LEGAL ETHICS
KIRK
OPINION
HAWKINS
30£
The Academy of Bankruptcy Lawyers is an association of
attorneys whose practice is primarily concerned with areas
governed by the Bankruptcy Act.
To become a member an
attorney must be sponsored by two current members, have been
a member of the Bar for seven years, and have spent at least
five years in the field of bankruptcy law and debtors' rights.
Organizations similar to the Academy are common throughout the legal profession.
It is also common for attorneys
who associate with such organizations to refer to themselves
as specialists in a particular field by virtue of their
membership in these organizations.
Harnsberger, Publication
of Specialists and Legal Ability in Law Lists, 49 A.B.A.J. 33»
37 ( 1 9 6 3 ) .
Some of these organizations base membership on
mere interest in the field, while others have strict membership requirements.
As an example the American College of
Trial Lawyers, established in 1950, limits membership to
attorneys with at least fifteen years of experience in trial
practice.
Membership is further limited to no more than one
percent of the lawyers within a state and no more than two
members from one firm.
The American Bar Association also has
special sections dealing with different fields open to any
member of the Bar.
70, 74 (1964).
Greenwood and Frederickson, Specialization.
While these organizations may be attempting to
improve the quality of the legal profession by setting strict
standards for membership, exchanging ideas and new information,
they have done so without the control or direction of the
profession as a whole.
Harnsberger, 49 A.B.A.J. 33. 37 (19^3) •
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The mere existence of organizations such as the Academy
cannot be challenged as illegal.
Custom seems to have e
established the right of attorneys to establish and
participate in such organizations and as long as these
organizations strive to improve the quality and accessibility
of legal services and do not violate the ethics of the
profession their existence should be condoned and encouraged.
Any controversy concerning the existence of these
organizations is rooted in the greater controversy over
specialization of the legal profession.
Perhaps the best
solution concerning the professional association is to
regulate their membership requirements and activities,
several state now have plans which certify or license
specialists in particular fields.
In the case of a national
association, such as the Academy, an attorney may qualify
as a member but may not be recognized as a specialist in
accordance with state law.
to a potential client.
This situation can be misleading
Therefore there is a need for a
national plan for the regulation of such special professional
associations and of specialists by the American Bar Association,
or as a more drastic measure, by the Federal Government.
Specialization has slowly crept into the American legal
profession.
Large law firms are compartmentalized in order
to provide faster and better service to their clients.
State
laws recognize specialists in some fields and the A.B.A.
Code of Professional Responsibility recognizes specialists
in trademark and patent law, and admiralty.
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LDR 2-105(a)(ll3.
Although the American Bar Association has decided to evaluate
state plans "before establishing its own plan, it has established
the goals for specialization asi
(1) improving the quality of
legal services(comptence), (2) increasing access by the
public to legal assistance (accessibility), and (3) decreasing unit cost of legal services to the consumer.
Fromson,
Let's Be Reasonable About Specialization, 63 A.B.A.J.
(1977)'
, 75
The Law has grown to the point that no lawyer can
obtain an adequate working knowledge of the law on all subjects.
A specialist can provide more competent service in
his field than can a general practitioner.
Even if a general
practitioner can provide the same service the specialist
should be able to the same more effeciently and in less time
and therfore at less cost to the client.
Allowing the
specialist to represent himself as such should enable the
prospective client to fimj the proper aid he seeks in less
time.
The Code of Professional Responsibility recognizes
the problems of the client in selection proper counsel,
EC 2-7, and prohibits a lawyer from accepting employment
when he is unable to render competent service, EC 2-30.
Specialization may have its beneficial aspects but
there are criticisms.
The tradition of the American legal
profession is that all lawyers are equal.
Critics fear that
the mere existence of specialists will downgrade other lawyers.
Fromson, 63 A.B.A.J. 77 (1977).
There is also the fear that
the client will lose confidence in his attorney when the
attorney recommends a specialist and the fear that the
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attorney will lose his client to the specialist.
There is
also a problem of fee-splitting between the attorney and
the specialist.
Thurman, Phillips, Cheatham, The Legal
Profession, 46l (1970).
Proponents of specialization argue that the client will
go to the specialist only when he seeks aid in the specialist's
field and that specialists will not be able to charge higher
rates because the public will not pay more than the services
are worth.
Tweed, The Changing Practice of Lawi
of Specialization, 48 A.B.A.J. 423 ( 1 9 6 2 ) .
The Question
To insure this
theory Russell D. Niles has proposed three rule based on the
English system of solicitors and barristers.
