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Re: Advisory
Opinion 2003-03
Professional Ethics Committee
Arkansas Bar Association
Date: October
6, 2003
Subject:
Advertising and Referrals to Out of State Attorneys
Facts: An Arkansas attorney proposes
to enter into a contract with an out of state law
firm. The out of state firm will finance advertising
by the Arkansas attorney in Arkansas media outlets.
The advertising will make no reference to the out
of state firm.
The Arkansas attorney will obtain clients, do the
initial interview, gather information and evidence,
and enter into an attorney-client contract with the
client.
At that
point the client will be referred to the out of state
law firm. That law firm may refer the client to another
out of state law firm. Representation to the client
will be provided by the Arkansas attorney and by both
the out of state firms. Any legal fees generated by
the representation will be split among the firms.
Discussion: The Arkansas Rules of Professional
Conduct do not govern financing of legal advertising.
An Arkansas law firm may pay for advertising from
its own resources, may borrow from an individual,
or may enter into an arrangement with financial institutions.
Nothing prohibits the firm from obtaining financing
from another law firm, within or outside the state.
Likewise,
the Rules do not require any disclosure, in the media
or to clients, of the financial resources for advertising.
The out of state firm does not need to be mentioned
in the advertising. Ark. R. Prof. Conduct 7.2(d) requires
that advertisements shall disclose the geographic
location of the law firm that will actually perform
the services. Because not all cases will involve the
out of state law firm, and since the Arkansas attorney
will perform the initial services, it is not necessary
to disclose the name or location of the out of state
firm in any advertising.
Arkansas
Rule of Professional Conduct 1.5(e) permits referral
fees. With the consent of the client, and pursuant
to the requirements of the rule, the Arkansas firm
may associate the out of state firm or firms to serve
the client. See Ark. Bar Association Opinion 92-01.
We note that advisory opinions in South Carolina (1989),
Pennsylvania (1994) and Utah (2000) have come to the
same conclusion. See Daniel R. Alexander, Note, Referral
Fees and Other Fee Arrangements Between Attorneys
in Different States, 27 Journal of Legal Profession
123 (2003).
Because
the out of state firms are not admitted to practice
in Arkansas, this committee has been asked whether
the Arkansas lawyer or the out of state firms risk
violating Rule 5.5, which prohibits assisting in the
unauthorized practice of law. We are unable to give
a definitive answer to that question. First, the non-resident
attorneys may seek admission pro hac vice, pursuant
to Rule XIV of the Rules Governing Admission to Practice.
Second, the Arkansas Supreme Court has proposed Admission
to Practice by Motion. Third, the House of Delegates
of the Arkansas Bar Association has recommended to
the Supreme Court a revision of the rules. That proposal
would permit a non-resident lawyer to provide legal
services on a temporary basis in Arkansas.
We have
been asked whether the Arkansas attorney would be
engaged in the unauthorized practice of law in another
state. For example, if the client were a resident
of Tennessee, would the Arkansas attorney (or the
other law firm) be violating the rules of Tennessee?
We are unable to venture an answer to that question,
which must be answered under the law of that jurisdiction
and by appropriate authorities there.
We must
add the following caveat to this proposal. The Arkansas
attorney's loyalty must be to the client. For example,
the client may refuse to consent to the association
of the out of state law firm. Regardless of an underlying
contractual relationship with the out of the state
firm, the Arkansas attorney must adhere to the wishes
of the client. Likewise, the Arkansas attorney must
exercise independent professional judgment and render
candid advice to the client. Rule 2.1. In some situations
the independent judgment and advice may conclude that
the outside law firm should not be associated.
Conclusion: The marketing and advertising
scheme described above does not violate the Arkansas
Rules of Professional Conduct. However, the arrangement
between firms can not be allowed to diminish or weaken
the primary obligation that the attorney owes to the
client.
NOTICE
"This
is an opinion only of the Arkansas Bar Association
which is a voluntary association of attorneys licensed
to practice in the State of Arkansas, and reliance
thereon is voluntary and relieves any Association
member from liability for the content hereof. This
opinion is intended to be the Association's best interpretation
of the Model Rules of Professional Conduct as promulgated
by the Supreme Court of Arkansas as that code applies
to the written facts presented to the Committee."
ARKANSAS
BAR ASSOCIATION
By: ____________________________________
Howard W. Brill
Reporter
Professional Ethics Committee
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