by William R. Denny

In a now famous incident, attorney Laurence Canter placed an electronic advertisement on the Internet that reached more than 5,000 Internet groups and many thousands of email addresses. Mr. Canter’s April 1994 unsolicited electronic message offered to help almost anyone obtain a green card. The Tennessee Supreme Court’s Board of Professional Responsibility determined that Mr. Canter’s conduct violated numerous ethics rules and the Board suspended him from practicing law for one year. Although the Canter case represents extreme misuse of email communication, over the past decade, state bars have been faced with increasingly frequent questions regarding the ethics of email advertising.

As every lawyer realizes, electronic communication with clients is no longer a cutting-edge novelty. It is standard business and marketing practice. Electronic newsletters, alerts, and bulletins are an important part of keeping and generating business. They are not going away.

These communications implicate the ethics rules governing advertising. They also implicate the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”). Since it is a federal law, CAN-SPAM applies to electronic communications received anywhere within the United States, regardless of the location of the sender. Things get tricky, however, when trying to figure out which ethics rules apply. As it now stands, four states continue to operate under some version of the ABA Model Code of Professional Responsibility, first promulgated in 1969. Thirty-seven states have some version of the ABA Model Rules of Professional Conduct. Nine states have their own unique ethics rules. To confuse matters further, each state has its own variant of ethics rules. While some states expressly recognize and regulate electronic communication through their ethics rules, other states have interpreted preexisting rules by comparing electronic communication to more traditional forms of communication. Of the states using the Model Rules, some have adopted certain or most changes made by ABA’s Ethics 2000 Commission, including specific reference to electronic communications.

This article will not address every permutation of how the relevant ethics rules interact with CAN-SPAM. Instead, it will give a general overview of CAN-SPAM, focus on the current version of the ABA Model Rules with the Ethics 2000 Commission revisions, and point out some of the more significant variations in how the ethics rules are applied among the states. It will also address how advertising rules generally apply to sending e-newsletters and linking to Web sites in email.

CAN-SPAM in a Nutshell

Generally, CAN-SPAM regulates the character and transmission of unsolicited commercial email, popularly known as “spam.” Specifically, CAN-SPAM prevents the sending of false or misleading message information. It requires that messages be labeled as advertisements, and that recipients be given an “opt-out” option to avoid further contact.

CAN-SPAM applies only to electronic communications whose “primary purpose” is commercial, rather than to “transactional or relationship” communications. To determine whether an electronic communication has a “commercial primary purpose,” the electronic communication must be evaluated according to the varying primary purpose tests established by the Federal Trade Commission (“FTC”).

Primary Purpose 
All electronic communications are “commercial” if the primary purpose of the communication is the “advertising or promotion of a commercial product or service.” The FTC created four distinct categories of electronic communication, each with varying criteria to determine the primary purpose.

There are two types of single-purpose email. First, email that has purely “transactional or relationship” content does not have a “commercial” primary purpose, making CAN-SPAM inapplicable. Similarly, email containing purely “commercial” content has a “commercial primary purpose” and falls within CAN-SPAM regulation.

There are two types of dual-purpose email. Email containing both “commercial” content and “transactional or relationship” content will have a “commercial primary purpose,” if:

Finally, email containing “commercial” content and other content (not considered “transactional or relationship” or “commercial”) will have a “commercial primary purpose,” if:

Factors to consider include location of the “commercial” content, the proportion of the email devoted to the “commercial” content, and the formatting used to bring attention to the “commercial” content (e.g., color, graphics, type size, style).  Although CAN-SPAM does not directly mention lawyers, lawyers often send email that might be considered to have a “commercial primary purpose.”

Preemption of State Ethics Rules
Except to the extent that state laws prohibit falsity or deception in messages or attachments, CAN-SPAM expressly supersedes any state rule regulating the use of electronic mail to send commercial messages. Since all state ethics rules are couched in terms of the prevention of false or misleading communications, it appears that CAN-SPAM does not preempt any of the applicable state rules. Instead, state ethics rules should be viewed as additions to the CAN-SPAM requirements for unsolicited commercial email.