1. An attorney should not undertake legal
work beyond his competence or if there is
an unreasonable risk or expense to his
client; but should associate with a
specialist or refer his client to one.
2. The specialist should advise the client
to return to his attorney and not accept
the client as his own for matters outside
his specialty, even if the client refuses
to return.
3. The specialist should get a fair
opportunity to notify other attorneys of
his specialty but not advertise directly to
the public to get clients. Niles, Ethical
Prerequisites to Certification of Special
Proficiency, 49 A.B.A.J. 83. 84 (1963).
Rule 1 may be supported by EC 2-30 and Rule 3 is
supported by DR 2-105 (A) (3) and expanded to allow a
specialist, under state authority, to go directly to the
public by DR 2-105(A)(4).
support.
Rule 2 may be more difficult to
Specialists should not be limited to
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practice in
in their specialty.
At present, most specialists began
their practice as general as general practitioners and may
have life long clients they wish to keep.
In some rural
areas a specialist may "be the only attorney available and to
restrict his practice would severly limit the local residents'
access to general legal services.
For the same reason
the
general practitioner should not be barred from practice in
a specialized field.
There will be some clients whould stay
with their general practitioner, whom they know and trust,
rather than seek the aid of a specialist.
Such a bar would
hamper those who wish to become specialists, or specialize in
more than one field, or change specialties.
Allowing general
practitioners to compete with the specialists will help
deter the specialists from overcharging clients for their
services.
As previously stated the mere existence of the Academy
of Bankruptcy Lawyers is acceptable and probably beyound
reproach.
However, the activities of the Academy are sub-
ject to scrutiny under the Code of Professional Responsibility
and the Federal Anti-Trust Laws.
The publication of the
Academy's own list of members must meet the requirements of
DR 2~102(A)(6).
To be a reputablelist it must be certified
by the American Bar Association and be published by the state,
county, or local Bar Association.
On the information provided
the Academy's list does not seem to meet these requirements.
The list, as well as the attorneys' notations as to membership in the Academy must be in accordance with the rules
of the authority having jurisdiction under state law over the
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subject.
If the state law recognizes in embership in the
Academy or specialization In the field of bankruptcy law
and permits notation of such the members may state this
information in the list.
If not, the members are barred
from using such statements by DR 2-102.
The members may
argue that the Bankruptcy Act is a federal statute and the
states are precluded from denying designations as specialists
in lists and telephone directories under Silverman v. State
Bar of Texas. 405 F.2d 410 (5th Cir. 1 9 6 8 ) .
In this case the
court allowed a Texas attorney to list himself as a patent
attorney and as an attorney in the telephone directory on
the grounds that a state cannot obstruct or hinder the free
use of a license granted under an acto of Congress.
This
case probably will not apply to Academy members because they
are not granted a license under federal law.
The use of the terms "specialist" and "limitation of
practice'' is regulated by DR 2-105 and EC 2-14.
For areas
other than admiralty, trademark, or patent law an attorney
cannot claim to be a specialist unless certified as such under
state law.
Although DR 2-102(A)(6) prohibits use of the
term "specialist" on law lists,except where permitted by state
law, an attorney may note membership in professional associations such as the academy on the lists.
The Academy's planned referral system may be supported
under EC 2-15 which encourages the use of such systems to
aid clients in locating lawyers competent to handle their
particular problems.
The referral system must be approved
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by a bar association under DR 2-103(C)(1).
Lf the referral
system is approved a member may list the fields
in which he
will accept referrals under DR 2-105(A)(2), but he may not
claim to be a specialist in the field unless certified under
state law as required in DR 2-105(A)(4).
The contents of professional cards are governed by
DR 2-102(A)(l) and (2) and cannot state membership in legal
organizations such as the Academy or state the nature of the
practice except as permitted by DR 2-105(A)(4).
If the
member is not a certified specialist under state law but
wishes to act as a consultant or associate of other lawyers
for the field of bankruptcy he may distribute such information
to other lawyers in accordance with DR 2-105(A)(3).
He cannot
hold himself out as a specialist to the public unless he is
certified under state law in accordance with DR 2-105(A)(4).
Mr. J.R. Martin's proposed business card is in violation of
these rules because it states his membership in the Academy.
He may list the limitation of his practice on the card but
he can only distribute the cards to
other attorneys once a
year as required by DR 2-105 (A)(3).
The Academy's unwritten rule that a member must refer
clients to other academy members is contrary to EC 2-8 and
DR 2-103.
A lawyer should not seek to influence another to
recommend his employment.
