The Plan Exception in Rule 7.3(e)

Rule 7.3(e) opens with the words “Notwithstanding the prohibitions in this Rule,” and those words make it an override: in one defined situation the live-contact ban gives way, and a lawyer may participate with a prepaid or group legal service plan that uses live person-to-person contact to enroll members or sell subscriptions.¹ The override is conditional, and each condition answers one question about the plan’s calls: who operates the plan, whom its callers reach, and what they sell.

The conditions make sense against the danger the ban addresses. The prohibition on personal solicitation of prospective clients remains nearly absolute,² and in Ohralik v. Ohio State Bar Association the Supreme Court said why: unlike a public advertisement, in-person solicitation “may exert pressure and often demands an immediate response, without providing an opportunity for comparison or reflection.”³ A union or an insurer that recruits members asks the listener to join a group benefit, not to retain a lawyer for a problem at hand, and that difference explains the exception. Each condition then closes one route by which the exception could be abused. A lawyer who owned the plan could market personally under an organization’s name. A call aimed at someone already known to need help in a covered matter would revive the targeted pitch to a person in trouble. A call whose real subject was one lawyer’s services would use the plan as a pretext for the solicitation the rest of Rule 7.3 forbids.

One separate carve-out is easy to confuse with the plan exception. Rule 7.3 does not prohibit communications authorized by law or ordered by a court or other tribunal.⁴ That carve-out covers a different category of communication and has no bearing on plan enrollment.

The three subsections below take the conditions in that order. The conditions are cumulative, so a plan call that fails any one of them falls outside the exception.

Plan Not Owned by the Lawyer

The first question is who stands behind the plan. The rule allows participation only with a plan “operated by an organization not owned or directed by the lawyer.”⁶ Two relationships disqualify the sponsor, ownership and direction, and the word “or” makes either one enough. Ownership asks who holds title to the organization. Direction asks who controls its decisions: who chooses its officers, sets its budget, approves what its callers say, and hires them. A lawyer with no equity who controls those decisions has directed the sponsor as surely as one who owns it outright.

The condition keeps the person who makes the pitch separate from the lawyer who profits when members use the plan. Live enrollment calls are tolerated because the caller recruits for a collective benefit run by an organization with its own identity. Remove that separation and the callers become the lawyer’s sales force under another name, so the lawyer does through the plan the live contact the ban forbids the lawyer to make personally.⁷ The independence requirement closes that route by denying the exception to a plan that is really the alter ego of the lawyer or the lawyer’s firm.

Participation differs from ownership or direction, and the rule contemplates it: a lawyer “may participate with” a plan run by an organization the lawyer does not own or direct.⁸ A lawyer who joins an independent sponsor’s panel acquires neither relationship. What a lawyer may pay such a plan, and what the lawyer must monitor once inside it, are the subjects of later sections.

The two plans make the same kind of calls; only the identity of the organization behind them changed. Exam stems rarely label a front organization as one. Expect a plan with a community-minded name, a staff of callers, and a detail about who funds the organization, hires its callers, or writes its scripts. Put one question to those facts: who owns or directs the sponsor? If the answer is the lawyer or the lawyer’s firm, the exception fails and the calls are judged under the live-contact ban. If the answer is an independent union, employer, insurer, or association, the first condition is met, and the other two still need checking.

Contacts With Unknown Prospects

The second question is whom the callers may reach. A plan may use live contact to enroll members or sell subscriptions only “from persons who are not known to need legal services in a particular matter covered by the plan.”¹⁰ Each phrase narrows the limit differently. “Known to need” turns on what the plan knows about the individual it calls. “Particular matter” ties that knowledge to an identifiable problem, such as a pending lawsuit or a specific accident. “Covered by the plan” confines the bar to problems the plan’s benefits would address. The wording echoes the Rules’ definition of solicitation, which centers on a communication directed to a specific person the lawyer knows or reasonably should know needs legal services in a particular matter.¹¹ Knowledge of a pending problem is what makes a pitch targeted, and that same knowledge takes a plan’s call outside the exception.

