If you care about legal ethics and client rights, and can be in Columbus,Ohio, tomorrow afternoon, Jan. 27, please start making plans to be at theheadquarters of The Ohio State Bar Association by 1 P.M. If you can’t bethere — and especially if you are a member or future member of OSBA orthe Ohio Bar — you should also read on, and take action by email or phone,or at your website.As explained below, we believe OSBA is (or is about to be) aprime example of our Bar & Guild Theory: Most bar groupsspend much of their time acting like guilds — promoting theinterests of their members, and “protecting” the public fromcompetition, information, innovation and choice.The Urgency: On Jan. 27, 2006, the OSBA House of Delegateswill consider whether to support a completely revamped setof ethics rules.The two issues I will focus on here are: (1) Should lawyers beallowed to characterize their fees or rates in ads as “discount,”“cut-rate,” “lowest,” or “special,” when the terms are not usedin a false of misleading fashion? (2) Should lawyers be required(for matters bove $500) to communicate in writing with a clientconcerning the scope of engagement and the basis or rate offees and expenses? [You may find other favorite issues thatneed your or our attention.] [UPDATE: Our efforts failed. The Ohio Bar included the ban on advertising discount fees in its recommendations to the Ohio Supreme Court, which then included the provision in the Comment to Rule 7.1, which has been in effect since February 2007.]
After lengthy consideration on how to modernize the current Ohio ethicsto the Model Rules and the current Code) for comment, in October 2005.An OSBA ethics subcommittee has also issued its Bar Recommendations.On Jan. 27, 2006, at 1 p.m., the Council of Delegates will hold aspecial meeting at OSBA Headquarters, 1700 Lake Shore Drive,Columbus, to consider recommendations of the Supreme CourtTask Force on Rules of Professional Conduct.In addition, all members of the Association ”have the privilege of thefloor on a parity with delegates. . . [and] Members wishing to addressthis matter at the upcoming Council of Delegates meeting are askedto communicate their interest to Bill Weisenberg in advance sothey can be recognized at the meeting. [you can contact Bill firstname.lastname@example.org; phones: (614) 487-8585; (800) 232-7124;FAX (614) 487-8808]Here’s why I am concerned and am asking for your help:First: As the ABA eJournal reported last week, and Carolyn ElefantBar Won’t Allow Lawyers to Say They Offer Cut Rate Service,” Jan.25, 2006). In Opinion 2005-9, (Dec. 2, 2005), the Bar Ethics Committeeheld that it had no choice but to apply the current Code to the “coupons”in question. Ohio Code DR- 2-101(A) specifies that a lawyer shall notuse any form of publicity that:(5) Contains characterizations of rates or fees chargeable by thelawyer or law firm, such as “cut-rate,” “lowest,” “giveaway,” “belowcost,” “discount,” and “special;” however, use of characterizationsof rates or fees such as “reasonable” and “moderate” is acceptable.Clearly, this antiquated rule, which almost certainly violates 1st Amendmentcommercial speech rights, and would violate antitrust laws if promulgated bythe Association rather than by the Court, deserves to be thrown out. There isnothing inherently misleading about a discount claim — there is, of course,something inherently competitive about them, which might be the rub. Rulessuch as these, which have been eliminated in all but a few jurisdictions, arewrapped in concern for misleading claims, but “belie the legal profession’sbasic dislike of lawyer advertising, competition, and affronts to its bloatedfeelings of self-importance.” (see prior post on the NYSBA war against adver-tising, and a round-up of recent action by the profession’s “dignity police.”They contain excerpts from the ABA and the Federal Trade Commission,on the harm to consumers from broad lawyer advertising bans that are notnarrowly tailored to prevent unfair or deceptive acts or practices.)“Complaint BillF”The Ohio Supreme Court Task Force recommends new Rules 7.1 and 7.2,which largely follow the much-improved ABA Model advertising rules. Theymove many prohibitions “in deference to constitutional concerns about theregulation of commercial speech.” (Task Force Report) The Model Rules banonly a false or misleading communication — that is, one which “contains amaterial misrepresentation of fact or law, or omits a fact necessary to makethe statement considered as a whole not materially misleading.” In aComment to Rule 7.1, there is this appropriate conclusion about fees:“[A]n unsubstantiated comparison of the lawyer’s services or feeswith the services or fees of other lawyers may be misleading ifpresented with such specificity as would lead a reasonable personto conclude that the comparison can be substantiated. The inclusionof an appropriate disclaimer or qualifying language may preclude afinding that a statement is likely to create unjustified expectationsor otherwise mislead a prospective client.”It is unfortunate (and misleading), however, that the Proposed Ohio Rule 7.1removes the ban on terms such as “discount” and “cut-rate” from the bodyof the Rule, but insert the provisions again in Comment  to Rule 7.1, whichstates:4] Characterization of rates or fees chargeable by the lawyer or lawfirm such as “cut-rate,” “lowest,” “giveaway,” “below cost,” “discount,”or “special” is misleading. [emphasis added]It is a per se rule making discount advertising by lawyers unethical. That canonly have one purpose (eliminating or reducing price competition) and oneresult: higher prices for consumers of legal services. The higher price will,of course, mean that more and more Americans will be functionally eliminatedfrom the legal services marketplace, and have their legal needs unmet or metthrough nonlawyer sources.The drafter of the Task Force Report sounds rather unhappy about this result,reading between the lines. And, the OSBA ethics committee could havecorrected it, advocating for the Model Rule version, the First Amendment,and competition. However, it did not. The committee’s Recommendationsadopt the Task Force’s version of the advertising rules in their entirety.The written fee and scope of engagement requirement has a bitof a different posture.The current Code says, in relevant part:
EC 2-18 As soon as feasible after a lawyer has been employed,
it is desirable that he reach a clear agreement with his client as
to the basis of the fee charges to be made. Such a course will
not only prevent later misunderstanding but will also work for
good relations between the lawyer and the client. It is usually
beneficial to reduce to writing the understanding of the parties
regarding the fee, particularly when it is contingent.
