoling expression of regret. These very admirable sentiments were invariably followed by equally impressive injunctions concerning the treacherous nature of insurance companies, the importance of legal representation in obtaining the "largest possible recovery," the qualifications of your law firms and the fact that you won't collect unless I do. Thank goodness these letters uniformly bore the compulsory disclosure that they were "legal advertisements." Otherwise, I might have inferred an altruistic motive. As it was, all I felt was a twinge of remorse, remembering the soft tissue injury that might have been.

Actually, I have somewhat more sympathy for attorneys who solicit by direct mail than may be apparent from the sarcastic recitation set forth above. I'm convinced, for instance, that there are a great many potential clients with valid claims who are in need of just the sort of information contained in the letters I received. To the extent that these people are encouraged or enabled to obtain counsel, the solicitation is probably quite benign. To the extent, however, that others are being induced to file unmeritorious claims or that targeted direct mail is causing any of the other mischief attributed to it, it is appropriately the subject of careful regulation. The purpose of this article is to recapitulate the regulatory history of solicitation in North Carolina since the creation of the State Bar. It will be recognized by habitual readers of this publication as the second part of a two-part article concerning the regulation of lawyers' commercial speech, part one having appeared in the Winter 1997 issue of the Journal. 1 Perhaps by recalling where we have been in regard to this sensitive subject, we may have a better sense of where we ought to go.

What is solicitation? And how is it different from advertising? For these purposes solicitation is defined as an offer of representation communicated directly to a prospective client concerning a particular matter by a lawyer or a lawyer's representative. The communication may be in-person, written, electronic or digital. In contrast, advertising is an offer of representation made generally to persons or entities who are deemed likely to be in the market for legal services. It is generally communicated through the mass media.

The State Bar was created by the legislature in 1933. Shortly after organizing, the State Bar's governing body, the council, adopted its first code of professional conduct, The Canons of Ethics. The Canons, which had been developed by the American Bar Association earlier in the century, included an almost total prohibition of commercial speech. Canon 27 provided that, "solicitation of business by circulars or advertisements, or by personal communications or interviews, not warranted by personal relation, is unprofessional." This professional restriction was augmented in 1947 when the General Assembly, acting at the behest of the State Bar, enacted a statute making it a crime to "solicit" legal business. The statute, which is still in effect as G.S. 84-38, has rarely if ever been successfully invoked in a criminal proceeding. Indeed, it is rather unclear precisely what conduct the legislature meant to condemn by its use of the term "solicit." Nevertheless, it seems likely that the proscription, however vague, would embrace in-person solicitation and render contemporary ambulance chasing a chancy venture at best.

After the adoption of the criminal statute referenced above, there was a period of more than 25 years during which little of consequence occurred relating to the regulation of solicitation. There were no new rules, no landmark constitutional decisions and no serious disciplinary cases. The State Bar's Ethics Committee was, however, fairly active in defining the concept's penumbra. A complete recitation of its pronouncements would be beyond the scope of this undertaking. At least one, however, is worth remembering. Opinion 90, propounded in 1952, concerned the propriety of deducting country club dues as a business expense. The Committee dodged the tax issue, properly noting that the question was fundamentally one of law and not ethics. It did, significantly, and a bit gratuitously, seize the opportunity to announce that a lawyer might properly join a civic organization or club if the action was not taken for "the sole purpose of acquiring clients." In making that seemingly offhand statement, the Committee legitimated a means of business development which remains basic for most law practices. It also helped define the dichotomous nature of in-person solicitation; approving Dr. Jekyll's incidental acquisition of clients in the context of polite society while condemning, by implication at least, Mr. Hyde's more direct and aggressive marketing strategies.

Some observers have perceived in this duality a bit of hypocrisy. They note that the rules, which were originally drafted by professional Brahmins in Boston, Philadelphia and Chicago, were designed to extol and perpetuate the professional values and manners of those elite lawyers. It should not be surprising, they argue, that certain practices, such as in-person solicitation, which were not then uncommon among lawyers obliged to compete for the legal business of ordinary citizens, were regarded as unsavory and, ultimately, as unethical. Importunings not "warranted by personal relation" in the words of Canon 27 were "unprofessional" and the subject of professional discipline. They still are. As far as I know, though, no one has ever been charged with solicitation (of legal business) on the golf course.

