Would an attorney's participation in a barter exchange arrangement be permissible under the Texas Code of Professional Responsibility where the attorney pays a membership fee to the exchange, a portion of trade credits paid by the attorney to non-attorney exchange members is retained by the exchange, and the exchange makes available to other exchange members on their request the names of attorney members of the exchange but where there is no other factor in the arrangement as to which a question was raised in Ethics Opinion 410?
Opinion 410 of this Committee dealt with the general question of a lawyer's participation in a barter association. That opinion held that bartering on a one-on-one basis is ethically permissible, but that "participation in a barter association in which the attorney would exchange his services for barter units that would then be used to obtain goods or services from other members of the association, with a percentage of all purchases being paid to the association, is ethically improper."
Opinion 410 concerned a barter association arrangement under which a percentage of all purchases, including purchases of legal services, was paid to the association and the association promised a refund of the association membership fee and dues if a specified level of "units" was not expended for a new member's services during the first year. In addition, the association rules provided for a bonus to association members who introduced new members to the association.
Opinion 410 also referred to other factors specified in American Bar Association Informal Opinion 1430 which raised additional problems under the Code of Professional Responsibility: the failure of a barter exchange to contemplate the duty of an attorney to refuse employment in some circumstances, the fact that a lawyer's membership would be subject to cancellation or recall by the barter exchange, the question as to whether a lawyer who terminates membership in a barter exchange would have a duty to continue representation of a client who is an exchange member, and potential conflict of interest problems that could arise if the lawyer were called upon to represent an exchange member against the exchange or against another member or if the lawyer were to represent a nonmember of the exchange against a member.
The barter arrangement addressed in the present opinion seeks to eliminate many of the objectionable factors identified in Opinion 410. An attorney is not guaranteed any amount of business by the exchange. The exchange does not provide any bonus or credit to an attorney who recommends a new member to the exchange. The exchange agrees not to solicit business for the attorney, but the exchange will provide, when requested by other members, the name, address and phone number of member attorneys. The exchange agrees that it will never receive any fee or percentage of trade credits with respect to any transaction between a member attorney and the attorney's clients. Member attorneys are specifically free to refuse to accept any exchange member as a client and the attorney's membership in the exchange is not subject to cancellation or recall by the exchange. The exchange agrees that it will have no right to direct the operation of a member attorney's practice. The attorney and the exchange agree that the attorney shall not knowingly represent the exchange against any other exchange member, one exchange member against another exchange member, or a nonexchange member against an exchange member.
The attorney may not pay court costs or expenses in cash and receive trade credits as reimbursement. The attorney and the exchange agree that, upon the attorney's termination of membership in the exchange, the attorney will treat clients that have paid for services through the exchange no differently from any other clients and the attorney will comply with the attorney's obligations under agreements with clients and under the Code of Professional Responsibility. The agreement between the attorney and the exchange will not prevent the attorney from withdrawing from membership in the exchange at any time.
The provisions described in the preceding paragraph do not in the opinion of the Committee alter the fundamental problem addressed in Opinion 410: under a barter exchange arrangement, value is paid by an attorney member of the exchange in effect to obtain promotion of the attorney's services by the barter exchange. This result arises in spite of the fact that the barter exchange does not guarantee any business to the attorney, that there is not payment made to the barter exchange with respect to payments of exchange dollars for the attorney's services, and that the barter exchange only provides the name and other information about a member lawyer when requested by another member of the exchange. In spite of these and other limitations referred to above, the member attorney of a barter exchange nonetheless is making payment to the exchange in the form of membership fees and in the form of a portion of the attorney's payments in trade dollars to other exchange members for goods and services other than legal services. In order for an attorney's membership in a barter exchange to be meaningful as a business matter, the arrangement must contemplate that exchange members who may wish to employ an attorney will ask the barter exchange for the names of member attorneys even if no such information is provided in a membership listing or directory.
The essence of an attorney's membership in a barter exchange is a transfer of value by an attorney to the exchange (in the form of membership fees and/or in the form of a percentage of trade credits paid by the attorney to other members to the exchange) in return for the exchange's making the attorney's name available to other exchange members and facilitating payments through barter for the attorney's legal services. A lawyer's participation in such an arrangement therefore violates Disciplinary Rule ("DR")DR 2-103(C): A lawyer shall not compensate or give anything of value to a person or organization to recommend or secure his employment by a client, or as a reward for having made a recommendation resulting in his employment by a client; . . . . Such arrangement also violates DR 2-103(E), which provides that "a lawyer shall not knowingly assist a person or organization that recommends, furnishes, or pays for legal services to promote the use of his services or those of his partners or associates." Although DR 2-103(E)authorizes a lawyer's dignified cooperation with certain legal service activities of organizations specified in DR 2-103(E) (1) through (5), no facts have been supplied to indicate that the barter exchange here at issue qualifies under such provisions.
It is not permissible under the Texas Code of Professional Responsibility for an attorney to enter into a barter exchange arrangement in which the attorney's identity as a member of the exchange is provided by the exchange to other members of the exchange on their request and in which the attorney pays anything of value to the exchange (including amounts paid to the exchange as membership fees and as a percentage of trade credits expended by or received by an attorney member). This opinion does not apply to any barter arrangement that is an integral part of legal service activities of an organization that meets the requirements of DR 2-103(E)(1) through (5). (9-0 vote)