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Suggested Amendments to

RULES OF PROFESSIONAL CONDUCT

Rules 5.5, 7.1, 7.2, 7.3, 7.4, 7.5

A. Proponent:

Washington State Bar Association

1325 4^th Ave, Suite 600

Seattle WA 98101-2539

B. Spokespersons:

William D. Pickett, President

Washington State Bar Association

1325 4^th Avenue, Suite 600

Seattle, WA 98101-2539

Phone: (509) 972-1825

Jeanne Marie Clavere, Professional Responsibility Counsel

Washington State Bar Association

1325 4^th Avenue, Suite 600

Seattle, WA 98101-2539

Phone:(206) 727-8298

C. Purpose:

I. Overview

In June 2015, the Association of Professional Responsibility Lawyers (APRL)¹ issued a groundbreaking report following a two-year study of the regulation of lawyer advertising in the United States. Taking into account constitutional and antitrust concerns, technology change, globalization, and the impact of overregulation, the report concluded that the rules of professional conduct governing lawyer advertising are outdated and unworkable in the current legal environment. The report recommended substantial reform of the American Bar Association’s Model Rules of Professional Conduct (ABA Model Rules) relating to lawyer communications and advertising.²

In early 2016, the Washington State Bar Association (WSBA) Board of Governors (BOG) convened a work group to evaluate the APRL report and report to the BOG regarding possible amendments to the rules governing lawyer advertising and communications in Title 7 of Washington’s Rules of Professional Conduct (RPC). After considering the work group’s analysis and recommendation, the BOG referred the issue to the WSBA Committee on Professional Ethics to develop a proposal for regulatory reform of Washington’s ethics rules governing lawyer advertising and communications. The accompanying suggested amendments--designed to simplify the regulation of lawyer advertising, promote innovation in legal marketing, and improve access to legal services--are the culmination of this effort.

II. Background

A. Impact of the APRL Report

APRL’s 2015 report and 2016 supplemental report were broadly disseminated and presented nationally to groups focused on ethics and lawyer regulation, including to the National Organization of Bar Counsel, the ABA National Conference on Professional Responsibility, the ABA Standing Committee on Ethics and Professional Responsibility (SCEPR), and the ABA Center for Professional Responsibility Fall Leadership Conference.

In light of the APRL reports, SCEPR formed a work group to draft and recommend potential amendments to the ABA Model Rules to the ABA House of Delegates. The ABA SCEPR work group took written commentary on the APRL proposal and convened a public forum at the February 2017 ABA mid-year meeting in Miami.³ At the end of 2017, the work group released a working draft of amendments based on the APRL proposal. The work group hosted a well-attended second public forum at the February 2018 ABA mid-year meeting in Vancouver, British Columbia, with 13 speakers and about 65 attendees present. Twenty-seven written comments were accepted in the comment period to March 1, 2018, and the work group further modified its proposals. In late March, SCEPR presented a free webinar to introduce and explain the revised recommendations. More than 100 people registered for the forum, and many favorable comments were received. Interest in SCEPR work remains high, and the trend is favorable to the changes. The SCEPR plans to present its report and recommendation to amend the Model Rules to the ABA House of Delegates at the ABA annual meeting in August 2018.

On April 17, 2017, the Virginia Supreme Court became the first state supreme court to revise its rules of professional conduct using the recommended APRL reforms as a template. It has been reported to the proponent that committees have been formed in North Carolina and Maryland to review the APRL recommendations. Two other jurisdictions have reformed their Title 7 rules consistent with (although not as a result of) the APRL recommendations. On February 7, 2018, the Oregon Supreme Court adopted amendments to Oregon Rule of Professional Conduct 7.3, essentially identical to the amendment suggested here for Washington’s RPC. Furthermore, many Title 7 rules in the District of Columbia mirror the principles recommended by APRL.

B. Substance of the APRL Proposal

The APRL proposal recommends both substantive and procedural amendments to the ABA Model Rules, seeking greater simplicity and uniformity nationally. In short, the APRL reports propose that the ABA Model Rules focus specifically on false and deceptive advertisements rather than impose complex technical requirements seeking to prohibit potentially misleading, distasteful, or unprofessional communications, and that discipline in this area be reserved for conduct that would otherwise violate Model Rule 8.4(c) (conduct involving fraud, deception, deceit, or misrepresentation).

The draft APRL amendments retain the core language of Model Rule 7.1 (prohibiting false or misleading communications about a lawyer or the lawyer’s services), while deleting Model Rules 7.4 and 7.5 and most of Model Rule 7.2. Much of the commentary to the deleted rules migrated to the comments to Model Rule 7.1 to provide guidance and direction to lawyers in interpreting how to avoid “false and misleading communications.”