The academy in not merely
influencing its members but coercing them to recommend
other members.
According to DR 2-103(B) an attorney cannot
compensate another for such a recommendation.
O*
Although a
member does not receive money for recommending a fellow
member he knows that the members will return the favor and
this should constitute compensation.
This unwritten rule
may be sufficient to invoke the wrath of the Anti-Trust
Division of the Justice Department.
It is clear that the
legal profession is not immune to the Anti-Trust Laws.
Goldfarb v. Virginia State Bar. 421 U.S. 773 (1975).
In Goldfarb the state bar was charged with minimum pricefixing.
Jurisdiction was established on the grounds that
some of the funds used by petitioners to buy the land
involved came from out of state sources and therefore
interstate commerce was involved.
In bankruptcy claims
there is always a good chance that there will be out of state
creditors and this may be sufficient to be interstate
commerce and subject to the Anti-Trust Laws.
This unwritten rule may be construed as a group boycott
of non-member attorneys as defined in Klors. Inc. v.
Broadway-Hale Stores, 359 U.S. 207 (1959).
"When a group of
competitors (two or more) agree not to deal with a person or
firm ouside the group, or to deal only on certain terms, there
is a combination in restraint of trade violating section one
of the Sherman Act."
or conspiracy.
There need not be an express agreement
The mere exchange of information among members
may be sufficient to infer an agreement to fix prices or
divide the market and thus violate section one of the Sherman
Act.
American Column & Lumber Co. v. U.S., 257 U.S. 377 (1921).
It may be enough knowing that concerted action was contemplated
and invited and adhered to by the defendants to infer an
agreement.
(1939).
Interstate Circuit, Inc. v. U.S., 306 U.S. 208
The Academy's activites may be sufficient to invoke
section five of the Federal Trade Commission Act which
condemns unfair methods of competition and does not require
the existence of a contract, combination, or conspiracy.
The Academy may advertise but within the limits of
Bates v. State Bar of Arizona,
U.S. Supreme Court (I977).
The Academy may advertise its free referral service but
probably cannot make any representations as to the quality
of the service offered by members.
The court in Bates did
not answer the issue concerning representations of quality
but stated that such representations would be too difficult
to measure and might be deceptive or misleading to the public.
The Academy member's magazine article is probably in
violation of DR 2-104(A)(4).
That rule allows an attorney
to speak publicly or write for publication on legal t pics
so long as he does not emphasize his own professional
experienpe or reputation..
By publicly promoting the Academy
he is also claiming to be better than any non-menber.
This
could also be construed as advertising the quality of services
which is not specifically allowed in Bates.
The attorney
was also recommending the employment of associates (the
five members listed) which is a violation of DR 2-103(A).
Although attorneys are encouraged to educate the public
and aid potential clients in obtaining acceptable legal
counsel under EC's 2-1, 2-2, and 2-7. the attorney's reference
to general practitioners as amateurs is too strong and does
not reflect well on the profession as a whole.
He could
probably suggest the need of a specialist without this
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language.
He has also presented himself and other members
of the Academy asypecialists in violation of DR 2-105(A)(4).
Aside form the advantages, disadvantages, and fears
of specialization previously mentioned the largest problem
is the establishment and regulation of a specialization
program.
In view of the American Bar Association's goals
of accessibility and competence the best approach is a twotier plan suggested by David R. Brink in Let's Take
Specialization Apart. 62 A.B.A.J. 191 ( 1 9 7 6 ) .
The first
tier of the plan calls for self-identification by attorneys
who wish to specialize in a certain field.
This would provide
immediate accessibility by the public to the legal profession.
Certain safeguards would be utilized to insure competency,
includingj
an annual sworn statement by the attorney that
the specialty standards have been me1r plus an experience
requirement; and audit procedures; and a restriction to no
more that two specialty fields.
The second tier would be
instituted at a later time and would include the same requirements as the first plan in addition to certification requirements; continued special education; and a mandatory peer
review of the attorney's skills.
testing.
A final safeguard would be
Brink, 62 A.B.A.J. 19^, 195 (1976).
There could
also be recertification requirements at specified times
after initial certification to insure maintenance of a
prescribed level of competence in the field.
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A licensing of specialists in the sense that only licens
attorneys may practice in the field would "be too restrictive.
It would limit comptetion among attorneys and any abuse of
the privileged position of the specialists by overcharging
clients would prompt government regulation of the legal
profession. A certification process with strict requirements
would insure competency in the specialty and give substance
to the meaning of the term "specialist."
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