Model Rule 1.5 (b) states that the engagement/fee agreement must be
communicated before or within a reasonable time after commencing the
representation, “preferably in writing.” But, the Ohio Task Force decided
to go farther — giving, in reality, both the client and lawyer more protection,
by requiring a written agreement unless the matter is expected to cost less
Rule 1.5 (b) The scope of the representation and the basis or
rate of the fee and expenses for which the client will be responsible
shall be communicated to the client in writing, before or within a
reasonable time after commencing the representation, unless the
lawyer will charge a client whom the lawyer has regularly represented
on the same basis as previously charged or the fee is $500.00 or less.
Any change in the basis or rate of the fee or expenses is subject to
division (a) of this rule and shall also be promptly communicated to
the client in writing.
How did the OSBA “ethics” subcommittee react to this written requirement?
The majority of the members rejected it — with the following eloquent and
thoughtful, but remarkably frank analysis:
“A majority of the subcommittee recommended changing Rule 1.2
to eliminate the writing requirement concerning scope of representation
and fee-and-expense agreements to prevent violations of that requirement
forming the basis of a disciplinary complaint.”
Ironically, the OSBA website has a LawFacts e-pamphlet, titled Lawyers,
“You should ask the lawyer to put into writing fee and billing agreements
to avoid any misunderstanding.”
In a modern, information world — with clients who can almost always read and write
(and with the scope of representation in more flux than ever ) — many of us surely ask
ourselves: “What kind of a lawyer wouldn’t use a written agreement when representing
a client.” My reply: Exactly the type of lawyer who would oppose this Rule and whose
clients most need the in-writing mandate in Rule 1.5(b) for their protection.
“tinyredcheck” Ohio consumers need your voice in support of the proposed
Rule 1.5(b), and to help make it easier for Ohio lawyers to compete
on price (with its resulting benefits in innovation and acces).
In addition to letting the OSBA know how you feel, you can
write the Supreme Court of Ohio, which is seeking comments, until Feb.
15, 2006. Ask them to keep the in-writing requirement and to junk
the ban on discount advertising.
You might also contact OSBA President E. Jane Taylor (click for herfirm profile and email address), or Robert K. Leonard, Chair of OSBA’s LegalEthics and Professional Liability Committee (at 119 N. West, Lima, OH 45801,(419) 228-1020 , (419) 228 5490 Fax.Please excuse the lateness of this alert. Youf humble editorlearned of the OSBA Meeting this morning.
Ohio weblogers (and other concerned citizens), please do whatever you can at
your website to help bring Ohio’s lawyer ethics rules into the 21st Century and the
era of Consumer Sovereignty. How about it, Modern Esquire; Dale Oesterle at
Dan Tokaji of Equal Vote; and Prof. Douglas A. Berman at the award-winning
p.s. In August 2003, in a moment of deep insight and/or cynicism, I
suggested the following Warning be placed on all bar association
Warning: We are a guild, here to serve the economic interests of our
members. We’ll fight (’til your last dollar) to protect you from any legal
adversary and to secure your legal rights. However, when it comes to
your financial interests versus our own, we will put ours first whenever
afterthought (Jan. 27, 2006): Another aspect of the ProposedRule 1.5 bothers me — the Model Rule 1.5‘s ban on “unreasonable”fees or expenses is rejected in favor of keeping the current ban inOhio’s DR 2-106 on “clearly excessive” fees. Furthermore, thefee, to be excessive, under the current and the proposed rule,must leave a “lawyer of ordinary prudence” with “a definite and firmconviction that the fee is in excess of a reasonable fee.” [emphasisadded] (Apparently a layperson on any Ohio grievance committeecannot apply his or her own prudent judgment on the excessivenessof a fee, after studying the circumstances. That’s one more concern)Good lawyers use or choose particular words purposefully. Here,it is hard to avoid the conclusion that merely banning “unreasonable”fees seemed too harsh for Ohio’s lawyers. Indeed, even a ban on“excessive” fees was apparently too draconian — a fee needs to be“clearly” excessive to be unethical.I do not buy the excuse, if offered by theTask Force and the Bar committee, that thebenefits of continuity outweighed adoption ofthe standard used in most jurisdictions. Keepingthe “clearly excessive” standard is a clear signalthat the burden of proof for anyone challenging afee is extremely high — so that few, if any, fees willbe held to be excessive by your peers. If your feeisn’t illegal or fraudulent (e.g., demonstrably padded),you’re safe in Ohio.One final point of irony: The current Ohio Publicity Rule, DR 2-101 (5),prohibits the advertising of fees as being “discount,” but allows you tocall your fees ”reasonable” and “moderate.” Comment  to Proposedadvertising rule 7.1, also declares discount claims to be misleadingand therefore banned. Notice how this ties in with the current andproposed ethics rules on fees: any legal fee that is not “clearly exces-sive” is “reasonable” in Ohio. It makes you wonder which is more likelyto mislead the public, a “discount” claim by a lawyer whose fees aregenuinely lower than the local norm, or a “reasonable” claim by anOhio lawyer whose fees are just shy of being “clearly excessive.”
January 26, 2006
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