With respect to solicitation and referrals, the 2016 APRL supplemental report proposes a modified Model Rule 7.2 that combines elements of current Model Rules 7.2 and 7.3. The modified Model Rule 7.2 would include a definition of "solicitation" in the black letter of the rule, and the general ban on solicitation would be limited to in-person and telephone contacts (not including real time electronic contact), with listed exceptions. The proposal also migrates the provision on prepaid and group legal services plans to Model Rule 7.2 and retains, in modified form, the prohibition in current Model Rule 7.2 on giving anything of value to a person for recommending the lawyer’s services, with listed exceptions.

III. WSBA Review of the APRL Proposal

In early 2016, the BOG formed the "Advertising Workgroup" to analyze whether the APRL proposal would be viable and appropriate in Washington, the ways in which the proposal might need to be modified in light of Washington’s existing Title 7 RPC, and the extent to which the APRL proposal might be improved on to address issues of overregulation of advertising.

The consensus of the Advertising Workgroup, as stated in its February 2017 report to the BOG, was that (1) the APRL proposal represented a viable model for regulatory reform of ethics rules governing lawyer advertising and communications, (2) that work could begin on how to adapt the proposal for Washington State, and (3) that there was no reason to delay consideration of potential amendments.

In light of the widespread favorable reception of the APRL report, the consistency of the APRL proposal with established enforcement practices in Washington State, and the desirability of prompt action in the area of regulatory reform, the Advertising Workgroup proposed that the BOG commence the process of review and revision of Washington’s RPC.

The BOG agreed with the work group’s recommendation and on March 9, 2017, voted to direct the Committee on Professional Ethics (CPE) to: (1) evaluate, and as appropriate draft, potential amendments to Washington’s Title 7 RPC in light of the APRL proposal and (2) report its recommendation to the BOG.

In March 2017 pursuant to the BOG’s request, the CPE formed a subcommittee composed of CPE members and several members of the Advertising Workgroup to draft proposed rule amendments to Title 7. The subcommittee proposals were presented to and reviewed by the CPE over the course of several meetings and adopted at the October and December 2017 CPE meetings. After a first reading in January 2018, on March 8, 2018, the BOG approved the CPE recommendations for submission to the Court under GR 9.

IV. Explanation of Recommended Changes

These suggested amendments would (1) revise RPC 7.1 and 7.3 and their accompanying comments, (2) delete and reserve RPC 7.2, 7.4, and 7.5, and (3) relocate to RPC 5.5 provisions currently in RPC 7.5(b).

A. Communications Regarding Lawyer Services

The suggested amendments simplify Title 7 RPC while maintaining the core concept that communications regarding a lawyer’s services must not be false or misleading. This core concept is expressed in RPC 7.1, which remains unchanged. Ancillary concepts related to (1) the communication of fields of practice and specialization and (2) firm names, currently expressed in RPC 7.4 and 7.5 respectively, are incorporated into RPC 7.1 by moving the comments from RPC 7.4 and 7.5 to RPC 7.1 as new comments 5-13. Black-letter RPC 7.4 and 7.5 are removed and reserved. New comment 8 would make it clear that a lawyer is generally permitted to indicate a specialization, as long as the communication is consistent with the “false or misleading” standard of RPC 7.1.

The only other material difference from the APRL proposal is to reflect the existence in Washington of limited license legal technicians (LLLTs) in the comments, including the relocation of “Additional Washington Comments (3-4)” from RPC 7.5 to Additional Washington Comments (12-13) to RPC 7.1.

B. Advertising

The “Advertising” rule, RPC 7.2, is removed and reserved. The historical basis for having a separate rule was based on traditional restrictions on lawyer advertising that were virtually extinguished when the ABA Model Rules replaced the former ABA Model Code of Professional Responsibility in 1983. The provision in subsection (b) of current RPC 7.2(b) for “referral fees” is moved to RPC 7.3, the solicitation rule, as discussed below.

C. Solicitation

The solicitation rule, RPC 7.3(a), has been simplified consistent with the policies discussed in APRL’s 2016 supplemental report, though the suggested amendments to RPC 7.3 go further by eliminating the current distinction between written solicitation (generally permissible subject to specific prohibitions) and solicitation “by in-person, live telephone, or real-time electronic contract” (generally impermissible but subject to safe harbor exceptions). The suggested RPC 7.3 revision recognizes that solicitation is generally permissible irrespective of form; instead, the rule focuses on prohibiting those solicitations that are unwanted or abusive in defined ways, e.g., where the solicitation is false or misleading, where the lawyer knows that the individual could not exercise reasonable judgment in employing the lawyer, or where the solicitation involves coercion, duress, or harassment. In addition, the suggested revision deletes and reserves subsection (d), relating to authorized solicitations by prepaid or group legal services plans. Since in-person or telephone solicitation would no longer be generally prohibited, this provision would be unnecessary.

On April 17, 2017, the Virginia Supreme Court became the first state to adopt the APRL solicitation reforms. The Oregon Supreme Court simplified its solicitation rule even further when, on February 7, 2018, it issued an amended order adopting a version of the general solicitation rule that limits solicitation restrictions to abusive or unwanted communications “by any means.”