Short of that knowledge, the condition leaves wide room. It excludes only persons the plan knows to need help in a covered matter, and it names no other group.¹² A plan can therefore call the general public, the employees of a sponsoring employer, or the members of a union, because it chose them for reasons that have nothing to do with a legal problem. A call to such a person sells protection against risks that may never arrive, and most listeners will need nothing in the coming year. That is ordinary membership marketing, the live contact the exception exists to permit.

The line falls where it does because live contact does its worst work on people in trouble. In-person solicitation may exert pressure and often demands an immediate response, with no opportunity for comparison or reflection.¹³ A person facing a lawsuit or the aftermath of an accident is exposed to that pressure, and a plan that phones people because it knows of the problem reaches them at that moment, while the network lawyer who would handle the covered matter stands to gain the work. Because the ban on direct solicitation remains nearly absolute,¹⁴ a contact outside the exception stays under the ban, and a lawyer cannot invoke the plan exception to cooperate with it.

The details that make the calls look harmless carry no weight. The sponsor’s independence satisfies the first condition only, and nothing in the three conditions turns on the callers being nonlawyers. Because the conditions are cumulative, a failure on the second cannot be cured by a pass on the first.

An exam stem often sets the permitted version of a plan call beside the forbidden one, and the two can look alike because both rely on a list and a telephone.

Both plans phoned people from a list, so the existence of a list cannot be the dividing fact. The roster in the second scene came from employment records and reveals nothing about anyone’s legal trouble, whereas the list in the first was compiled from a legal event that the plan’s coverage addresses. Ask whether the plan picked each person because it knew the person faced a covered matter. If it did, the contact is outside the exception. If the person was reached as a member of the public, an employee, or a union member, with nothing known about a present need, the second condition is satisfied. The word “covered” also deserves a look, because the plan’s benefits supply the benchmark: a known problem the plan does not cover falls outside the words of this condition, and the stem’s list of covered services tells you which problems count.

Enrolling Members, Not Selling Lawyers

The third question is what the caller sells. The rule permits live contact “to enroll members or sell subscriptions for the plan.”¹⁶ The product is the plan. A successful call produces a member or subscriber, not a client of any particular lawyer. Read that way, the words require a live pitch that promotes the membership benefit, and a pitch that sells one lawyer’s services is something the exception does not describe.

The reason follows from what the exception does. A lawyer who may not make a live pitch personally cannot lend the pitch to someone else: the Rules’ definition of solicitation covers a communication initiated “by or on behalf of a lawyer or law firm,”¹⁷ and the ban on direct contact reaches live contact by the lawyer in person, by telephone, and by real-time electronic means.¹⁸ If a plan’s callers could sell a named lawyer, the plan would act as that lawyer’s agent in making the very contact the lawyer may not make, and the dangers behind the ban would return: a call can demand an immediate answer and leave the listener no chance to compare lawyers.¹⁹ Enrolling in a pooled benefit protects against problems that may never arise. Hiring a specific lawyer for a specific problem is the choice the ban protects, and the plan exception does not reach it.

An exam stem will seldom describe a call that sells a lawyer from its first word. The usual pattern is a call that begins as ordinary recruitment and then slides.

The failure sits in the call’s second half, and the first half does not rescue it. The first two conditions can be fully met and the call still fails, because the conditions are cumulative and each one must hold for the whole contact.²⁰

Both calls were live, both reached people not known to need help, and both came from independent sponsors; only the product on offer changed. The test therefore does not turn on whether a lawyer’s name is ever spoken. In a plan that routes covered matters to a panel of firms, the panel is part of the benefit, so describing it describes the plan. The call crosses the line when a particular lawyer’s services become the reason to buy or the thing the listener is asked to arrange. Ask what the call as a whole is selling, including anything added after the standard script ends.

When this condition fails, the override no longer covers the contact, and the call is judged as the live solicitation it has become. The lawyer whose services were sold then faces the baseline ban whenever a significant motive is the lawyer’s pecuniary gain.²¹ A lawyer who receives matters from a plan therefore has every reason to learn how its callers talk, a point the section on monitoring the plan develops.