The Florida Bar
An attorney may participate in a barter exchange when the membership fee is a flat annual fee rather than a percentage of legal fees derived from representation of exchange members; when the exchange furnishes members a list of attorney members rather than recommending any particular attorney; and when membership in the exchange does not interfere with the attorney's conflict-of-interest and confidentiality obligations.
October 15, 1984
October 15, 1984
CPR: EC 2-30; DR 2-103(B), (D); DR 2-109; DR 2-110(A); DR 3-102(A); DR 5-103(B); Canon 5
Opinion: ABA Informal 1430
Chairman Mead stated the opinion of the committee:
We have been asked to determine the ethical propriety of membership by a lawyer in a barter exchange (hereinafter "Exchange") based on the attached Attorney Membership Agreement (hereinafter "Agreement"). The Agreement was designed by the inquiring attorney for use by the Exchange's lawyer members to comport with the requirements of the Code of Professional Responsibility.
Although this Committee has never specifically addressed the subject, we note that attorneys have traditionally been prohibited from participating in barter exchanges. In light of recent changes in our advertising guidelines, and in acknowledgment of the fact that attorney participation in barter exchanges is becoming widespread, we believe barter exchange membership by lawyers requires careful consideration by the Bar.
DR 3-102(A), which prohibits lawyers from sharing fees with nonlawyers, would in our opinion prevent attorneys from joining those barter exchanges in which a percentage of the amount involved in each "purchase" transaction is paid to the Exchange. However, the Agreement in question proscribes the charging of a transactional fee when legal services are rendered. Instead, attorney members pay an annual flat membership fee to the Exchange; in our view this does not constitute fee splitting under DR 3-102(A). The cost of the membership in the Exchange is comparable to the fee paid by lawyers for the use of a Mastercharge or Visa card in their offices.
Another Code provision that bears on the barter exchange issue is DR 2-103(D), which states that a lawyer shall not assist a person or organization in promoting the use of his services (except as to approved lawyer referral services, prepaid legal services plans, etc.). Under the Agreement each time an Exchange member requests legal services the Exchange will furnish a list of all attorney members. Although recommending a particular attorney would be prohibited, listing the attorney members of the Exchange as a group , simply allowing the other members to make their own choice, does not violate DR 2-103(D).
A related proscription is contained in DR 2-103(B), which states that a lawyer shall not compensate a person or organization to recommend his employment. The question here is whether payment by an attorney of the annual membership fee would violate this provision. The American Bar Association's Committee on Ethics and Professional Responsibility, in its Informal Opinion 1430 (issued January 8, 1979), answered this question in the affirmative. We disagree; in our view, the payment of this fee is made by the attorney not as consideration for the promotion of his services by the Exchange, but in return for the rights and privileges of membership. We should point out that in the fact situation under consideration by the ABA Committee in its opinion, the proposed arrangement also involved a 5% charge on each transaction which, as we have noted, would constitute fee splitting in violation of DR 3-102(A).
In its opinion the ABA Committee reviewed several other ethical considerations presented by the barter exchange question, which we now address. First, EC 2-30 and DR 2-109 require a lawyer to decline employment under certain circumstances (for example, when he is not able to render competent service in the matter or when his client's legal action is intended merely to harass or maliciously injure another person). It is clear that a lawyer member of the Exchange must retain the right to refuse employment, and the Agreement so provides. The Agreement is terminable by either party upon thirty days' written notice; nevertheless, the continuation of the Agreement is in no way conditioned on the attorney's acceptance or rejection of representation of Exchange members, and the right of cancellation by the Exchange does not of itself compromise the attorney's obligation to decline employment as mandated by the Code.
The ABA opinion also examined the attorney's duty to continue in the representation of his client/member after the termination of the attorney's membership in the Exchange. DR 2-110(A) prohibits a lawyer from withdrawing from representation except under specific circumstances. We see nothing in the Agreement, nor in the attorney's relationship with the Exchange, that would negate or adversely affect this requirement.
Finally, the ABA opinion discusses potential conflict of interest problems related to a lawyer's membership in the Exchange. The question is asked whether the lawyer can represent an Exchange member against the Exchange, one member against another member, or a nonmember against a member. The Agreement states that the attorney's membership in the Exchange does not create an attorney-client relationship with either the Exchange or any of its members and further provides that the Code shall govern the conduct of attorney members. We perceive no inherent conflict between an attorney's obligations under Canon 5 and his membership in the Exchange.
