Formal Opinion 1986-1

February 26, 1986

The inquirer represents clients applying to the Immigration and Naturalization Service (INS) for permanent visas to the United States. He states that, in some cases, INS approval is “not a matter of discretion,” but must be granted “if certain conditions are met.” He asks whether in such cases it is ethically proper to provide his clients with a form guaranteeing a permanent visa and whether he may advertise that guarantee publicly.

The proposed form, entitled “Guarantee,” states that the attorney “guarantees that he will obtain a permanent visa to the United States” for his client based on the latter’s representation that (1) “he/she has not lied to the American Consul or other U.S. Government official,” (2) “he/she has told [the attorney] the truth,” and (3) “conditions as they exist today will remain the same.” The form concludes by stating that all legal fees will be refunded if the attorney fails to obtain a permanent visa.

Whether evaluated in terms of ethical considerations governing advertising and solicitation or those governing contingent fee arrangements, the proposed guarantee raises serious ethical issues. The Committee concludes that the proposed conduct is inconsistent with the Code of Professional Responsibility.

Advertising

We first consult ethical standards governing advertising and solicitation. Such considerations are relevant whether or not the lawyer disseminates the guarantee to the public, for it is obviously intended to induce potential clients to retain him. We note, however, that in pursuing this line of inquiry, it is beyond our jurisdiction to consider the legality of the proposed conduct under statute, court rules, or the First Amendment. Cf. Zauderer v. Office of Disciplinary Counsel, 105 S.Ct. 2265 (1985).

Disciplinary Rule 2-101(A) prohibits a lawyer from disseminating false, deceptive or misleading information. This prohibition includes “claims regarding the quality of the lawyers’ legal services” and “claims that cannot be measured or verified.” DR 2-101(B). Read in conjunction with Ethical Considerations 2-19 and 2-20, DR 2-101(A) also counsels complete and clear disclosure of contingent fee arrangements.

The Committee believes that the proposed form is inconsistent with DR 2- 101(A). It invites misunderstanding in three different, but equally important, ways.

First, the “guarantee” may mislead clients as to the attorney’s qualifications or experience. The term “guarantee” implies expertise. Hence, it may give the appearance that the lawyer is preeminent in the field of immigration law. Such a claim cannot be measured or verified. It is therefore improper under DR 2- 101(A). See N.Y.State 539 (advertisement setting forth results previously obtained by the lawyer is misleading).

The term “guarantee” not only implies expertise, but when coupled with an offer to refund legal fees suggests that the lawyer’s expertise renders virtually certain a favorable result. The result of any particular case, however, depends not only upon the lawyer’s expertise but also the merits of the case. Any suggestion that a lawyer’s expertise, rather than the merits of the case, will conclusively determine the result is inconsistent with the Code’s admonition that special care be taken to avoid misleading statements “[i]n disclosing information, by advertisements or otherwise, relating to a lawyer’s education, experience or professional qualifications”. EC 2-10. Caution is of particular importance where, as here, the persons to whom the statements are addressed are likely to be unsophisticated in legal matters and, hence, susceptible to misleading interpretations. See N.Y.State 487.

Second, the guarantee may be misleading because it purports to provide a “money back guarantee” without disclosing that the client is liable for costs even if the lawyer is unsuccessful. Disciplinary Rule 5-103(B) prohibits a lawyer from accepting “ultimate legal responsibility for the cost and expenses occasioned by a litigation in which he or she represents a client on a contingency (or any other) basis.” N.Y. City 81-56; see N.Y.State 464, DR 2- 101(C)(4). Here, however, the inquirer’s offer to refund all legal fees if he is unsuccessful suggests a no-lose proposition: a permanent visa or “your money back.”

That such a “money back guarantee” poses “the possibility of deception is … self-evident.” Zauderer v. Office of Disciplinary Counsel, 105 S.Ct. 2265, 2283 (1985). It fails to disclose the client’s potential liability for litigation expenses. We understand that, to a lawyer, the word “fee” does not encompass costs or disbursements. The average lay person, however, is unlikely to understand the word “fee” as a legal term of art. Id.; N.Y. City 81-56. For precisely these reasons, the Committee found in N.Y. City 81-56 that the statement, “no fee unless we’re successful,” may be misleading in violation of DR 2-101(A). The language of the proposed guarantee has an equally great potential to mislead.

