New advertising rules irk some lawyers

Editor's Note: This story has been corrected.

Bloomington attorney Ken Nunn says he hasn’t been hurt by new attorney advertising rules put in place at the start of the year, but he’s hearing more disturbing stories from people who are feeling the effects.

One man told Nunn recently that he’d been approached by an insurance company representative days after an accident inside a store, when he was still in the hospital with an injured back and hooked up to an IV. The offer: settle for $10,000.

Historically, Nunn said, plaintiff attorneys might have been able to contact that person immediately following an accident and be able to offer information about what legal options exist.

But not anymore. Since Jan. 1, plaintiff lawyers are not able to make that initial contact because of new attorney advertising regulations adopted by the Indiana Supreme Court. The new professional conduct rules put in place a 30-day cooling off period, meaning that these personal injury attorneys must wait at least a month to make any direct solicitation to people who have potential personal injury or wrongful death claims.

Hausmann

“I thought this would have a dramatic effect, but this hasn’t hurt my practice at all,” Nunn said. “But while I’m not unhappy because it hasn’t hurt me, I’m hearing more stories now than ever before and that’s concerning. People who are telling me they are being contacted sooner and the game has changed.”

The state’s highest court announced the rule changes at the Indiana State Bar Association’s annual meeting in October 2010. It was the first attorney advertising rule change of its kind in the state in two decades and the culmination of four years of work between the state bar association and court leaders.

They dealt with the 7-series of the Indiana Rules of Professional Conduct, and Rule 7(b)(3) specifically focuses on the 30-day period. While the ISBA’s Special Lawyer Advertising Committee didn’t include that 30-day provision in its proposal to the board of governors, a provision for a cooling-off period on arrests and criminal cases as well as the personal injury issues was ultimately included when the rule changes were adopted by the court.

Nothing prevents injured people from contacting attorneys directly during the 30-day period, and the attorneys are able to advertise on billboards, online, and through other marketing avenues as long as they comply with the rest of the professional conduct rules.

Disciplinary Commission Executive Secretary G. Michael Witte says it’s still too early to say what impact the rules are having on attorneys, and at this point his office has been mostly focused on education and awareness about the new rules. Most questions have been about what he perceives to be the “hot button” issue – law firm names and how revised Rule 7.5 applies to attorneys practicing together if they aren’t in actual partnerships.

Witte cited confidentiality rules in being able to say generally whether any complaints or investigations have been initiated about the 30-day provision, but said no public verified complaints have been filed with the Supreme Court.

Witte said the rule may be perceived to be one-sided, but it’s focused on lawyers who are contacting potential clients to represent them, not on those with other attorney-client relationships like an insurance company and its attorney who might be handling an accident or injury claim.

“That’s the distinction, and the commentary shows this is aimed at protecting people who are at points in their lives where they might need this kind of consumer protection,” he said, noting that defense attorneys should also be mindful of other conduct rules regulating their practices.

With the rules now in place in Indiana for three months, attorneys practicing here say they haven’t observed any direct impact on their business – but some describe what they see as disturbing trends that might warrant additional review.

Kyrouac

“I’m a believer that what’s fair is fair, but this rule completely tips the scales away from justice and gives one side more of an advantage in influencing people’s lives,” said Wisconsin attorney Charles Hausmann, whose five-state law firm of Hausmann-McNally has three attorneys in Indianapolis and Merrillville offices. “I’m proud of what we do for people, and I think those of us who are proud are angry and disgusted by this kind of regulation.”

Before the rule change, Hausmann said his firm would take 70 to 80 percent of the cases that came in and passed the screening process. The number of calls coming into the office hasn’t changed much, but he said now the number of cases being accepted has gone down because of follow up and what’s happened in those initial 30 days in preserving claims and issues. Hausmann talked about an Indiana man who had recently had surgery and was on pain medication when an adjuster phoned and asked him about fault.

“He responded in a way that likely killed the case, and he later told me that he’d said that just to get them off the phone because he was in pain. But this, in my opinion, was a case where clearly no one was at fault, and because that person may not have had contact with an attorney initially, that outcome is different.”

When the rule was initially being crafted, Hausmann said he created what’s called the Indiana Citizens for Free Speech – an organization that he says now encompasses attorneys from 8 to 10 law firms statewide. Many say they aren’t willing to publicly speak on this issue because of fear of retaliation, according to Hausmann.

Since the rule was initially scrapped during the crafting stages before the special ISBA committee, Hausmann said he thought the plaintiff’s bar had been heard. But then it resurfaced. Hausmann argues the re-insertion of this provision after the March 2009 public comment period deprived the public and legal community of due process, and he wants the Supreme Court to re-examine and reverse itself.

A potential First Amendment lawsuit is being explored on the commercial free speech issues present because of this rule, Hausmann said, and that’s something he’s considering filing in one of Indiana’s federal courts.

“This rule hurts the very people they think they are helping,” he said. “I’m surprised at the Supreme Court’s rationale and lack of understanding of the true consequences of implementing this rule.”

Terre Haute defense attorney Scott Kyrouac, president of the Defense Trial Counsel of Indiana, said he’s heard some fellow lawyers concerned about the rule change and wondered how it came to be. Some thought the 30-day period created a disadvantage for small firm or solo practitioners, who tried to level the playing field with written material.

He doesn’t think this new rule is having much impact on how the insurance industry or its attorneys do business or how people go about consulting a lawyer. Most defense attorneys don’t regularly write to injured people within 30 days of an accident, and they are hired only after the threat of litigation is apparent, he said. But if that is happening, he thinks those lawyers should also wait to contact people for at least 30 days.

Waggoner

“Ultimately, a 30-day waiting period will have no effect on the defense bar,” he said. “I suspect the effect on the plaintiff’s bar will be minimal. Perhaps a few injured parties will chose an attorney before the 30-day waiting time expires, but I suspect those instances will be limited to the selection of an attorney based on a prior social or professional relationship.”

Rochester plaintiff attorney Ted Waggoner, managing partner at Peterson Waggoner & Perkins, doesn’t handle these types of cases or do direct solicitation, but he said he thinks the 30-day moratorium sends the wrong message to the public – that lawyers can’t be trusted, but insurance companies can.

“There’s some concern on my part about the court not having any control over insurance adjusters or not addressing insurance attorneys in the same way,” he said. “There’s no corresponding rule, and I do not think this rule is looking at the best interest of the people.”

Speculating on what might have helped make the case for this rule change, Waggoner suggested that two events may have contributed to the decision-making. One involved an Evansville airplane crash in February 1992 when two California lawyers sent written solicitations to families and victims soon after the accident with self-laudatory claims about their track records of getting big awards for disaster victims.

Waggoner also pointed to an incident in South Bend last year, when a prominent personal injury lawyer sent a promotional video to the family of a young girl who’d been killed and they received the video when returning home from the girl’s funeral.

“Those may have both left a bad taste in the mouth, and it’s understandable. But my concern generally is about silencing one side of the argument for a period of time,” he said, noting that he doesn’t think the court would be motivated to change this provision unless groups such as the Indiana Trial Lawyers Association pushed for it. “I don’t think a handful of attorneys from inside the state or those from outside Indiana would create much of a pressure point on the issue for the court to reconsider this. They took their time and probably had a lot of discussion on that, and ended up deciding what they thought was best.”•