Ethics Opinions

Opinion No. 79-5

Summary: Where a nonprofit corporation funded by the Legal Services Corporation acts as a referral agency, to refer indigent inquirers to one of 11 participating private law firms, and pays for its legal services at agreed rates, it is proper for one of the firms to represent an inquirer referred to it by the corporation and for another of the firms to represent the opposing party in the same case, even though each of the 11 firms has a representative on the board of directors of the corporation.
The inquirers never become "clients" of the corporation or of its referral staff, which determines by a confidential interview the kind of legal problem involved, where the inquirer lives, and whether he or she is indigent, and notes the law firm to which the inquirer was referred, and the fees paid to it by the corporation for its legal services. The directors and other representatives of the participating law firms have only policy making authority over the program and procedures of the corporation. In reaching this conclusion, the committee has assumed that the directors and other representatives of the participating law firms do not have access to confidential information which may come to the referral staff and that the contracts with the 11 participating private law firms are authorized by the Legal Services Corporation under its statutory authority (42 U.S.C. SS2996-2996L), and its regulations (45 C.F.R. SS1600-1623).
Facts: A nonprofit Massachusetts corporation, funded by the Legal Services Corporation, acts as a referral agency for the indigent persons in need of legal services. By a confidential telephone interview, its staff determines the kind of legal problem, where the inquirer lives, and whether the inquirer is indigent. If the inquirer is determined to be indigent, he or she is referred to one of 11 participating private law firms, the choice depending on the kind of legal problem and the inquirer's residence. If the inquirer is accepted as a client by the law firm, after completing a financial statement, the firm bills the corporation at a stated rate, with agreed maximums in all areas.
The corporation's board of directors is composed of one representative from each of the 11 law firms. The board has policy making authority for the corporation, and representatives of the11 law firms meet regularly with the corporation's staff to discuss program and procedural matters. The committee has been asked whether one of the 11 firms may properly represent a person referred to it by the corporation, when another of the 11 firms represents the opposing party who has privately retained it to do so, and vice versa.

Discussion: The committee believes that no inquirer has ever become the "client" of either the corporation or of its referral staff. In its Opinion 76-6, the committee concluded that an attorney-client relationship existed "where an attorney has been shown a document by a person who sought (unsuccessfully) to retain him as trial counsel, while advising the person as to some of the basic legal considerations involved in the suit." But in the present case, the inquirer has not sought to retain the corporation or any of its referral staff as counsel, no advice is given on the basic legal considerations, nor are facts elicited beyond those needed to determine where the inquirer lives, the kind of legal problem, and whether the inquirer is indigent.
There are literally hundreds of lawyer referral programs in operation, by bar associations, by prepaid legal service plans, by various nonprofit agencies, and by unions, as upheld by the Supreme Court in Bates v. State Bar of Arizona, 433 U.S. 350 (1977), Ohralik v. Ohio State Bar Association, 98 S.Ct. 1912 (1978) and In re Primus, 98 S.Ct. 1893 (1978).
So far as the committee is aware, it has never been responsibly suggested that these referral agencies are themselves practicing law or that inquirers who are referred to law firms are also the "clients" of the referral agencies although the files of the referral agencies may be confidential.
There is, in the opinion of the committee, no conflict of interest where one of the 11 law firms represents an inquirer referred to it by the corporation and one of the other law firms has been privately retained by the opposing party. The only connection between the two law firms is that representatives of each are directors together on the board of the nonprofit corporation. The committee knows of no provisions of the Disciplinary Rules which would make it improper for two law firms to represent the opposing parties in a legal action, merely because representatives of both firms are directors of a corporation which has no interest in, or legal relationship to, the legal action and the parties thereto. The fact that the corporation will pay the fee of the law firm to which the inquirer was referred is irrelevant, provided that the inquirer is informed that it will do so, and consents thereto. Nor can the corporation properly direct or regulate the firm's professional judgment in rendering legal services to the referred client. See DR 5-107(A) and (B).
The committee has noted that the Legal Services Corporation is not permitted under 42 U.S.C. S 2996(E) to "interfere with any attorney in carrying out his professional responsibilities to his client," as established by the ABA Code of Professional Responsibility, or to abrogate a state's authority "to enforce the standards of professional responsibility generally applicable to attorneys in such jurisdiction." For the reasons above stated, the committee believes that there is no conflict of interest involved in the case before it.
In reaching this conclusion, the committee has assumed that the directors and other representatives of the participating law firms do not have access to confidential information which may come to the referral staff and that the contracts with the eleven participating private law firms are authorized by the Legal Services Corporation under its statutory authority (42 U.S.C. SS2996-2996L) and its regulations (45 C.F.R. SS1600-1623).


Permission to publish granted by the Board of Delegates, 1979. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.
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