A question could be raised with regard to an attorney's duty under Canon 4 to preserve the confidences and secrets of his clients. The Agreement states that an attorney member shall not be required to provide any information to the Exchange concerning his clients' legal affairs. The attorney remains subject to the dictates of the Code and his duty of confidentiality does not appear to be incompatible with membership in the Exchange.
Finally, the Agreement anticipates potential problems with DR 5-103(B)-which prohibits an attorney from acquiring an interest in litigation by advancing or guaranteeing financial assistance to a client in connection therewith-by providing that no transaction between a client member and his attorney will be completed if the client does not have a credit balance in his trade account sufficient to cover the proposed legal fees.
For the reasons set forth above, it is the opinion of this Committee that attorney membership in a barter exchange, within the specific guidelines set forth herein, is ethically permissible. However, we expressly caution against relying on this opinion in a general sense. Our finding of propriety is based on, and strictly limited to, our review and interpretation of the Attorney Membership Agreement attached hereto. Any barter exchange arrangement created or entered into under terms that are not identical to the provisions of said Agreement is not covered by this opinion and must be considered on a case by case basis.
ATTORNEY MEMBERSHIP AGREEMENT
AGREEMENT made this ______ day of _______________ , 198 __ ,
betweena Florida corporation of , Florida, (hereinafter referred to as "Exchange"), and , attorney at law of , Florida, (hereinafter referred to as "Attorney"), as follows:
Exchange is a "barter exchange" acting as an accounting and clearing house for the exchange of goods and services among its members.
Attorney is a member of the Florida Bar and a practicing attorney with offices in, Florida. Attorney and Exchange wish to have attorney's services available for exchange for goods and services of other members of the exchange. Attorney and Exchange wish to memorialize their relationship to each other and set forth certain restrictions on the attorney's membership in exchange.
IT IS THEREFORE AGREED AS FOLLOWS:
1. MEMBERSHIP: Upon the effective date of this Agreement, Attorney shall become a member of the Exchange. He shall be entitled to all of the benefits of membership and comply with all the rules and regulations of the Exchange unless modified or superseded by this Agreement.
2. FEES: Upon the effective date of this Agreement, Attorney shall pay a membership fee of $ __________ . In addition, beginning one (1) year after the effective date of this Agreement, and every year thereafter, Attorney shall pay an annual membership fee of $ __________ . No fee or surcharge shall be made on any exchange of legal services made by Attorney, nor will any fee or surcharge be made on any use of trade credits in exchange for goods and services made by Attorney. The usual 10% fee of the amount of the trade normally charged to members of the Exchange when they use trade credits to purchase goods and services will not be made when a member purchases legal services from an attorney/member of the Exchange.
3. OTHER ATTORNEY/MEMBERS: Nothing in this Agreement shall restrict the exchange from acquiring other Attorney members. Any other Attorney/member of the Exchange will be admitted to membership on the same conditions with the same rights and obligations as contained in this Agreement.
4. ATTORNEY'S FEES: Attorney agrees that he will charge his normal rates for services to members of the Exchange and always deal with members as he would any other client of his practice. In all cases, the amount of the fee and the services to be rendered, therefore, will be solely determined between Attorney and client member. Attorney is under no obligation to accept employment from any exchange member for any particular legal matter. Attorney's sole obligation to the members of the Exchange is that if he agrees to accept employment by a client member, and there is a sufficient trade credit in the client member's account, that he will accept an exchange of goods and services for his fees under the rules and regulations of the Exchange.
5. NO CREDIT TRANSACTIONS: Exchange and Attorney agree that no transaction between a client member and Attorney will be completed if the client member does not have a credit balance in his trade account sufficient to cover the proposed attorney fee. Exchange agrees that Attorney may rely on information as to the credit balance of each client member as supplied by the Exchange. In no event will Attorney be allowed to receive goods and services from other members without a sufficient trade credit balance.
6. ADVERTISING: Exchange issues monthly newsletters and periodic communications to members. Exchange agrees that it will not permit any advertising by any Attorney member of the Exchange, unless permitted under existing guidelines for attorney advertising of The Florida Bar, nor will it publish the name of any attorney member in any respect without publishing the names of all current attorney members of the Exchange. Exchange may advise its members that legal services are available for trade and may advise members of the current attorney members of the Exchange and the specific terms of this Agreement.
