What’s Left? Law Firm Risk Management After the Marketing Rule Amendments

COLUMN > Ethics & the Law

BY MARK J. FUCILE

Earlier this year, the Washington Supreme Court adopted a sweeping package of amendments to the lawyer marketing rules in Title 7 of the Rules of Professional Conduct (RPCs) that significantly reduced their regulatory scope in several key respects.¹1 The Supreme Court also adopted a parallel set of amendments to the RPCs applicable to Limited License Legal Technicians (LLLTs). At the same time, the economic pressure on law firms large and small to market themselves continues unabated. In this column, we’ll look at what’s left in the marketing rules and the continuing risks that lawyers and their law firms should consider when marketing.²2 Two elements of Title 7 did not change substantively. The prohibition on paying for referrals moved from former RPC 7.2(b) to RPC 7.3(b). At the same time, a new provision—RPC 7.3(b)(5)—was added to permit nominal “thank you” gifts that “are neither intended nor reasonably expected to be a form of compensation for recommending a lawyer’s services.” RPC 7.6, which addresses political contributions to obtain government legal work, remains unchanged.

THE AMENDMENTS

The amendments adopted by the Supreme Court in January followed several years of study by multiple bar groups and substantial public comment.³3 The Supreme Court’s order adopting the amendments is SCO 25700-A-1333 (Jan. 8, 2021). The “legislative history” of the amendments recounted in the WSBA’s GR 9 cover sheet and public comments on the proposals are both available in the “rules” section of the Washington Courts’ website at: www.courts.wa.gov/court_rules/. For additional history of the amendments, available on the WSBA website, see Mark J. Fucile, “Looking Forward: Proposed Amendments to Lawyer Marketing Rules Under Review,” March 2019 WSBA NWLawyer 12, and Mark J. Fucile, “Washington Supreme Court Approves Major Changes to Lawyer Marketing Rules,” WSBA NWSidebar (Jan. 19, 2021). At their core, the amendments distill most marketing regulation down to two central concepts reflecting the underlying constitutional limits articulated by the seminal cases of Bates v. State Bar of Arizona, 433 U.S. 350 (1977), on advertising, and Ohralik v. Ohio State Bar Association, 436 U.S. 447 (1978), on solicitation.⁴4 The Washington amendments followed a similar, but not completely identical, path as their ABA Model Rule counterparts. As a result, some elements of the Washington amendments, such as RPC 7.3 on solicitation, differ from the corresponding ABA Model Rule. The history of the Model Rule amendments is recounted on the ABA website at: www.americanbar.org/groups/professional_responsibility/committees_commissions/ethicsandprofessionalresponsibility/mrpc_rule71_72_73_74_75/.

Reflecting Bates, lawyer marketing communications are broadly permitted as long as they are truthful. The amendments, therefore, did not change the text of RPC 7.1, which prohibits false or misleading lawyer marketing communications. Rather, the amendments reserve RPCs 7.2, 7.4, and 7.5 and fold their concepts tied to truthfulness into comments to RPC 7.1 which address, respectively, advertising, specialization, and law firm names.⁵5 An accompanying technical amendment to RPC 5.5 makes clear that law firms can continue to practice across state lines despite the deletion of former RPC 7.5(b), which formerly regulated the names of multistate law firms and implicitly recognized multistate practice. See RPC 5.5(f) and cmt. 22; see also RPC 7.1, cmt. 14 (cross-referencing RPCs 7.1 and 5.5 in this regard). Comments 5 through 7 to RPC 7.1, for example, tether the breadth of advertising forms permitted to the requirement of truthfulness. Comment 8, in turn, now permits lawyers to specifically state they are “specialists” as long as that is true.⁶6 Comment 8 goes on to qualify this regarding certifications: “A lawyer may state that the lawyer is certified as a specialist in a field of law if such certification is granted by an organization approved by an appropriate state authority or accredited by the American Bar Association or another organization, such as a state bar association, that has been approved by the state authority to accredit organizations that certify lawyers as specialists.” Likewise, Comment 10 to RPC 7.1 continues to permit law firms to use trade names as long as they are not misleading.