The ethical landscape in this area remained essentially unchanged when the Canons of Ethics were displaced in 1973 by the Code of Professional Responsibility . Disciplinary Rule 2-103(A) restated the familiar prohibition. It provided that, "[a] lawyer shall not recommend employment, as private practitioner, of himself, his partner, or associate to a nonlawyer who has not sought his advice regarding employment of a lawyer." Subsections (B) and (C) made it clear that a lawyer could not ethically pay someone else to recommend him or her or even request that such a recommendation be made outside the context of a bar-sponsored lawyer referral service. Disciplinary Rule 2-104 completed the proscription by forbidding a lawyer who had advised someone that they ought to obtain counsel to undertake the representation personally.

In 1977 the United States Supreme Court let the advertising genie out of the bottle when it decided the case of Bates v. State Bar of Arizona. 2 In Bates the Court held that a state could not constitutionally prohibit a lawyer's newspaper advertising of fees for routine legal services. In extending the protection of the First Amendment to lawyer advertising, the Court was careful, however, to make clear that its decision did not license in-person solicitation. It noted, rather, that such communication might be so likely to be misleading as to warrant restriction. The North Carolina State Bar acted quickly and responsibly in amending the Code of Professional Responsibility to permit some advertising. It did not change the rules prohibiting solicitation.

The following year the United States Supreme Court handed down another landmark decision concerning legal commercial speech. This time it specifically addressed solicitation. In Ohralik v. Ohio State Bar Association , 3 the Court was called upon to review the application of Ohio's version of DR2-103, which was virtually identical to North Carolina's, to conduct that could only be described as ambulance chasing. It seems that Mr. Ohralik, then a member of the Ohio bar, learned that two 18-year old women from his community, had been injured in an auto accident. He proceeded to visit both without invitation for the purpose of obtaining their cases. One of the prospective clients was interviewed in her hospital room while in traction. The other was encountered at home the day following her release from the hospital. In both instances, Mr. Ohralik was able to obtain employment, one contract being memorialized in writing, the other by an audio tape made by the recorder he carried concealed beneath his trench coat. There were no findings that anyone was actually harmed by Mr. Ohralik.

The Court held in Ohralik that the state may constitutionally discipline a lawyer for soliciting clients in person for pecuniary gain, under circumstances likely to pose dangers that the state has a right to prevent. The Court went on to recognize in general terms the nature of the state's interests. It noted that those interests are particularly strong in regard to consumer protection, the regulation of commerce and the maintenance of professional standards, and agreed with the parties that the State has a compelling interest in preventing those aspects of solicitation that involve fraud, undue influence, intimidation, overreaching, and other forms of vexatious conduct . The Court disagreed, however, with Mr. Ohralik's assertion that since there was no finding that his conduct had been harmful, the rule should not have been applied to him. It found that the risk of harm under such circumstances and the fact that such conduct generally takes place outside public view (unlike newspaper advertising), warranted a prophylactic rule totally prohibiting the conduct without regard to its consequences.

On the same day it decided Ohralik, the Supreme Court handed down another decision in a solicitation case. In In re Primus, 4 the Court held that South Carolina could not discipline an ACLU lawyer merely for sending a prospective client a letter offering to represent her free of charge in regard to her having been sterilized as a condition of continued receipt of medical assistance under the "Medicaid" program. Finding that the purpose of the solicitation was to advance the political agenda of the ACLU rather than financial gain, the Court determined that prophylactic application of the rules in such cases would be unconstitutional. It declared that since litigation is for organizations like the ACLU a form of political expression, communications proposing its initiation are entitled to a greater degree of First Amendment protection than the commercial propositions of lawyers motivated by their own pecuniary interests. Solicitation of litigation for political purposes cannot therefore be preemptively banned. Professional sanctions are appropriate only if actual harm has occurred.

Apparently, no one associated with the North Carolina State Bar supposed that either of the solicitation cases required any rethinking of the Disciplinary Rules until 1982 when a special committee of the council was appointed to revise the Code of Professional Responsibility in light of the United States Supreme Court's next important decision concerning the commercial speech of lawyers, In re R.M.J . 5 Although R.M.J . was primarily an advertising case involving the defendant lawyer's dissemination of unauthorized information, there was one alleged violation of the solicitation rules. The offending attorney mailed announcement cards concerning his practice to persons other than "lawyers, clients, former clients, personal friends and relatives" in plain violation of Missouri's version of DR2-102(A)(2), which was, interestingly enough, identical to North Carolina's rule. The Supreme Court determined that none of the alleged misconduct could properly be the subject of professional discipline because the Missouri Bar failed to identify a substantial state interest that would justify the absolute prohibitions at issue. Perhaps more significant than the case's result was the Court's decision to adopt for the purposes of lawyer advertising the analytical test it had previously developed in regard to the commercial speech of nonlawyers. The test, which was borrowed most directly from the Court's decision in Central Hudson Gas & Electric Corp. v. Public Service Commission , 6 provided, in essence, that while a state can absolutely prohibit commercial speech that is misleading, it can adopt other restrictions only to the extent that they serve, and directly advance, substantial state interests, and are no more extensive than necessary to accomplish the state's objectives.

