NJ Court paves way for trade names.
Court Approves Lawyers’ Use Of Trade NamesBennett J. Wasserman and Raphael M. Rosenblatt
This past term we saw our Supreme Court’s ethics engine firing on all cylinders. In the attorney discipline arena, there were more than 200 reported decisions. Fee arbitrations saw an enormous jump over previous years, with more than 1,200 cases filed by clients contesting their lawyers’ bills. But perhaps one of the more progressive developments this year is the court’s final implementation of an amendment to the Rules of Professional Conduct that permits lawyers and law firms to conduct their practices under trade names. In so doing, the court has taken a positive step forward, following the lead of more than 40 states which permit law firms to use trade names. And in so doing, the court has brought the profession one step closer to making legal services more available to the consuming public in a commercially acceptable way. The traditionalists among us cringe at the thought. But the visionaries in our midst welcome this development. Regardless of this divide, the amendment is designed to benefit both the public and the profession and the court has carefully navigated the differing views on the subject to achieve that objective.
Effective Sept. 1, the new amendment to RPC 7.5(e) responsibly balances the risks and rewards of the accelerating trend toward the modernization of law practice in New Jersey. It provides as follows:
Use of a trade name shall be permissible so long as it describes the nature of the firm’s legal practice that are accurate, descriptive and informative, but not misleading, comparative or suggestive of the ability to obtain results. Such trade names shall be accompanied by the full or last names of one or more of the lawyers practicing in the firm or the names of lawyers who are no longer associated in the firm through death or retirement.
An official comment that accompanies the new amendment strikes the balance on use of trade names:
By way of example, “Millburn Tax Law Associates, John Smith, Esq.” would be permissible under the trade name provision of this rule, as would “Smith & Jones Millburn Personal Injury Lawyers,” provided the law firms’ primary location is in Millburn and its primary practice area is tax law or personal injury law, respectively. “John Smith Criminal Defense and Municipal Law” would also be permissible. However, neither “Best Tax Lawyers” nor “Tax Fixers” would be permissible, the former being comparative and the latter being suggestive of the ability to achieve results. Similarly, “Budget Lawyer John Smith, Esq.” is not permissible, as it is comparative and likely to be misleading; “Million Dollar Personal Injury Lawyer John Smith, Esq.” is not permissible, as it suggests the ability to achieve results; and “Tough as Nails Lawyer John Smith, Esq.” is not permissible, as it purports to describe the lawyer and does not describe the nature of the firm’s legal practice.
The Background to the Amendment
The genesis of the new amendment stems back to 2007, when the Advisory Committee on Professional Ethics issued its Opinion 711 (July 23, 2007) that effectively put a halt to New Jersey lawyers’ involvement in a commercial center for divorce mediation under the trade name “_______ Center for Divorce Mediation.” The center was essentially an early effort to bring a successful collaborative law practice based in Pennsylvania and other states into New Jersey. Collaborative law seeks to synchronize various professionals who are frequently involved in divorce cases (lawyers, accountants, parenting mediators, financial counselors, etc.) to help resolve marital breakups through alternative dispute means rather than through traditional litigation.
Alpha Center for Divorce Mediation challenged the Advisory Opinion. The court referred the matter to its Committee on Attorney Advertising (CAA), which has exclusive jurisdiction on attorney advertising matters. The CAA determined that the center’s name violated RPC 7.5. The court granted review. The center argued that, as applied, the rule violated its constitutional guarantees of commercial free speech. The court remanded the matter to the CAA for a fuller factual record and for recommendations and sought amicus input from the New Jersey State Bar Association. Ultimately, both the CAA and the NJSBA opposed any change to RPC 7.5 that would permit the use of trade names. The court then sought public comment and entertained oral argument. The result was a ground-breaking decision, In re Committee on Attorney Advertising, Docket No. 47-2007, 213 N.J. 171 (2009), which found that “most states allow use of trade names by law firms without any report of adverse impact to the public. The court also recognized the “changing and more multijurisdictional nature of the legal profession.” It then proceeded to provide an amended RPC 7. 5 that permits the use of trade names in such a way that it brought New Jersey’s rules into sync with most other states and provided a balance for the benefit of the public whereby the trade name would describe the nature of the firm’s legal practice in terms that are “accurate, descriptive and informative, but not misleading, comparative, or suggestive of the ability to obtain result, accompanied by the name of the attorney responsible for the management of the organization.”
The court then appointed the Ad Hoc Committee on Law Firm Trade Names to study the implementation of its newly revised RPC 7.5 (e). That committee issued its Report and Recommendation on May 6, 2014. The court accepted it toward the end of this past term, clearing the way for implementation of its new amended RPC 7.5 (e) as of Sept. 1.
The Limitations on Commercial Free Speech
Freedom of speech in attorney communications has its limits. Trade names used by lawyers are, like advertising, “Communications Concerning a Lawyer’s Service” and are governed by RPC 7.1. Not only does the new amendment require all trade names used by attorneys to be “accurate, descriptive and informative,” but specifically, they must “not [be] misleading, comparative or suggestive of the [lawyer’s] ability to obtain results.” In addition, trade names, under RPC 7.1, must not be “false or misleading.” The trade name will be false and misleading if it contains “a material misrepresentation of fact or law”; if it is “likely to create an unjustified expectation about the results the lawyer can achieve”; if it “compares the lawyer’s services with other lawyer’s services”; or if it relates to legal fees, with certain exceptions. Every trade name used by lawyers hereafter will be under the scrutiny of, and subject to the exclusive jurisdiction of, the Supreme Court’s Committee on Attorney Advertising, which is charged with enforcing Rules 7.1 to 7.5.