7. REFERRALS: In the event a member of the Exchange inquires as to the availability of legal services, or requests information concerning lawyer members of the Exchange, the Exchange will not refer to individual attorney members, but will advise the inquiring member of all current attorney members of the Exchange. In no event will the Exchange or any of its agents or employees characterize the value or benefit of legal services from one particular member as distinguished from another, or from member attorneys as distinguished from other attorneys.
8. CLIENT CONFIDENCES AND PROPERTY: At all times, the property, confidences, and the like of a client member are solely the property and concern of Attorney and client member. In no event and for no reason shall Attorney be required to provide any information concerning the affairs of a client member to the Exchange, or any of its affiliates.
9. CONFLICTS OF INTEREST: The execution of this Agreement and membership in the Exchange does not create an attorney-client relationship with either the Exchange or any of its members, or any of its affiliates. Therefore, Attorney is free to accept employment from any member of the Exchange for any legal matter agreed to between client member and Attorney, including actions against the Exchange, its affiliates, or any other member. In all events, the normal rules of conduct concerning an attorney's conflict of interest shall govern. In the event that a client member wishes to take legal action, or seek advice concerning actions, against the Exchange or another client member who is already a client of Attorney, such employment may be turned down by Attorney for that reason solely. In the event that Attorney is also employed by the Exchange or any of its affiliates he may reject employment by any member seeking action against the Exchange for that reason solely.
10. Attorney agrees that he will not make individual barter or trade transactions with members of the Exchange that do not go thru [sic] the Exchange. However, in the event that a client member's trade balance is not sufficient to cover legal fees, arrangements for the payment of the balance in cash may be made between Attorney and member client.
11. The provisions of this Agreement shall govern the relationship of Attorney to Exchange and supersedes any other agreement or rule or regulation of the Exchange or its affiliates. In the event of any conflict, this Agreement shall govern. This Agreement, in all respects, shall be construed under the provisions of the laws of the State of Florida. Nothing in this Agreement, or in Attorney's relationship with the Exchange, or client members, shall be construed to require Attorney to violate any provision of the Code of Professional Conduct [sic] of The Florida Bar. Whether any conduct under the terms of this Agreement violates the Code of Professional Conduct shall be solely determined by Attorney and construed pursuant to the interpretation of the Code of Professional Conduct by the Florida Bar.
12. It is understood that there may be rules, regulations or requirements imposed upon the relationship between Attorney and Exchange by the State of Florida, or The Florida Bar. Attorney and Exchange agree that they will either comply with such requirements, even if they are not contained in this Agreement, or immediately terminate the Agreement under the provisions of Paragraph 13A.
13. TERMINATION: This Agreement may be terminated in the following ways:
A. In the event any provision of this Agreement is determined to be violative of any law of the State of Florida, or of the United States, or of the Code of Professional Conduct of the Florida Bar, this Agreement shall be immediately terminated. Any credit balance in Attorney's trade account shall be frozen and available in trade. All client members shall be advised by Attorney and Exchange of the termination of this Agreement. Any retainers, whether in cash or trade, owing client members shall be returned in cash to the client member, or in legal services rendered to the client.
B. The Agreement may be terminated by Exchange upon thirty (30) days written notice to Attorney. Upon termination, all credit balances due Attorney will be available in trade to Attorney, together with a prorated portion of the last annual membership fee.
C. The Agreement may be terminated by Attorney upon thirty (30) days written notice to Exchange. Upon termination, all credit balances due Attorney will available to Attorney in trade. No proration of any membership fee will be made.
D. This Agreement may be terminated on the anniversary date of this Agreement by either party if there is no credit balance owing to Attorney.
14. NOTICES: Any notices under this Agreement shall be delivered to
15. Exchange agrees that there is nothing in its agreement with the affiliated organizations known as Exchange with general offices in that prohibits this Agreement and further that all relationships between Attorney and any affiliate of Exchange will be governed by this Agreement solely.
IN WITNESS WHEREOF, this Agreement was executed by the parties herein this _________ day of _____________________ , 198 ___ .
__________________________ BY: _______________________
The above Agreement has been accepted.