The recent amendments are painted against the backdrop of a legal economy where lawyers in private practice face unrelenting pressure to market.

Reflecting Ohralik, solicitation under RPC 7.3 is generally permitted unless the contact is misleading, the lawyer knows or reasonably should know that the physical or mental state of the person contacted impairs their judgment on employing counsel, or the solicitation amounts to harassment (including instances where the target informed the lawyer they did not wish to be contacted). Comment 10 to RPC 7.3 provides a non-exclusive list of examples that cross these remaining lines:

Such circumstances and means could be the harassment of early morning or late-night telephone calls to a potential client to solicit legal work, repeated calls at any time of day, solicitation of an accident victim or the victim’s family shortly after the accident or while the victim is still in medical distress (particularly where a lawyer seeks professional employment by in-person or other real-time contact in such circumstances), or solicitation of vulnerable subjects, such as persons facing incarceration, or their family members, in or near a courthouse.

RISK MANAGEMENT

The recent amendments are painted against the backdrop of a legal economy where lawyers in private practice face unrelenting pressure to market. Some regulatory risk remains, but the competitive environment has in many respects shifted the principal risks for law firms beyond that of disciplinary action by the Bar.

Remaining Regulatory Risks. Although the amendments reduced the scope of marketing regulation, it is critical to stress that they did not eliminate marketing regulation altogether. Moreover, anecdotal evidence suggests that regulatory complaints in this regard are as likely to be made by law firm competitors as by consumers of legal services. Discipline is reported quickly on web-based lawyer rating platforms.⁷7 See generally Mark J. Fucile, “Public Discipline Is More ‘Public’ than Ever: The Impact of Web-Based Lawyer Rating Services on Discipline,” 24, No. 1 ABA Prof. Lawyer 42 (2016). Law firms, therefore, need to carefully assess the remaining regulations when marketing to avoid inadvertently creating their own “bad news.”               

With respect to law firm advertising, Comment 2 to RPC 7.1 notes that even a facially truthful statement can be misleading if sufficient facts are not included. For example, reporting on a law firm website that a lawyer obtained a $1 million verdict for a client would likely be deemed misleading if not accompanied by the qualifier that the verdict was reversed on appeal. Similarly, Comment 3 to RPC 7.1 counsels that disclaimers of results along the line of “past performance is no guarantee of future results” are important in placing results in context. Law firms should periodically review the content of their websites and social media platforms to ensure that results reported remain accurate and that disclaimers include appropriate qualifying language.

With respect to solicitation, regional variations remain. Although Oregon’s version of RPC 7.3 is substantively similar to the new Washington rule, Idaho has thus far retained an older version that generally restricts in-person solicitation and requires that most written solicitations include the words “advertising material.”⁸8 See Oregon RPC 7.3, Idaho RPC 7.3. With both multistate licensing and interstate practice increasingly common, lawyers need to carefully calibrate their marketing to the rules of the jurisdiction concerned.

Beyond Discipline. Given the economic pressure to market, risks are emerging in ways that lawyers don’t necessarily associate with “marketing.” In this column, we’ll look at three.

