CI-527
July 14, 1980
SYLLABUS
A lawyer may not use interest earned on a client trust account to pay attorney fees unless the client gives consent after full disclosure of the facts. A proposed investment of client trust funds in any fund other than an interest bearing account in a federally insured savings institution is not proper unless the client consents after full disclosure.
A lawyer may donate services to a television charity auction as long as he or she complies with Michigan Supreme Court Administrative Order 1978-4.
References: DR 9-102, DR 5-104(A); Goldman v. Kane, 329 NE 2d 770 (1975); In Re Staples, 259 Ore, 404, 486 P2d 1281 (1971).
TEXT
You present two inquiries. First, you inquire whether a lawyer may invest trust funds in a "safe," bank type, investment to draw interest while held in trust with the interest used to defray the attorney fees. Second, you ask whether a lawyer may offer services through a charity auction with the proceeds donated to the charity.
Your first question is answered in part by Informal Opinion 87. This opinion addresses the question of an interest bearing bank savings account under the client's name with the attorney's name as trustee. Insofar as your inquiry concerns that kind of investment, it is fully answered by CI-87. However, if by "some safe or bank type investment" you mean something other than an interest bearing account in a federally insured savings institution, it would be consistent with the principles of CI-87 for you to follow the same informed consent procedure outlined there.
This means that you must fully disclose the nature of the investment, the associated risks of the investment, and other possible investment options. To the extent that the investment involves less security than that guaranteed by a federally insured savings institution, you should probable suggest that the client seek outside investment advice before consenting to your recommendation. This is consistent with both DR 9-102 and DR 5-104(A) that requires the informed consent of the client to any transaction in which the lawyer and client may have a differing interest. The full disclosure provision in DR 5-104(A) has been construed to require the independent advice of another attorney to assure no conflict of interest in the informed consent process between attorney and client. See e.g., Goldman v. Kane, 329 NE 2d 770 (1975); In Re Staples, 259 Ore, 404, 486 P2d 1281 (1971).
Thus, if your proposed investment creates any risks for the client beyond those enumerated in CI-87, you should suggest outside investment advice from another attorney or investment advisor before proceeding to obtain the informed consent of your client to such investment.
Your second question raises an issue concerning the subject of lawyer advertising. On the subject of advertising in general, the Michigan Supreme Court has issued Administrative Order 1978-4 suspending most of the disciplinary rules on advertising. The Order provides, in part:
"A lawyer may on behalf of him or herself, partner, or associate, or any other lawyer affiliated with him or her or his or her firm use or participate in the use of any form of public communication that is not false, fraudulent, misleading, or deceptive. Except for DR 2-103 and 2-104, disciplinary rules in conflict with this Order are suspended for the period of one year." Emphasis added.
The Order places no restriction on the mode of communication. Today, attorney advertising may be found in the classified section of the newspaper, the telephone directory, the TV bulletin, heard on the radio, or seen on the television. Administrative Order 1978-4 explicitly preserves the prohibitions against solicitation contained in DR 2-103 and DR 2-104. In C-218, the Committee made a distinction between permissible advertising and improper solicitation.
". . . the Committee concludes that direct mail communications from an attorney (like communications using any other mode) may not be directed to, or be intended for, potential clients with an identified present need for legal services. To be permissible, communications must be general in nature, making known the services available from the attorney-sender, along with such other information as may be with the purview of Administrative order 1978-4, such as fees and costs, office hours, etc., leaving the recipient wholly free to respond or not according to his or her own judgment."
Applying these standards to your proposal to donate legal services to a charity auction broadcast on the local television network, the Committee believes this to be a permissible public communication, provided, the content of the communication is not directed to prospective clients with an already identified need for particular legal services. To meet the standards of Administrative Order 1978-4, you must provide the station with truthful information, including your name, location and the kind of service offered. You may offer a number of hours of service at your hourly rate or a specific service with a fixed fee such as a last will and testament.