Attorney Solicitation of Legal Work in Business Settings
LACBA Update, April 2006
By Hon. Samuel L. Bufford, U.S. Bankruptcy Judge, Central District of California; Nomura Lecturer on Law, Harvard Law School (winter 2005). Judge Bufford is a member of LACBA’s Professional Responsibility and Ethics Committee. The opinions expressed are his own.
In this article I argue that, because the solicitation of legal work for a prospective client in a business context is protected commercial speech, it does not violate Rule 1-400(C) of the California Rules of Professional Conduct.
Business firms and other sophisticated consumers of legal services increasingly request that a lawyer or law firm make a presentation on whether the lawyer should be hired by the prospective client. Alternatively, a lawyer may request an opportunity to make such a presentation to a prospective business client. 1
To the extent that such conduct violates Rule 1-400, this rule is unconstitutional. Because of the convoluted wording of the rule, however, it appears that such conduct does not violate the rule. Nonetheless, the California Supreme Court and the California State Bar could do a much better job of articulating the applicable rule to make clear the propriety of this kind of lawyer activity.
California Rule. Rule 1-400(C) provides in relevant part:
A solicitation shall not be made by or on behalf of a member or law firm to a prospective client . . . unless the solicitation is protected from abridgement by the Constitution of the United States or by the Constitution of the State of California.
A solicitation is “any communication . . . [c]oncerning the availability for professional employment of a member or a law firm . . . .”2 However, the rule is limited to communications delivered in person or by telephone, or that are directed to a person known to be already represented by counsel in the matter at issue.3
The rule provides explicit exceptions in three circumstances. It permits a solicitation to a prospective client with whom the lawyer has a family or prior professional relationship, a solicitation to a former or present client in the discharge of a lawyer’s professional duties (such as a duty to keep a former client informed of legal developments relevant to the prior representation), and solicitation that does not have pecuniary gain as a significant motive4 (such as pro bono legal services).
The California State Bar Ethics Rules Revision Commission has posted a tentative revision of Rule 1-400. Proposed new Rule 7.3 essentially adopts the present rule, except that a solicitation would no longer be prohibited if the person contacted is a lawyer. ABA Model Rule 7.3 is essentially similar to the proposed California rule, except that it states no exception for constitutionally protected attorney solicitation.
Edenfield Case. The U.S. Supreme Court case governing the solicitation of business by professionals (including lawyers) is Edenfeld v. Fane,5 which explained that professional solicitation is generally protected commercial speech. Edenfield arose when an accountant challenged a Florida statute prohibiting a CPA from making a personal, uninvited solicitation to provide accounting services. The U.S. Supreme Court invalidated the Florida law and stated:
We hold that, as applied to CPA solicitation in the business context, Florida’s prohibition is inconsistent with the free speech guarantees of the First and Fourteenth Amendments.6
Invoking the intermediate level of scrutiny (applicable to commercial speech),7 the Supreme Court determined that a law restricting commercial speech need only be tailored in a reasonable manner to serve a substantial state interest.8 It found that the ban on CPA solicitation did not advance in any direct and material way Florida’s substantial interests in assuring the accuracy of commercial information in the marketplace,9 protecting the privacy of potential clients, and maintaining standards of ethical conduct in the licensed professions.10
To reach this conclusion, the Supreme Court in Edenfield narrowly construed its prior decision in Ohralik v. Ohio State Bar Ass’n,11 which upheld an Ohio ban on in-person lawyer solicitation of business involving the solicitation of a youthful driver and her passenger, both of whom had been involved in a car crash, where one was still hospitalized and the other had just been discharged from the hospital.