D. Law Firms with Offices in Multiple Jurisdictions

Current RPC 7.5(b) appears to be the only place in the rules that provides a justification for permitting out-of-state law firms to open branch offices here and allowing Washington-based law firms to open offices in other jurisdictions. Black letter law would ordinarily prohibit multijurisdictional arrangements involving otherwise unlicensed individuals unless the arrangement is specifically authorized by law. See RCW 2.48.180(2)(b)-(e); RPC 5.5(b)(1) (a lawyer not admitted in Washington may not establish an office here for the practice of law “except as authorized by these Rules or other law”); see also Geoffrey C. Hazard, Jr., W. William Hodes, and Peter R. Jarvis, The Law of Lawyering § 63.06 (4^th ed. 2015) (explaining that RPC 7.5(b), which “is chiefly concerned with the manner in which multistate firms present themselves to the public,” implicitly endorses the existence of such firms; “[w]ithout such an understanding, a single firm could not have ‘offices in more than one jurisdiction’”). The unauthorized practice statute makes this clear as well. See RCW 2.48.180(7) (in a prosecution for unauthorized practice of law under the Washington statute, “it is a defense if proven by the defendant by a preponderance of the evidence that, at the time of the offense, the conduct alleged was authorized by the rules of professional conduct or the admission to practice rules, or Washington business and professions licensing statutes or rules”).

Because RPC 7.5 would be repealed under the rule changes being recommended, it is suggested that a new paragraph be included in RPC 5.5 ("Unauthorized Practice of Law; Multijurisdictional Practice of Law") to clarify that when lawyers practice in firms having offices in more than one jurisdiction, the business structure does not itself constitute a violation of the Rules of Professional Conduct and the Washington unauthorized practice statute. New comments would be added to RPC 5.5 (comment 22) and RPC 7.1 (comment 14) explaining why this rule change is being made. References to RPC 7.5 in comments 4 and 21 to RPC 5.5 are removed.

In addition, two technical corrections are suggested in comments 5 and 14 of RPC 5.5 to clarify that those comments are Washington revisions. Finally, as an additional technical correction, two instances of the phrase “to prospective clients” are deleted from comment 21 to conform the comment to the ABA Model Rule.

E. Compensation for Recommending Lawyer Services (“Referral Fees”)

The suggested amendments would move the “referral fee” provisions from RPC 7.2(b) to subsection (b) of the solicitation rule, RPC 7.3, to reflect the historical justification for regulating referral fees as a prohibited form of solicitation (i.e., unseemly “running” or “ambulance chasing”). See Hazard, Hodes, & Jarvis, supra, at § 60.05^th (“Ordinarily, paying for a recommendation of a lawyer’s services is a form of solicitation, and thus is prohibited by Model Rule 7.3. [Model] Rule 7.2(b), however, provides several commonsense exceptions to govern situations in which money does indeed change hands in exchange for a recommendation of services, but where the evils of direct contact solicitation are not present.”). The one material difference from the APRL proposal is that the suggested rule reflects the existence in Washington of LLLTs in subsection (b)(4).

Adopting this version of the referral fee rule would change or clarify the Washington rule on referral fees as follows:

● The rule is revised to expressly permit referral fee payments to lawyers and employees in the same firm to address, as noted in the APRL report, the reality that lawyers in the same firm routinely pay a portion of earned fees on a matter to the “originating” lawyer in the firm;

● Paragraph (b)(1) is changed to clarify that payments for online group directories or advertising platforms are permitted payments for advertising;

● Paragraph (b)(4) is changed to permit reciprocal referral arrangements with other professionals (in addition to lawyers and LLLTs), consistent with the current ABA Model Rule and the APRL proposal.

● Paragraph (b)(5) was added to include an additional exception for nominal gifts that are neither intended nor reasonably expected to be a form of compensation for recommending a lawyer’s services.

V. Conforming the Limited License Legal Technician Rules of Professional Conduct

If the suggested amendments to the lawyer advertising rules are adopted, the proponent recommends that the corresponding LLLT RPC be simultaneously amended so the two rule sets are in conformity. The WSBA's LLLT Board is submitting suggested amendments to the LLLT RPC consistent with these suggested amendments.

D. Hearing:

A hearing is not requested.

E. Expedited Consideration:

Expedited consideration is not requested.

¹ APRL is a national professional association of attorneys who provide advice and services in all aspects of legal ethics, including private practitioners who defend lawyers in discipline matters, lawyers who provide ethics and risk management services, and law faculty in the area of legal ethics. Information about APRL is available at https://aprl.net/.

² In the 2015 report, APRL reserved consideration of the ABA Model Rules related to direct solicitation of clients and referrals. APRL’s Regulation of Lawyer Advertising Committee subsequently reconvened to consider those issues, and APRL issued a supplemental report on April 26, 2016. Both the 2015 report and the 2016 supplemental report are available at https://aprl.net/public-statements/.

³ A summary of the public forum is available at http://www.americanbar.org/publications/youraba/2017/march-2017/aba-standing-committee-on-ethics-and-professional-responsibility.html.