Third, the form guarantee may suggest an appearance of impropriety to the extent it implies that factors other than the justice of the claim will determine the result of the client’s case. “[E]ven the slightest ambiguity may tend to mislead the uninformed.” N.Y.State 487. To an audience that may lack any familiarity with basic principles of the American legal system, the proposal may suggest that the lawyer is able to offer a guarantee because he possesses some special influence or special expertise in obtaining visas that is not possessed by other lawyers. Such an implication not only is misleading, but also may suggest an appearance of impropriety. Neither the bar nor this particular class of clients would be served by any intimation that cases are decided other than on the merits.

Our conclusion that the form guarantee may be misleading is not altered by the inquirer’s statement that in some cases the INS must approve permanent visa applications. It is beyond our jurisdiction to assess the legal validity of that statement. Our analysis assumes approval must be granted “if certain conditions are met.” Contrary to what the “guarantee” suggests, however, that does not mean the result in any given case is a foregone conclusion. An abuse of discretion always remains a possibility, no matter how clearly defined the standards for awarding a permanent visa.

Contingent Fee Arrangement

The inquirer’s form guarantee raises ethical questions not only because its language may be misleading, but also because its proposed contingent fee arrangement may lead to a serious conflict of interest.

As in a typical contingent fee arrangement, the proposal protects the client from payment if the lawyer is unsuccessful. Unlike a typical contingent fee case, however, there is no fund here from which the fee can be paid. The result of the case is a visa, not a money judgment. Hence, the fee is to be paid in advance and refunded upon certain conditions.

The guarantee expressly provides for a refund where the lawyer is unsuccessful in obtaining a permanent visa. It also suggests, however, that even if the lawyer is unsuccessful, he will not refund the fee if the client has made false representations. The guarantee states that it is “based on” the client’s representations that he has told the truth to governmental officials and to the attorney.

Construed in this light, the guarantee suggests that in a case where the lawyer has not obtained a visa, he has a financial interest in proving that his client lied. This conflict strikes at the heart of the attorney-client relationship, for it weakens the mutual trust and confidence that the relationship is designed to foster. See Canon 4.

We recognize that every contingent fee arrangement poses a potential conflict of interest. The Code expressly permits such arrangements in civil cases despite the general rule prohibiting a lawyer from acquiring “a proprietary interest in the cause of action or subject matter of litigation he is conducting for a client”. DR 5-103(A). Contingent fee agreements in civil cases (or appropriate administrative agency proceedings) are excepted from this general rule because they may be the only practical means for some clients to obtain representation and because “a successful prosecution of the claim produces a fund out of which the fee can be paid.” EC 2-20. It is significant, however, that the Code does not permit contingent fees in criminal matters, DR 2-106(C), “largely on the ground that legal services in criminal cases do not produce a fund out of which the fee can be paid.” EC 2-20.

Whether or not the lack of a fund would in itself render a contingent fee agreement unacceptable, the Committee believes that the conditions attached to the proposed refund arrangement may raise serious conflict of interest questions. At the very least, before the lawyer offers any such arrangement to a client, he must specify the conditions upon which a refund will or will not be granted. The proposed arrangement does not clearly specify such conditions. Such a basic ambiguity in a contingent fee arrangement is inconsistent with the Code’s admonition that a client is to be “fully informed of all relevant factors” before entering into a contingent fee contract. EC 2-20.

Independent of the specific points discussed above, the Committee believes that the proposed guarantee arrangement taken as a whole cannot but mislead the particular audience it addresses, many of whom may be new to this country and untutored in the English language. In such circumstances, a lawyer owes a special responsibility to avoid any suggestion of impropriety or any misimpression concerning the fundamental principles of the American legal system including the lawyer/client relationship.

For the reasons stated above, the Committee answers the inquiries in the negative.