Meanwhile, the State Bar Council's Special Committee on Lawyer Advertising, mentioned above, completed its review of North Carolina's disciplinary rules in light of the Supreme Court's recent pronouncement. The Special Committee was chaired by Frank P. Spruill of Rocky Mount, one of the state's most eminent lawyers, who also happened to be a former chair of the State Bar's Ethics Committee. The Special Committee's recommendations, which were presented to the council in October 1982, were rather surprising and, in the opinion of some, radical, particularly regarding the regulation of solicitation. In its revised version of DR2-103(A), the Special Committee recommended that solicitation be banned if "(1) the communication is false, fraudulent, misleading or deceptive, or (2) the communication has a substantial potential for, or involves the use of, coercion, duress, compulsion, intimidation, threats, unwarranted promises of benefits, overpersuasion, overreaching or vexatious or harassing conduct, taking into account the physical, emotional or mental state of the person to whom the communication is directed and the circumstances in which the communication is made." The clear implication was that benign solicitation exists and ought to be tolerated. The Special Committee specifically rejected the notion that Ohralik is authority for the prohibition of solicitation under any and all circumstances. Quite to the contrary, it noted that

under circumstances in which the likelihood of deception and overreaching is not present, the State has no substantial interest in suppressing such commercial speech. Although in-person solicitation may offend professional sensibilities sharpened by years of self-nourishment by the profession, the Committee looks in vain for any offense against the public interest in a situation involving sophisticated clients and an absence of deception. It seems clear to this Committee that a blanket prohibition against in-person solicitation would not survive a challenge in a fact situation devoid of circumstances hospitable to the evils the State has a substantial interest in controlling, such as fraud, deception, duress, and overreaching. Where the only "adverse" effect of in-person solicitation is the unwanted competition which flows from truthful commercial speech, the State has no substantial interest in suppressing it, and in-person solicitation that is free of those objectionable elements which adversely affect the public interest constitutes commercial speech that is protected by the First Amendment. 7.

The revised version of DR2-103 was adopted by the council at the October 1982 meeting. For the next 21 months the North Carolina State Bar had the most liberal rule concerning in-person solicitation in the entire country. For the first time in fifty years, country club lawyers could openly ask their golfing partners for their legal business without fear of disbarment, confident that under such circumstances their entreaties, however self-laudatory, were harmless and constitutional. It is worth noting, however, that the revised rule was just as intolerant of ambulance chasing as its predecessor. Indeed, it prohibited prophylactically and explicitly the entire spectrum of objectionable behavior long associated with solicitation. The only significant difference between the old and new rules was the new rule's tacit recognition that the public has no substantial interest in preventing a lawyer from recommending his or her own employment to a reasonably sophisticated person who is not under duress.

In July 1985, the council adopted a new code of conduct entitled, The North Carolina Rules of Professional Conduct. The new Rules were an amalgam of the former Code of Professional Responsibility and the American Bar Association's Model Rules of Professional Conduct which had been promulgated in 1983. Rule 2.4(A) of the new Rules, which was essentially a restatement of Rule 7.3(a) of the Model Rules, signaled a retreat from the idea that solicitation can be benign and ought to be tolerated under some circumstances. It totally prohibited in-person and telephonic solicitation motivated by a desire for pecuniary gain, except in regard to relatives and former clients. There were no other exceptions noted. There was no reference to benign solicitation, just an observation in the rule's official comment that the risk of harm is so great that solicitation cannot be regulated by means less drastic than outright prohibition. Interestingly, Ohralik was cited for that proposition. There was no attempt to reconcile the rule's blanket prohibition with the language of Ohralik's holding which seemed to offer constitutional protection for solicitation under at least some circumstances. There was no acknowledgment of the fact that, during the previous 21 months, the State Bar had received no complaints from consumers concerning solicitation.