At least one court has discussed the preemptive effect of the CAN-SPAM Act. In White Buffalo Ventures v. The University of Texas at Austin, No. A-03-CA-296-SS, slip op. at 7 (W.D. Tex. Mar. 9, 2004), the court found that CAN-SPAM did not preempt the University’s preexisting email filtering of certain unwanted commercial solicitation. Although this decision is not based on CAN-SPAM’s allowance for the continued viability of state rules that prevent falsity or deception, this decision suggests that the various requirements of state ethics rules regulating electronic communication in advertising are still valid.

As a result, lawyers who send common electronic communications to recipients in multiple states need to consider their obligations under CAN-SPAM and their obligations under the ethics rules of the state where the communications are sent. Under the most current version of Model Rule 8.5, a lawyer is subject to the rules of the jurisdiction in which the “predominant effect” of the lawyer’s conduct occurred. When sending an email solicitation to a potential client, the predominant effect is likely within the jurisdiction where the recipient is located. Lawyers are subject to disciplinary authority both in the jurisdictions where they are admitted and in the jurisdictions in which they provide or offer to provide legal services. Thus, it is critical for lawyers to consider CAN-SPAM as well as the most restrictive of the relevant ethics rules when sending commercial email to multiple states

Ethics Rules & E-Newsletters

In addition to email, other common lawyer communications, such as electronic newsletters, alerts, and client bulletins, may also fall within the scope of CAN-SPAM. These documents are typically drafted by attorneys, use the law firm name, and are distributed as a way to demonstrate the firm’s expertise and attract new business. Before CAN-SPAM, the concern was whether e-newsletters were “solicitations” for purposes of the relevant state ethics rules. All states that considered the issue concluded that e-newsletters sent to potential clients were solicitations subject to the ethics rules on advertising. Although ethics opinions frequently distinguish between e-newsletters sent to clients and those sent to potential clients, these opinions simply conclude that e-newsletters sent to clients do not need to be marked as advertisements. Are these newsletters also subject to CAN-SPAM?

CAN-SPAM & E-Newsletters

The first important question to ask under CAN-SPAM is whether the e-newsletter is delivered pursuant to a subscription. If the e-newsletter is delivered pursuant to a subscription, the newsletter is then considered “transactional or relationship” and does not fall within the purview of CAN-SPAM regulation. A subscription implies that the recipient has agreed and expects that the e-newsletter will contain some commercial content; however, whether an e-newsletter is “transactional or relationship” is determined based on the recipient’s understanding. Notwithstanding the recipient’s subscription agreement, an e-newsletter will no longer qualify as “transactional or relationship” if the amount of commercial content exceeds a recipient’s reasonable expectations. On the other hand, e-newsletters delivered without a subscription are unlikely to qualify as “transactional or relationship.” As such, it then becomes necessary to evaluate the e-newsletter according to the appropriate primary purpose test.

Thus, CAN-SPAM presents a veritable landmine for attorneys. Even when there is a subscription, attorneys must not include so much commercial content as to exceed a recipient’s reasonable expectation. When there is no subscription, the e-newsletter is evaluated against a recipient’s reasonable interpretation according to the relevant primary purpose test. Attorneys should consider the subject line used and the font styles used to draw attention to the commercial material.

Applicable State Ethics Rules

Generally, state ethics rules governing lawyer communications and advertising will figure prominently in a CAN-SPAM analysis. Relying on old state ethics rulings and opinions, however, is not enough. To be safe, consider both the state ethical rules and CAN-SPAM.

Rule 7.1: Communications.
Rule 7.1 prohibits a lawyer from making a false or misleading communication about the lawyer or the lawyer’s services. A statement is considered false and misleading if it contains a material misrepresentation of fact or law or omits a fact necessary to make the statement, considered as a whole, not materially misleading. Thus, if presented in a misleading way, a truthful statement potentially violates the rule, as could an unsubstantiated comparison of the lawyer’s services or fees with the services or fees of another lawyer.

