LAWYER ADVERTISING OPINION #A-0l02

FEE INFORMATION: "No Recovery, No Fee"

Disciplinary Rule 2-l0l(A) permits a lawyer to use or participate in the use of public communication, i.e., advertising, provided that such communication does not contain a false, fraudulent, misleading, or deceptive statement or claim. The Rule articulates several examples of communications which would be violative of the prohibition, including an advertisement which contains misleading fee information. DR 2-l0l(A)(1)

In response to an inquiry, the Standing Committee on Lawyer Advertising and Solicitation [Committee] considered whether the language "no recovery, no fee" contained in advertising or other public communication soliciting claims for cases in which contingent fees are permissible, was misleading or deceptive pursuant to DR 2-l0l, under circumstances in which the advertising or public communication did not also include an explanation that the client was obligated to pay litigation expenses and court costs, regardless of whether any recovery was obtained.

The Committee determined that use of the explicit phrase "no recovery, no fee" in the solicitation of contingent fee cases is potentially misleading or deceptive without any additional explanation that litigation expenses and court costs would be payable regardless of outcome, because the public generally may not distinguish the differences between the terms "fee" and "costs". See Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 47l U.S. 626, 652-3 (l985)(finding that "[t]he State's position that it is deceptive to employ advertising that refers to contingent-fee arrangements without mentioning the client's liability for costs is reasonable enough to support a requirement that information regarding the client's liability for costs be disclosed").

Although use of the explicit phrase "no recovery, no fee" may therefore be misleading, the Committee notes here that an attorney undertaking representation in the contingent fee case has a separate obligation to the client pursuant to DR 2-l05. Under that Rule, not only shall the lawyer's fees be adequately explained to the client, but a contingent fee agreement:

...shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial, or appeal, expenses to be deducted from the recovery, and whether expenses are to be deducted before or after the contingent fee is calculated.

Accordingly, the Committee concludes that any potential for misleading the public is cured by the attorney's compliance with DR 2-l05 prior to the undertaking of representation of the client.

The Committee further determined that use of the explicit language "no recovery, no fee" is improper under the following circumstances:

LAWYER ADVERTISING OPINION #A-0l02

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(l) In the advertising solicitation of claims other than those cases in which contingent fees are permissible; and

(2) Under circumstances in which the advertising or public communication includes the solicitation of contingent fee cases together with other types of cases, without making clear the distinction that the phrase "no recovery, no fee" applies only to that part of the solicitation that refers to cases in which contingent fees are permissible.

Lastly, the Committee considered the propriety of such phrases as "we guarantee to win, or you don't pay", "we are paid only if you collect", "no charge unless we win", or other language not making explicit reference to a legal "fee". The Committee determined that language of this type that does not make explicit reference to a "fee" is not proper in that phrases of this type are misleading and deceptive in violation of DR 2-l0l(A) since the language includes the implication that the client will not be required to pay either expenses or attorney's fees if there is no recovery, under circumstances in which the client will be and must be obligated to reimburse the attorney for any litigation expenses and court costs advanced, regardless of outcome. See also DR 5-l03(B). The use of language that does not make explicit reference to a legal "fee" is not cured by an explanation to the client at or prior to the formation of the attorney-client relationship in that compliance with DR 2-l05 (Fees) is not a substitute for failure to comply with DR 2-l0l (Publicity and Advertising).

This opinion is advisory only and not binding on any court or tribunal.

Opinion of the VSB Standing Committee on

Lawyer Advertising and Solicitation

April 28, l993