Ethics Opinion

Opinion No. 78-5

May 1978

Summary: Under DR 2-103(D) a lawyer may not be a member of an organization which exists solely to promote the use of members' products and services.

Facts: An organization of business owners and professional persons trade among each other without using cash. For example, a restaurant provides a meal for another member and receives credit on the books of the supervising organization equal to the value of the meal. The diner's account is debited in equal amount plus a 10 percent service charge by the organization. Members learn about other members, and their products or services, by telephoning the organization when a specific product or service is needed. The organization's "newsletter" states that membership will increase volume, bring "greater profits," and provide "valuable new business contacts," and that "all members sell their ... services at prevailing prices."

Discussion: We are asked whether lawyers may ethically become members of this organization. The purpose of the organization primarily appears to be a means of promoting the goods and services of the members.
The lawyer members would be offering other members of the organization their services through an intermediary. The proposed arrangement violates DR 2-103(D) of SJC Rule 3:22 which states that "[a] lawyer shall not knowingly assist a person or organization ... to promote the use of his services ... ." Similarly, a listing of the lawyer by the organization could be considered a recommendation of the employment, prohibited by DR 2-103(A), since the only way that a lawyer could pay for his membership would be by soliciting others to employ him. It should be noted that the constitutionality of DR 2-103 is presently being reviewed by the Supreme Court of the United States.
Further, since the client would pay a 10 percent premium when he hires the services of a lawyer member, the fee charged to the client for the legal services rendered would either be higher than it otherwise would be and therefore perhaps unreasonably excessive or else would have to be discounted by payment of 10 percent to a non-lawyer, the equivalent of a division of legal fees, prohibited by DR 3-102.
The inquirer states that the "seller" will receive the entire amount of any sales or meal taxes. We express no opinion on whether the proposed arrangement could require the lawyer to collect taxes on his services since this is a question of law.

Permission to publish granted by the Board of Delegates, 1978. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.