Changes to Colorado Rules Allow Trade Names, Referral Agreements

When the revised Colorado Rules of Professional Conduct take effect January 1, 2008, Colorado law firms will be allowed to practice under trade names. 

The firm of Abel, Burns, Chavez, Dickstein and Evans, for example, will be able to call itself the Colorado Retail Jewelers Law Firm.  The first name is pretty generic.  The second would truly resonate with clients in the firm’s target market.

Each state, however, has different rules.  Law firms practicing in states other than Colorado, or with lawyers licensed in states other than Colorado, must abide by the rules in those states as well.  Although the majority of states now allow the use of trade names, some do not.

Large law firms that market themselves regionally or nationally might want to wait for universal state acceptance of this change before changing their names – although it is certainly not too soon to start thinking about it.  Smaller firms that focus solely on Colorado clients should be aware of this option – and its marketing potential.

Revisions to the Colorado Rules of Professional Conduct were the subject of a July 10 program presented to members and guests of the Rocky Mountain Chapter of the Legal Marketing Association, held at The Oxford Hotel in Denver.

Presenters were Nancy L. Cohen, chief deputy regulation counsel with the Colorado Supreme Court Office of Attorney Regulation Counsel (www.coloradosupremecourt.com) and Reba Nance, director of law practice management and risk management for the Colorado Bar Association (www.cobar.org).

Use of a trade name

Revised Rule 7.5 states that “a trade name may be used by a lawyer in private practice if it does not imply a connection with a government agency or with a public or charitable legal services organization and is not otherwise in violation of Rule 7.1.”

Rule 7.1 states that “a lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services.”  To this end, Cohen recommends that law firms stick with descriptive rather than emotionally “evocative” names.  A communication – no matter what the format – is false or misleading if:

–         It contains a material misrepresentation of fact or law.  Therefore, ABCD&E could not change its name to “Colorado Retail Jewelers Law Firm” if its lawyers were not, in fact, licensed to practice in Colorado and serving Colorado clients and if it did not, in fact, have experience representing retail jeweler clients.

–         It compares the lawyer’s services with other lawyers’ services, unless the comparison can be factually substantiated.  Therefore, ABCD&E could not change its name to “The Very Best Law Firm for Colorado Retail Jewelers” – unless it could provide the scientifically valid statistics to prove this claim.

–         It creates an unjustified expectation about results the lawyers can achieve.  Therefore, ABCD&D could not change its name to “The Colorado Retail Jewelers Law Firm That Will Win for You.”  Even a disclaimer would not save this one.

According to comments to the revised rules, If ABCD&E chooses a trade name that includes a geographical name, such as “Colorado Retail Jewelers Law Firm,” it might want to include a disclaimer that states that it is not aligned with the State of Colorado.  If it selects a trade name like “Colorado Retail Jewelers Legal Clinic” it might want to disclaim that it is not aligned with any public or charitable legal services organization.

Reciprocal referral agreements

Under revisions to Rule 7.2 (advertising), a Colorado lawyer now can enter into a reciprocal referral agreement with another lawyer or non-lawyer – as long as the agreement is not otherwise prohibited under the rules.

Reciprocal referral agreements are allowed as long as they are not exclusive and the referred client is informed of the existence and nature of the agreement.

“This change allows a commercial litigator, for example, to agree to refer personal injury cases to a personal injury lawyer in exchange for the personal injury lawyer referring commercial litigation cases to the commercial litigator,” said Cohen.

Pursuant to Rules 2.1 and 5.4(c), reciprocal referral arrangements must not interfere with the lawyer’s independent professional judgment

“In other words,” said Cohen, “you should only enter into a reciprocal referral relationship with someone whose professional skills and ethics you can honestly vouch for.  You should break off a relationship if conditions arise – like an addiction problem – that would make the person’s skills and ethics suspect.”

In addition, under Rule 1.5(e), referral fees are prohibited.  Conflicts of interest are governed by Rule 1.7.  Reciprocal referral arrangements should be for a specific duration and should be reviewed periodically to determine compliance with the rules.

Attorney/client relationship

Because legal marketing activities involve the relationship between clients and lawyers, Nance defined for the audience who is a client, how to decide whether to accept a client, the nature of the attorney/client relationship and an attorney’s responsibility to a client.

“Every single contact that a lawyer has with the public – even informally at a cocktail party or a soccer game – has the potential to create an attorney/client relationship,” said Nance.  “By understanding the nature of the attorney/client relationship, a marketing professional can help her or his lawyers market effectively while staying out of trouble.

“A lawyer with a question is encouraged to call the Ethics Hotline – a free service of the Colorado Bar Association,” said Nance.  “It is far better to find out before a violation occurs than after.”  The lawyers-only number is (303) 860-1115.

“Forty-five percent of complaints to the Office of Attorney Regulation Counsel involve neglect (Rule 1.3) and a failure to communicate (Rule 1.4),” said Cohen.

“Invest in the outstanding new technology that helps you manage your workload and avoid neglect,” said Nance.  “Develop the habits that lead you to communicate reasonably, clearly and regularly with your clients.  The biggest complaint we hear – by far – is ‘My lawyer doesn’t return my phone calls.’”

Janet Ellen Raasch is a writer and ghostwriter who works closely with lawyers, law firms and other professional services providers – to help them achieve name recognition and new business through publication of articles and books for print and rich content for the Internet.  She can be reached at (303) 399-5041 or jeraasch@msn.com.