The new rule did for the first time specifically address the problem of targeted direct mail advertising/solicitation. Rule 2.4(B) was based upon the ABA's correlative rule, Model Rule 7.3, and banned all such written communications to prospective clients other than relatives or former clients. The rule did recognize the propriety of general mailings of promotional material "to persons not known to need legal services in a particular matter of the kind provided by the lawyer, but who are so situated that they might in general find such services useful." Actually, the State Bar had considered targeted mail at least once before in an ethics opinion, CPR 348, which was issued in 1984. In that matter, the Ethics Committee was asked whether a lawyer could mail a letter offering representation to a stranger whom the lawyer knew had recently been involved in an accident. The Committee chose to view the communication as solicitation and applied the rather permissive version of DR2-103 then in effect. While observing that the rule did not prohibit all solicitation, the Committee found the subject communication to be unethical. It noted that accident victims are likely to be suffering from "emotional, mental and possible physical distress" and suggested that direct mail solicitations under such circumstances increase substantially the risk of "intimidation, compulsion, over persuasion, overreaching or vexatious or harassing conduct.."

The general prohibition of in-person solicitation has remained in place since its inclusion in the Rules of Professional Conduct in 1985. It was wholly reiterated when the next comprehensive revision of the State Bar's code of professional ethics, the Revised Rules of Professional Conduct , was adopted in 1997. Its comprehensive quality was amply demonstrated in an ethics opinion which was propounded in 1986. In RPC 20, the Ethics Committee was asked whether a lawyer might ethically make "cold calls" upon businesses to request their legal work. In a tersely worded opinion, the Committee replied negatively, saying only that, "cold calls made in an attempt to cause a company to employ the attorney or law firm directly violate Rule 2.4(A)." This pronouncement effectively foreclosed any further speculation that benign solicitation might be recognized and countenanced in our state, and doubtless saved many of North Carolina's business leaders from being intimidated, overreached or just plain vexed by unscrupulous attorneys.

Even as the prohibition against in-person solicitation has remained static, the regulation of direct mail has taken several surprising turns. In 1988, the United States Supreme Court decided Shapero v. Kentucky Bar Association , 8. Mr. Shapero, a bankruptcy lawyer, wanted to send letters offering his services to persons who had recently been made defendants in foreclosure actions. Although the proposed letter was not found to be false or misleading, the Kentucky Supreme Court ultimately ruled against Mr. Shapero, finding that the communication would violate Kentucky's version of Model Rule 7.3. The United States Supreme Court reversed and ruled that a state may not prohibit lawyers from seeking business by sending truthful, nondeceptive letters to potential clients known to face particular legal problems. It took issue with the Kentucky Bar's assertion that for regulatory purposes direct mail is virtually indistinguishable from an in-person encounter and is, therefore, just as deserving of absolute prohibition. The Court noted that unlike in-person solicitation, letters are not presented by trained advocates skilled in the arts of persuasion. Nor are letters likely to pressure their recipients into immediate, ill-considered decisions. Rather than being the same as in-person solicitation, targeted letters are, according to the Court, more like newspaper advertisements which can be read or not when and as the recipient pleases. The Court did acknowledge that the potential for deception inherent in targeted direct mail advertising and the fact that such communications take place outside public view might warrant the imposition of narrowly drawn restrictions short of outright prohibition. In fact, it suggested several lawful alternative regulations to address these legitimate concerns. It noted that the State might effectively police the situation by requiring lawyers to submit copies of letters they had mailed for ex post facto inspection. It also suggested that the State might consider requiring lawyers to include disclosure statements in targeted letters to ensure that recipients do not misconstrue their character as advertisements.

Soon after Shapero came down, the ABA produced a revised version of Model Rule 7.3. The North Carolina State Bar also swung into action and proposed a Shapero -compliant revision of its correlative provision, Rule 2.4, in the fall of 1988. That proposal generally permitted nondeceptive targeted direct mail advertising, but did include both a disclosure requirement ("This is an advertisement for legal services") and a post-publication submission requirement. However, by the time the rule was finally adopted the following spring, the submission requirement had been deleted. Even before the rule was revised, the injured, the insolvent, and the arrested citizens of North Carolina began receiving targeted direct mail from members of the bar. During the years since Shapero, the volume of that correspondence has from all appearances steadily increased, in our state and around the country. This phenomenon has been the subject of considerable lamentation throughout the organized bar and has spawned regulatory initiatives in some states that are considerably more restrictive than the Model Rule.

The Florida Bar has been among the most inventive and determined of the regulatory authorities in this regard. Its rule requiring lawyers to wait at least 30 days before soliciting accident victims by mail became the subject of the United States Supreme Court's most recent case concerning the commercial speech of attorneys in 1995. In that case, Florida Bar v. Went For It, Inc ., 9 the Court upheld the 30-day rule finding that the restriction on speech was justified by two substantial, but previously unidentified, interests of the government: protection of citizens from invasion of privacy and protection of the legal profession's reputation. Its opinion was bolstered by a mass of essentially unchallenged evidence, including a survey of public opinion, tending to prove that the interests in question were indeed compromised, in Florida at least, by targeted direct mail advertising.