Implementing the New Rule
Even with the abundant proscriptions furnished by the rules relating to trade marks, plenty of questions still remain on how lawyers should approach this new venture into trademark use. Here are some of them to consider:
• Do the trade names have to be registered?
No. There is no provision in the rule or the Official Comment requiring a lawyer or law firm to register the trade name they select. Well then, one can legitimately ask, what if lawyers pick the same or similar trade name, won’t that create confusion? The answer is that all trade names must “be accompanied” by the name of the lawyer practicing in the firm using the trade name. That, felt the Ad Hoc Committee on Law Firm Trade Names, will diminish the likelihood of “too-similar trade names.” An additional safeguard to minimize similar trade names is that many firms who practice as an entity—a professional association (corporation), limited liability company and limited liability partnership—must register the names of those entities with the secretary of state. For them, the secretary of state offers its search engine to prevent the selection of identical or similar names.
• Should trade names be pre-approved by the Committee on Attorney Advertising to assure compliance?
No. According to the Ad Hoc Committee Report, only two states require pre-approval of law firm trade names. The rest of the states have not had any significant problems, such as abuse, deception and the like in the trade names used by lawyers. In fact, only one of the states that requires pre-approval seems to have had some problem with trade names and those relate to characterization of the quality and results of legal services furnished by the specific lawyers. In New Jersey, lawyers have the option under Rule 1:19A to ask the committee whether a proposed trade name complies with the new rule and the committee’s interpretation of it by simply using the attorney ethics research assistance hotline. The committee’s response generally comes expeditiously and the attorney can feel reassured with the committee’s authoritative, though nonbinding guidance. Any objectionable trade name that is brought to the attention of the committee through the grievance process can be expected to receive a letter advising the attorney whether it violates the rule. The committee usually gives the attorney a 30-day period to cease and desist. Compliance or amicable resolution is generally forthcoming. Given the lack of problems reported in other states and the availability under the current rules of hotline guidance, the court did not recommend pre-approval. But, it is possible that attorneys will have to report or register their trade names through the annual registration system.
• Can a lawyer use more than one trade name?
Probably not. The current Court Rules do not permit an attorney to operate under more than one name, although nothing in the new rule would seem to prohibit an attorney from describing in one trade name multiple areas of practice or legal services that he or his firm offer.
• Who will benefit from the new rule?
Most lawyers, especially solos and small firms, who adopt trade names in their practices as well as consumers of legal services will likely benefit.
The practice of law (and lawyers in general) have generally been slow to adapt to change. But that is changing. In the past two to three decades we have seen a rapid expansion of technology applicable to law practice. We are embracing that technology and adopting its new ways with greater speed, fervor and commitment. This has profoundly affected the way we practice law each day, and the way we interact with the courts, clients and colleagues. The inclusion of these technological advances in our everyday work has made profound changes to our professional lives: from legal research to calendaring events, from phone calls and texting to emails, “skyping” and cloud computing. From timekeeping and billing to collection of fees. From paperless offices to virtual offices, from e-filing in the federal courts and soon in the state courts. And that’s just for starters.
There has also been a meteoric rise in the numbers of lawyers practicing law and this has led to increased competition. In New Jersey alone, there are some 90,000 licensed lawyers. Most lawyers are licensed in more than one state and actively practice in adjacent states. More than half of the lawyers practice as solos or small firms. More and more lawyers are gravitating to niche practice areas. All these factors are making legal services more available to more consumers.
Trade names can have a beneficial effect for lawyers and consumers of legal services. A trade name that identifies a lawyer’s field of practice can set that lawyer apart from others and can help to drive clients his or her way. We frequently hear about the consumer’s daunting quest to find the right lawyer. With the use of trade names, at least the search can be narrowed to those lawyers who practice in that area more frequently than others and, with that, will hopefully become more experienced than others. The consumer’s search for competent legal advice would thus be facilitated.
We have previously seen a similar scenario. Within the last decade, we have come to rely on legal rating services to promote the availability of legal services: SuperLawyers, Best Lawyers, Avvo, Martindale, to name just a few. Our Supreme Court, in a forward-looking decision made that happen in 2008. (Bennett Wasserman served as co-lead counsel for plaintiffs in In Re Opinion 39 of the Committee on Attorney Advertising, 197 N.J. 66 (2008), which prompted changes in lawyer advertising rules in the Rules of Professional Conduct.) These rating services have since become important tools used by consumers and lawyers alike.
At first, the skeptics among us looked askance at these innovations and fought hard against them. The visionaries welcomed the change and advocated zealously for their acceptance. Our Supreme Court weighed in on that fight and sided with the visionaries, calling for changes in our Rules of Professional Conduct. Now, legal rating services have become reliable reference tools for consumers and have been embraced by even the largest of law firms to showcase their expertise in well-defined practice areas. True to its measured and forward-looking approach, with its current amendment to RPC 7.5 (e), our Supreme Court has once again given lawyers and consumers seeking legal services a new tool that will promote and facilitate the availability of legal services, all under the watchful eye of its Committee on Attorney Advertising. Trade Names will be an effective way for lawyers to promote their services and for consumers to find their way to the lawyer that’s right for them. Kudos to the court this season.
Wasserman, whose law practice focuses on the law governing lawyers, is also vice president and general counsel of Legal- Malpractice.com, a consulting firm in Hackensack. Rosenblatt is principal at Rosenblatt Law PC in Hackensack, where he focuses on criminal defense, legal malpractice and commercial litigation.