Edenfield distinguished Ohralik on the grounds that “the constitutionality of a ban on personal solicitation will depend upon the identity of the parties and the precise circumstances of the solicitation.”12 Ohralik, the Supreme Court explained, applied to “an unsophisticated, injured or distressed lay person.”13 In contrast, where “prospective clients are sophisticated and experienced business executives who understand well the services” offered, the speech is protected.14 This is especially true where “the prospective client has an existing professional relation with [a professional of the same type] and so has an independent basis for evaluating the claims of a new [professional] seeking professional work.”15 Constitutional protection applies to solicitation of professional business where “the manner in which [the professional] solicits business is conducive to rational and considered decision making by the prospective client, in sharp contrast to the uninformed acquiescence to which the accident victims in Ohralik were prone.”16
Application of Edenfield to Attorney Solicitation. Intermediate scrutiny requires three inquiries in determining the applicability of Edenfield to attorney solicitation: (1) Are the state’s interests substantial? (2) Does the challenged regulation advance these interests in a direct and material way? (3) Is the restriction in reasonable proportion to the interests served?17 The Supreme Court has found the state’s interests substantial in the regulation of both accountants18 and lawyers,19 which leaves questions two and three.
“A governmental body seeking to sustain a restriction on commercial speech must demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree.”20 The harm may not be speculative or conjectural.21 Neither the Ethics Rules Revision Commission record nor that of the adoption of the existing rule contains any reference whatever to harms that the rule seeks to avoid. Even assuming the continuing vitality of Ohralik in the nonbusiness context, the records of both commissions fail to document this concern.
Reasonable proportionality is altogether lacking in both the present and proposed revisions of Rule 1-400. If the rule is construed to prohibit attorney solicitation of clients in a business context, it does so in the broadest fashion—by prohibiting, except for the three exceptions, attorney solicitation altogether. The commission defends the retention of the present language in the rule as follows:
Edenfield [citation deleted] has arguably rendered prohibitions such as those found in rule 7.3(a) constitutionally infirm and that the provision should be deleted. However, it was noted that this constitutional issue was one for the courts, not for the Commission, requiring a prediction of how a reviewing court might interpret the rule. Nevertheless, it was determined that the constitutional issue would be adequately addressed and an “all or nothing” invalidation of the rule avoided by extending and including the savings clause that now appears in [the current rule].
In short, the commission makes no effort to satisfy the Edenfield concerns, and leaves it to the reviewing courts to address the proportionality issue. Similarly, there is nothing in the publicly available history of the present rule to indicate any attempt to make the rule reasonably proportional to the interests served.
One statement in Edenfield could give rise to a distinction between the treatment of lawyers and accountants for the purposes of the solicitation of legal work. A CPA, the Supreme Court noted, is not an advocate trained in the art of persuasion.22 The Court also noted that a typical client of a CPA is a sophisticated and experienced business executive with an existing relationship with an accountant and an independent basis for evaluating the claims of a new CPA seeking professional work.23 Such a prospective client does not expect to retain the CPA on the spot but checks references and deliberates before entering into such an engagement.24
All these observations apply to an attorney soliciting work in a business context. Thus, Rule 1-400(C) and its proposed revision notwithstanding, an attorney soliciting work from a business client enjoys First Amendment protection for in-person communications with a prospective client.
1 In Formal Opinion No. 494 (1998), the Professional Responsibility and Ethics Committee of the Los Angeles County Bar Association opined that telephone calls offering to conduct in-house educational seminars are constitutionally protected and not subject to the prohibition of Rule 1-400(C).
2 Rule 1-400(B).
3 See id.
4 See id.
5 507 U.S. 761 (1993).
6 Id. at 763.
7 See id. at 767.
8 See id. at 767.
9 See id. at 768-70.
10 See id. at 771.
11 436 U.S. 447 (1978).
12 See 507 U.S. at 774.
17 See Central Hudson Gas & Electric Corp., 447 U.S. 557, 564 (1980).
18 Edenfield, 507 U.S. at 768-70.
19 See Florida Bar v. Went For It, Inc., 515 U.S. 618, 625 (1995) (upholding Florida’s ban on attorney direct mail advertising to accident or disaster victims for first 30 days after the event).
20 Edenfield, 507 U.S. at 770-71.
21 See id. at 770.
22 See Edenfield, 507 U.S. at 775.
23 See id.
24 See id.