“Intake” and “outplacement” can present particularly sharp risks. Websites that engage potential clients interactively through mechanisms like chat boxes and pop-up windows (i.e., “intake”) should include disclaimers of both an attorney-client relationship and confidentiality⁹9 See, e.g., Barton v. U.S. Dist. Court for Central Dist. of Cal., 410 F.3d 1104 (9th Cir. 2005) (discussing both kinds of disclaimers in the context of internet marketing).—and then proceed consistently with those disclaimers.¹⁰10 Under Bohn v. Cody, 119 Wn.2d 357, 363, 832 P.2d 71 (1992), whether an attorney-client relationship exists turns on the subjective belief of the putative client and whether that subjective belief is objectively reasonable under the circumstances. Disclaimers can be undermined if, notwithstanding their terms, a law firm leads a website inquirer to believe that the firm is representing that person by, for example, providing detailed individualized legal advice. Systematic use of conflict checks and engagement agreements remains critical to avoid potentially disqualifying conflicts when taking on new work.¹¹11 See, e.g., Jones v. Rabanco, Ltd., No. C03-3195P, 2006 WL 2237708 (W.D. Wash. Aug. 3, 2006) (unpublished) (failure to run conflict check); Atlantic Specialty Ins. Co. v. Premera Blue Cross, No. C15-1927-TSZ, 2016 WL 1615430 (W.D. Wash. Apr. 22, 2016) (unpublished) (failure to send engagement agreement). With respect to “outplacement,” if a former client isn’t happy and writes a negative online review, a lawyer is not free to reveal confidential information in responding. The ABA recently issued an ethics opinion—Formal Opinion 496 (2021)—that both addresses the limitations on responding to negative online reviews and suggests alternatives.¹²12 See also Mark J. Fucile, “The Delicate Art of Responding to Negative Online Reviews,” Apr.-May 2018 WSBA NWLawyer 10.

Under pressure to generate work, lawyers sometimes stray into practice areas in which they are not fully competent. The term of art used in risk management circles for this is “dabbling.” Last year, the ABA updated its periodic “profile” of legal malpractice claims-reporting statistics from major insurance carriers for the period 2016 to 2019. Nearly 16 percent of all claims for that reporting period involved “failure to know/properly apply [the] law.”¹³13 See also RPC 1.1 (competency). These sobering statistics underscore that law firms must invest in adequate training so lawyers are competent to move into new areas and must also have peer review mechanisms in place to dissuade firm lawyers from straying into uncharted waters without the requisite knowledge and resources.

Finally, law firms should closely review broad statements on their websites about their experience and capabilities to ensure they are completely accurate. Under Short v. Demopolis, 103 Wn.2d 52, 691 P.2d 163 (1984), the Washington Consumer Protection Act (CPA), RCW Chapter 19.86, applies to the business aspects of law practice—including “the way a law firm obtains, retains, and dismisses clients.”¹⁴14 103 Wn.2d at 61. The CPA creates a private right of action that includes (with limitations) treble damages and attorney fees for “unfair or deceptive” acts or practices. Although there is a “public interest” requirement in a CPA claim, RCW 19.86.093(3)(a) permits this element to be met if the act or practice involved “had the capacity to injure other persons[.]”¹⁵15 See Bertelsen v. Harris, 459 F. Supp. 2d 1055, 1063 (E.D. Wash. 2006) (dismissing CPA claim for failure to meet the “public interest” requirement where the court found a fee agreement was a purely private transaction). Advertising on a website or analogous electronic platform may meet this standard depending on the facts of a given case.¹⁶16 See, e.g., Rhodes v. Rains, 195 Wn. App. 235, 238-43, 381 P.3d 58 (2016) (CPA claim against accounting/law firm over advertising); see also Crowe v. Tull, 126 P.3d 196 (Colo. 2006) (discussing lawyer advertising under the Colorado CPA).

SUMMING UP

By aligning the marketing rules with the constitutional limits first articulated in Bates and Ohralik, the recent RPC Title 7 amendments make the remaining marketing regulations simpler and more straightforward. At the same time, economic pressures will likely continue to nudge risk management in this area toward the practical consequences—and associated safeguards—of that broad ability to market.

NOTES

1.  The Supreme Court also adopted a parallel set of amendments to the RPCs applicable to Limited License Legal Technicians (LLLTs).

2.  Two elements of Title 7 did not change substantively. The prohibition on paying for referrals moved from former RPC 7.2(b) to RPC 7.3(b). At the same time, a new provision—RPC 7.3(b)(5)—was added to permit nominal “thank you” gifts that “are neither intended nor reasonably expected to be a form of compensation for recommending a lawyer’s services.” RPC 7.6, which addresses political contributions to obtain government legal work, remains unchanged.

