Where an attorney receives a benefit from a service provider which accrues at no additional cost as a result of expenses paid by the client, the attorney must disclose the receipt of the benefit to the client (1) if the client may claim or otherwise take advantage of the benefit or (2) if the benefit is of such significant value as to have a potential to influence the attorney's selection of a service provider.
Facts: An attorney is enrolled in several "frequent flyer" programs which provide him with free airline tickets when he has flown a specified number of miles on a particular airline. The cost of the tickets giving rise to the frequent flyer benefit is billed to clients as a litigation expense. No additional expense to the clients is incurred in accruing the frequent flyer miles. The benefit accrued through the purchase of a single ticket is nominal, but the benefits may ultimately add up to something of substantial value.
Discussion: We are asked whether it is unethical for a lawyer to benefit personally in some way by virtue of using one service provider rather than another.
The starting point of our analysis is DR 2-106(B) which provides that a lawyer must only charge a reasonable fee. The committee reads this provision to extend to the proposition that any expenses incurred on behalf of a client must also be reasonable, and the client should be provided with information necessary for the client to inform himself whether the expenses are reasonable.
It would, of course, be unethical for a lawyer to select a more expensive flight for the purpose of accumulating frequent flyer miles. Such a practice would also run afoul of DR 5-107(A)(2) which provides that a lawyer shall not, except with the consent of his client after full disclosure, "[a]ccept from one other than his client anything of value related to his representation of or his employment by his client." DR 5-107 is directed to those situations which present potential or actual hazards to the attorney's exercise of undivided professional judgment on behalf of a client. The language of this rule clearly encompasses situations in which an attorney's selection of a service provider whose expenses will be billed to the client is influenced by a personal benefit which he will obtain.
The variety of different situations which might give rise to an economic benefit for the lawyer make it impossible to formulate a hard and fast rule as to when the benefit must be disclosed to the client. Consistent with the provisions of DR 2-106(B) and DR 5-107(A)(2), the committee's view is that, assuming that there is no additional cost to the client in procuring the service which carries with it a benefit, the requirement of disclosure to the client depends on two factors. First, is the benefit of more than de minimis value and one which could be claimed by the client? If so, the client should be advised of the availability of the benefit. For example, in those cases where the air travel in a given case is more than de minimis and a client could obtain frequent flyer miles by paying for the travel directly, the lawyer should discuss with the client whether he wishes to pay directly and thereby obtain the benefit for himself. Similarly, where travel for an individual client is of such magnitude that sufficient frequent flyer miles are accumulated to purchase tickets which could be used for additional travel on that client's behalf, the issue should be discussed with the client. Second, is the benefit, while not available to the client, of such significant value as to have a potential to influence the attorney's selection of the service provider? In that case, the existence of the benefit should be disclosed to the client. Disclosure will ensure that the client is able to inform himself as to the reasonableness of the expense. It will also avoid any appearance that the attorney's selection of the service provider was not based solely on the needs of the client, but was influenced by the availability of the benefit.
One final point should be noted. It is apparent to us that BBA Ethics Opinion 93-4 is a response to the same inquiry that generates this opinion. Unless there is some special reason, this committee will normally not respond to an inquiry if it knows that the inquirer has already received advice from another ethics committee. The committee is not a governmental body and exists only to provide a public service for lawyers who want assistance. It seems a prudent use of the limited time and resources of the committee to decline to give advice to a lawyer who has received advice elsewhere. Moreover, the possibility of conflicting advice may be confusing. The situation with respect to the present inquiry is different. The inquirer sought and received written emergency advice from the committee long before the BBA Ethics Committee issued its opinion. This committee thought the substance of the inquiry to be of public importance and had already prepared several draft versions of this opinion when the BBA Ethics Opinion appeared. Since our interpretation of the rule is somewhat different from that of the BBA Ethics Committee, we thought that it might be helpful to the bar to put our draft in final form for publication.
Permission to publish granted by the Board of Delegates on January 14, 1994. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.