In contrast, CAN-SPAM only prohibits (and criminalizes) fraudulent statements. CAN-SPAM also has additional requirements relating to fraud. For example, email transmission information cannot be materially false or misleading. Even if the transmission information is technically accurate, the communication is prohibited if the information was obtained in a fraudulent manner. Lawyers should ensure that any outside services retained to send out e-newsletters comply with all of the provisions of CAN-SPAM, including accuracy in the headers, identity of the sender, and the subject line.

Rule 7.2: Advertising.
Rule 7.2 permits a lawyer to advertise services through written, recorded or electronic communication subject to the requirements of Rule 7.1 (misleading communications) and Rule 7.3 (solicitation). Rule 7.2 also contains a restriction. It requires an advertisement to include the name and office address of at least one lawyer or law firm responsible for its content. The requirement of an “office address” is not defined. In Opinion 756 (2002), the New York Ethics Committee considered whether email or a Web address would suffice as an “office address” under the rules. The committee stated that a Web address might mislead a recipient as to the lawyer’s proximity or jurisdiction. Therefore, a lawyer’s email advertisement must contain a physical street address. Similarly, CAN-SPAM requires that commercial emails include a “physical postal address.”

Many states retain record retention requirements from the previous version of Rule 7.2.^* These record retention rules require lawyers to retain copies of all advertisements in addition to information concerning where and when the advertisements were used. Periods of the required retention range from two to ten years. This onerous and unwieldy task is omitted from the current version of the Model Rule. However, lawyers sending advertisements into different states are subject to those states’ record retention rules. Those who ignore the rules do so at their peril.

Earlier versions of Rule 7.2 as well as the Code of Professional Responsibility do not expressly regulate electronic communication. The Ohio Code of Professional Responsibility, for example, does not mention electronic communication in its advertising section. Without direct textual guidance, lawyers are faced with uncertainty about their obligations when using the Internet.

Rule 7.3: Direct Contact With Prospective Clients.
The new Model Rule 7.3, with the Ethics 2000 Commission revisions, makes clear the extent to which prohibitions on direct contact with prospective clients apply to electronic communications. For example, the rule distinguishes electronic communications (such as email) from “real-time electronic contact” (such as chat rooms or instant messaging), prohibiting solicitation by real-time electronic contact except in the case that the prospective client is a lawyer or a close acquaintance. Model Rule 7.3(c) includes electronic communications in its definition of written communications. This rule also makes clear that the labeling of a solicitation as “Advertising Material” need only be at the beginning and ending of any electronic communication, and not in the subject line or on the outside of an envelope. The Model Rule also has a requirement similar to CAN-SPAM’s opt-out requirement, prohibiting further solicitation in any form of a prospective client who has made known to the lawyer a desire not to be solicited.

The CAN-SPAM Act creates an exception for e-newsletters that are sent pursuant to a subscription. They are considered “transactional or relationship” communications. Other forms of electronic communication will be governed by CAN-SPAM if they have a “commercial” primary purpose. CAN-SPAM labeling and opt-out features also apply to unsolicited commercial emails regardless of whether there is an existing relationship. As a result, an attorney must determine how the CAN-SPAM Act applies to client communication.

It is likely that attorneys will satisfy the labeling requirements of CAN-SPAM by following state ethics rules expressly regulating email solicitation. Yet, the numerous opt-out requirements of CAN-SPAM remain a hurdle. Lawyers and law firms confront a formidable task when forced to keep track and monitor lists of recipients who have opted out of future communications

Web Site Links

When an attorney sends an otherwise innocuous email, does the inclusion of a Web site link transform the email into a commercial communication or a solicitation for pecuniary gain?