3.  The Supreme Court’s order adopting the amendments is SCO 25700-A-1333 (Jan. 8, 2021). The “legislative history” of the amendments recounted in the WSBA’s GR 9 cover sheet and public comments on the proposals are both available in the “rules” section of the Washington Courts’ website at: www.courts.wa.gov/court_rules/. For additional history of the amendments, available on the WSBA website, see Mark J. Fucile, “Looking Forward: Proposed Amendments to Lawyer Marketing Rules Under Review,” March 2019 WSBA NWLawyer 12, and Mark J. Fucile, “Washington Supreme Court Approves Major Changes to Lawyer Marketing Rules,” WSBA NWSidebar (Jan. 19, 2021).

4.  The Washington amendments followed a similar, but not completely identical, path as their ABA Model Rule counterparts. As a result, some elements of the Washington amendments, such as RPC 7.3 on solicitation, differ from the corresponding ABA Model Rule. The history of the Model Rule amendments is recounted on the ABA website at: www.americanbar.org/groups/professional_responsibility/committees_commissions/ethicsandprofessionalresponsibility/mrpc_rule71_72_73_74_75/.

5.  An accompanying technical amendment to RPC 5.5 makes clear that law firms can continue to practice across state lines despite the deletion of former RPC 7.5(b), which formerly regulated the names of multistate law firms and implicitly recognized multistate practice. See RPC 5.5(f) and cmt. 22; see also RPC 7.1, cmt. 14 (cross-referencing RPCs 7.1 and 5.5 in this regard).

6.  Comment 8 goes on to qualify this regarding certifications: “A lawyer may state that the lawyer is certified as a specialist in a field of law if such certification is granted by an organization approved by an appropriate state authority or accredited by the American Bar Association or another organization, such as a state bar association, that has been approved by the state authority to accredit organizations that certify lawyers as specialists.”

7.  See generally Mark J. Fucile, “Public Discipline Is More ‘Public’ than Ever: The Impact of Web-Based Lawyer Rating Services on Discipline,” 24, No. 1 ABA Prof. Lawyer 42 (2016).

8.  See Oregon RPC 7.3, Idaho RPC 7.3.

9.  See, e.g., Barton v. U.S. Dist. Court for Central Dist. of Cal., 410 F.3d 1104 (9th Cir. 2005) (discussing both kinds of disclaimers in the context of internet marketing).

10. Under Bohn v. Cody, 119 Wn.2d 357, 363, 832 P.2d 71 (1992), whether an attorney-client relationship exists turns on the subjective belief of the putative client and whether that subjective belief is objectively reasonable under the circumstances. Disclaimers can be undermined if, notwithstanding their terms, a law firm leads a website inquirer to believe that the firm is representing that person by, for example, providing detailed individualized legal advice.

11. See, e.g., Jones v. Rabanco, Ltd., No. C03-3195P, 2006 WL 2237708 (W.D. Wash. Aug. 3, 2006) (unpublished) (failure to run conflict check); Atlantic Specialty Ins. Co. v. Premera Blue Cross, No. C15-1927-TSZ, 2016 WL 1615430 (W.D. Wash. Apr. 22, 2016) (unpublished) (failure to send engagement agreement).

12. See also Mark J. Fucile, “The Delicate Art of Responding to Negative Online Reviews,” Apr.-May 2018 WSBA NWLawyer 10.

13. See also RPC 1.1 (competency).

14. 103 Wn.2d at 61.

15. See Bertelsen v. Harris, 459 F. Supp. 2d 1055, 1063 (E.D. Wash. 2006) (dismissing CPA claim for failure to meet the “public interest” requirement where the court found a fee agreement was a purely private transaction).

16. See, e.g., Rhodes v. Rains, 195 Wn. App. 235, 238-43, 381 P.3d 58 (2016) (CPA claim against accounting/law firm over advertising); see also Crowe v. Tull, 126 P.3d 196 (Colo. 2006) (discussing lawyer advertising under the Colorado CPA).