Editor's Note:

State Bar Ethics Opinions cite the applicable California Rules of Professional Conduct in effect at the time of the writing of the opinion. Please refer to the California Rules of Professional Conduct Cross Reference Chart for a table indicating the corresponding current operative rule. There, you can also link to the text of the current rule.




Is it ethical for a lawyer to consent to or permit his name to be used in advertising material to potential investors, indicating the lawyer's opinion of tax benefits to potential investors, when so required by rules of the commissioner of corporations?


Rule 2 of the Rules of Professional Conduct of the State Bar.1

Administrative Code, Title 10, section 260.302(e).


Inquiry has been made of the Committee as to the propriety of use of an attorney's name under the following circumstances. A real estate syndicator seeking investor-participants in a group formed to acquire and develop specific properties obtained a negotiated permit from the California Commissioner of Corporations. In connection with these proceedings he has prepared advertising material for approval by the Commissioner's office and subsequent distribution to potential investors. Such material described the advantages of the proposed investment under current income tax laws and states that the description of these tax benefits is based upon the opinion of counsel. The attorney rendering this opinion consents to the use of his name in such material in accordance with section 260.302(e), title 10, of the Administrative Code, which provides:

"Any advertisement which refers to an exemption from or reduction in taxation under any law should be based on an opinion of counsel, and the name of such counsel should be stated in the advertisement."

The question put to the Committee is whether the attorney, in consenting to the use of his name, has violated the Rules of Professional Conduct. Rule 2, section (a), of the Rules of Professional Conduct states:

"A member of the State Bar shall not solicit professional employment by advertisement or otherwise."

It is the opinion of the Committee that a consented use of the attorney's name under the circumstances described is in no way improper and, specifically, it is not violative of rule 2, section (a), of the Rules of Professional Conduct. The thrust of the proscription against advertisement by an attorney is prevention of "solicitation" of professional employment, the ideal being that such employment should come through a deserved reputation for professional ability and trustworthiness. This rule cannot logically be construed to forbid all exposure to the public of the attorney's name and professional status. There will necessarily occur some instances in which public attention is directed to an attorney's name and capacity for reasons wholly unconnected with solicitation of employment, either direct or indirect.

The case presented by the facts here is illustrative of this principle. It is clearly in the best interest of the investing public that syndicators and promoters be required to fully disclose all aspects of a proposed investment and to document, to the extent possible, any claimed special advantages. This interest is well served by reference in publicly circulated material to an opinion of counsel on tax aspects of a real estate scheme. Since levels of expertise in this area differ rather markedly within the profession, it is entirely appropriate that counsel rendering the opinion is identified. Disclosure of his name and capacity to the investing public manifestly is made in the public interest, and any benefit which might be realized by the attorney is incidental, at most. Examples of disclosure under similar circumstances--many of which are required by statute, regulation, or administrative practice--are numerous. We note such requirements (including the reference to Admin. Code, tit. 10, Section 260.302(e), above) to emphasize the public interest involved.

The principles upon which this opinion is grounded have been articulated several times by the American Bar Association's Committee on Professional Ethics and Grievances. Its most comprehensive statement of the issue was Opinion No. 290 (1956), in which acquiescence by a law firm in the use of its name in a municipal bond circular approving the legality of the issue was unqualifiedly considered to be proper. The opinion observed:

"The value of municipal bonds is peculiarly dependent on the assurance of compliance with all the required legal formalities and it is hence most important for purchasers of them to be confident that the legal steps in their issuance have been in charge of competent lawyers. For the municipality to give such assurance is primarily in its interest and in that of the purchasers. Although some advantages to the law firm may result, this is incidental."

In summation, the Committee on Professional Ethics and Grievances highlighted the essential issue in these matters as follows:

"The question is always, as we said in Opinion 285, whether under the circumstances the furtherance of the professional employment of the lawyer is the primary purpose of the advertisement, or is merely a necessary incident of a proper and legitimate objective of the client which does not have the effect of unduly advertising him."

We are fully in accord with that reasoning. (See also ABA Committee on Prof. Ethics and Grievances, opn. No. 100 (1933) and informal opn. No. 421 (1961).)

This opinion is issued by the Standing Committee on Professional Responsibility and Conduct of The State Bar of California. It is advisory only. It is not binding upon the courts, The State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities, or any member of the State Bar.

1 [PUBLISHER'S NOTE: A complete revision of the Rules of Professional Conduct was approved by the Supreme Court effective January 1, 1975. (See (1975) 14 Cal.3d Rules 1 and "Cross Reference of Present Rules of Professional Conduct to Former Rules of Professional Conduct," in Part III. D.)]