The North Carolina State Bar acted quickly in the wake of Went For It ---and went for it. In October 1995, the State Bar responded by publishing for comment its own version of a 30-day rule. Like the Florida rule, the North Carolina proposal called for a 30-day moratorium on written or recorded communications with accident victims. It was much more comprehensive than that, however. The proposed rule actually contemplated barring targeted direct mail for a period of 30 days following any event apparently giving rise to a legal claim. At the same time the council appropriated the sum of $20,000 to fund its own scientific survey of public opinion to determine, among other things, whether targeted direct mail solicitation was perceived by North Carolinians as an invasion of privacy and whether it damaged the reputation of the bar.

When the proposed rule came on for final consideration before the State Bar Council in January 1996, it had considerable support. Many councilors felt that the same interests which justified the Florida rule warranted the broader North Carolina provision. Others, however, wary of threats of litigation emanating from practitioners accustomed to using the mails to drum up business in traffic court, felt it would be prudent to delay until some credible evidence might be developed to show that the comprehensive 30-day ban was necessary. Ultimately, the council was persuaded to defer final consideration of its proposed rule until the results of its survey were available.

In July 1996 the council received the results of the survey. In most respects they tracked the results of the Florida study cited in Went For It. The survey report concluded that North Carolinians, like Floridians, view direct mail solicitations in the immediate wake of accidents as an intrusion on privacy that reflects poorly on the legal profession. The report went on to note that "North Carolinians have an even more negative view of direct mail solicitations following traffic violations and financial difficulties." Emboldened by this scientific proof, the council adopted the proposed rule, which was to take effect immediately upon its approval by the North Carolina Supreme Court. After the council's meeting, the State Bar's executive director transmitted the rule to the Supreme Court for its review.

Not long after the rule was submitted to the North Carolina Supreme Court, a decision from the United States Court of Appeals for the Fourth Circuit, Ficker v.Curran , 10 cast serious doubt upon the provision's constitutionality. In that case, the Court of Appeals considered a Maryland statute which made it a crime for a lawyer to solicit a criminal case by targeted direct mail within 30 days of the defendant's arrest. Since important rights of a criminal defendant are commonly at stake during the case's first 30 days and the involvement of counsel is often crucial to the preservation of those rights, the Fourth Circuit concluded that the 30-day ban could be a burden on the right to counsel by restricting the free flow of information to individuals at a time when such information might be critically needed. Finding no state interest sufficient to justify denying either the attorney's right to send or the accused citizen's right to receive direct mail during the 30 days following arrest, the Court of Appeals had little trouble concluding that the Maryland statute was an unconstitutional restriction of speech. Although it is not known how this decision was viewed by the North Carolina Supreme Court, it seems unlikely that its significance was missed. At the very least Ficker appeared to invalidate the new rule insofar as it might be applied to the solicitation of criminal cases by direct mail.

Although the North Carolina Supreme Court generally acts in regard to proposed rules of the State Bar within a month or two of submission, the Court remained silent concerning the 30-day rule for many months. Finally, in October 1998, the council determined that it should ask the Court to return the proposal in order that the entire matter might be submitted to a committee for reconsideration. That process is now going forward. Meanwhile, there is no 30-day rule of any sort in effect in North Carolina and never has been.

That's why, if you've been in an accident, you've got mail.

L. Thomas Lunsford II

Endnotes:

1. Lunsford, L. Thomas II. "7305 Nights at the Bates Motel." The North Carolina State Bar Journal , Volume 2, Number 4 (Winter 1997)

2. Bates v. State Bar of Arizona , 433 U.S. 350 (1977).

3. Ohralik v. Ohio State Bar Association , 436 U.S. 447, reh'g denied 439 U.S. 883 (1978).

4. In re Primus , 436 U.S. 412 (1978).

5. In re R.M.J ., 455 U.S.191 (1982).

6. Central Hudson Gas & Electric Corp. v. Public Service Comm'n , 447 U.S. 557 (1980).

7.  "Report of the Special Committee on Lawyer Advertising," North Carolina State Bar Newsletter , Volume 7, Number 3 (1982).

8.  Shapero v. Kentucky Bar Association , 486 U.S. 466 (1988).

9.  Florida Bar v. Went For It, Inc ., 115 S.Ct. 2371 (1995)

10.  Ficker v. Curran , 119 F.3d 1150 (4 th Cir.1997).

 

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