Commercial electronic mail is defined in the CAN-SPAM Act as any message the “primary purpose of which is the commercial advertisement or promotion of a commercial product or service.” The CAN-SPAM definition of commercial content includes links to a Web site operated for a commercial purpose. The inclusion of a commercial Web site link may destroy the noncommercial nature of an email. Specifically, reference to a Web site or inclusion of a hyperlink to an Internet address operated for a “commercial” purpose will be considered “commercial” content under CAN-SPAM.

In light of the primary purpose criteria, an email message that contains only a link to a Web site operated for a “commercial purpose” will have a “commercial primary purpose.” Having a “commercial primary purpose” makes the email subject to CAN-SPAM. If email content is of the hybrid variety (e.g., “commercial” content, “transactional or relationship,” or other content), then the email is evaluated according to the appropriate primary purpose test.

Although CAN-SPAM relies on the primary purpose test to label a message commercial, the majority of state ethics rules apply only when an attorney is significantly motivated by his own pecuniary gain. Some state rules simply require pecuniary gain to be a motivating factor. See Ariz. Rules R. 7.3(a). Other states mention “significant motive” only in the prohibition against in-person contact, but later use of the undefined term “solicitation” suggests that the “significant motive” requirement applies to the entire body of advertising rules. See, e.g., Utah Rules R. 7.3. States like Delaware prohibit in-person communication where a significant motive is the lawyer’s pecuniary gain; however, the state regulates all written communication “soliciting professional employment.” As such, solicitations of employment almost always fall within the ambit of the rules. Thus, determining whether an email containing a link is subject to state regulation, one must initially decide whether the lawyer, in sending the email, was significantly motivated by pecuniary gain.

Encouraging Contact
In one opinion, the Utah State Bar’s Ethics Committee advised that any e-newsletter, alert or brochure that encourages the recipient to contact the firm for information is a solicitation of professional employment subject to the Utah Rules. See Utah State Bar Ethics Comm., Op. 02-02 (2002). A link in an email that is not otherwise a solicitation could be perceived as encouragement to contact the firm. This interpretation would result in the broad application of state ethics rules for attorneys who include a link to their firm as a matter of course.

Significantly, even if the inclusion of a link to the firm Web site does not make an email a solicitation subject to regulation, most state ethics rules regulate domain names directly. For example, the Maryland State Bar Association Committee on Ethics recognized that an Internet domain name is a communication subject to the general requirement that attorney communications not be false or misleading. See Md. State Bar Ass’n. Comm. on Ethics, Op. 02-18 (2002). Avoiding a false or misleading domain name does not necessarily mean an attorney has to use the firm’s name. It does require an attorney to refrain from including descriptive phrases in the name itself. State jurisdictions have cautioned lawyers against using such domain names as “bestlawyer.com,” “bigverdict.com,” or “personalinjuryexpert.com.”

Conclusion

Attorneys need to become informed about the provisions of the CAN-SPAM Act, including how the new regulations interact with their jurisdiction’s rules of ethics. Although the CAN-SPAM Act does not mention attorneys specifically, its provisions apply to conduct engaged in by most lawyers every day.

Many current state ethics rules governing Internet communication are out of date, are confusing, or both. Amendment of these rules to include express reference to the Internet, and regulation consistent with CAN-SPAM, would help to provide attorneys with guidance regarding their conduct. This may prevent lawyers from violating a new federal law, annoying prospective clients, and embarrassing the profession. c

* Editor’s Note:  Minnesota’s Rules of Professional Conduct do not retain the requirement that copies of advertisements be retained.  However, Comment 3 to Rule 7.3 suggests that attorneys may reduce the risk of subsequent disputes regarding advertising content by retaining copies of their advertising communications:

This article is a condensed version of an article first published in the August 2005 issue of
The Practical Lawyer, a publication of the American Law Institute - American Bar Association and reprinted here by permission.  © 2005 by William R. Denny.

Gabriel R. MacConaill, law student at the Dickinson School of Law, and Jennifer A. Chamagua, law student at Villanova University School of Law, assisted in the preparation of this article. This article is based on a paper the authors prepared for a seminar sponsored by the ABA’s Business Law Section.