1.2 Acquiring Clients

• Library: Real Estate Transactions in Virginia (Virginia CLE) (2019 Ed.)

1.2 ACQUIRING CLIENTS

Advertising, referrals, recommendations, and solicitation are subject to strict regulation with respect to time, place, manner, content, and record-keeping. The following paragraphs focus on this regulation.

Effective July 1, 2017, the Virginia Supreme Court adopted new amendments to the Rules of Professional Conduct governing marketing and advertising of legal services.

1.201 Communications.

A. Advertising in General. Communications about a lawyer's services are statements or claims made through public media as well as communications that are targeted to one or more persons. Every written, recorded, or electronic communication from a lawyer soliciting professional employment from a potential client who is known to be in need of legal services must conspicuously display the words "ADVERTISING MATERIAL" on the outside envelope, if any, and at the beginning and ending of any recorded or electronic communication. ¹ The Rules make all lawyer communications concerning a lawyer's services subject to Rule 7.1, which prohibits any communication that is false or misleading.

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B. Solicitation of Potential Clients. A solicitation is a targeted communication initiated by a lawyer that is directed to a specific potential client and that offers to provide legal services. ² Client solicitation is permitted in Virginia as long as it does not involve false or misleading communications, ³ harassment, undue influence, coercion, duress, compulsion, intimidation, threats, or unwarranted promises of benefits. ⁴ A lawyer may not solicit employment if a potential client has made known to the lawyer that he or she does not desire to be solicited. ⁵

1.202 Explaining and Advertising Fees. ⁶ The Rules require lawyers to "adequately" explain ⁷ their fees. ⁸ A challenged legal fee is unenforceable on constructive fraud grounds unless the lawyer proves that he or she adequately explained the fee (or its basis) to the client ab initio and that the client agreed to it. ⁹ Advertising a specified fee to handle "closings," "settlements," or "real estate transactions" while intending not to perform a title examination without extra charge is inherently misleading unless the advertising clearly indicates that the fee does not include a title examination. ¹⁰

1.203 "Specializing" in Real Estate. Rule 7.1 recognizes that it is not improper per se for a lawyer to claim that he or she specializes or concentrates in a practice area (for example, real estate) if in fact the lawyer devotes a substantial part of his or her practice to handling cases in that

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practice area. Any such statement made by the lawyer is subject to the "false and misleading" standard applied to all lawyer communications. ¹¹

1.204 Referrals.

A. Relationships with Persons Making Referrals. Lawyers are not permitted to pay others for channeling professional work. ¹² A lawyer's acceptance of a referral from a person with whom the lawyer has a business, financial, or professional relationship may constitute misconduct. Accommodating or giving favors to the referring person in the course of the relationship could be construed as giving "value" as a reward or inducement for referrals. Refunding part of a fee to a client who recommended another to the lawyer may constitute misconduct. ¹³ However, a lawyer is allowed to give nominal gifts of gratitude that are neither intended nor reasonably expected to be a form of compensation for recommending the lawyer's services. ¹⁴

In 2010, the Virginia Bar issued a legal...