1. See, e.g., Prepaid Legal Services–an Idea Whose Time has Come: A Compilation of Materials by the Committee on Availability of Legal Services of the New York State Bar Association (1974).Google Scholar

2. The Physicians' Defense Company of Fort Wayne, Indiana, was formed in 1899 and operated until about 1910. For details, see Pfennigstorf & Pfaff, infra note 10.Google Scholar

3. Much of the delay seems attributable to the attitude of the organized bar; see Norman J. Riedmueller, Group Legal Services and the Organized Bar, 10 Colum. J. Law & Soc. Prob. 228 (1974).Google Scholar

4. Seventy percent of the population is often said to be underserved. This customarily used figure is not based on survey; it is in effect the result of definition rather than computation. Robert W. Meserve, former President of the American Bar Association, seems to have been the first to use it. He described 20 percent of the population as poor, and thus theoretically eligible for legal aid or other welfare programs, and 10 percent as rich, and thus able to afford a lawyer whenever necessary. The other 70 percent represent the target population. Robert W. Meserve, Our Forgotten Client: The Average American, 57 A.B.A.J. 1092 (1971).Google Scholar

5. Werner Pfennigstorf, Legal Expense Insurance: The European Experience in Financing Legal Services (Chicago: American Bar Foundation, 1975) [hereinafter cited as European Experience].Google Scholar

6. In particular, the plans were charged with engaging in the unauthorized practice of law, practicing law as a corporation, and acting as an intermediary between attorney and client. Attorneys cooperating with such programs were subject to professional discipline. See generally the collection of articles in 5 Law & Contemp. Prob. 1-174 (1938).Google Scholar

7. NAACP v. Button, 371 U.S. 415 (1963); Brotherhood of R.R. Trainmen v. Virginia ex rel. Virginia State Bar, 377 U.S. 1 (1964); UMW, District 12 v. Illinois State Bar Ass'n, 389 U.S. 217 (1967); United Transp. Union v. State Bar of Mich., 401 U.S. 576 (1971).Google Scholar

8. Werner Pfennigstorf & Spencer L. Kimball, Legal Service Plans: A Typology, 1976 A.B.F. Res. J. 411 (hereinafter cited as Typology].CrossRefGoogle Scholar

9. The distinction has become blurred by the Legal Services Corporation Act of July 25, 1974, Pub. L. No. 93-355, 88 Stat. 378, which directs the corporation to study, among other things, “prepaid legal insurance” as a potential alternative or supplemental method of delivery of legal services to eligible (i.e., poor) clients. 42 U.S.C. sec. 2996f(g) (Supp. V 1975). The notion of having the government purchase coverage for indigents from an established insurance carrier has a certain attraction, principally in saving the expense and potential waste involved in establishing government agencies for the purpose and letting them acquire the experience necessary for the system to function efficiently. It also appeals to the widely held (but not necessarily correct) belief that private enterprise generally works more efficiently than the government. The experience with the Medicaid programs, which have been administered by private carriers for the government, has been satisfactory with respect to administration costs but less so with respect to overall cost. Most important, it is a myth that an insurance carrier can continue to be a private business enterprise when it enters into an agreement with the government to administer a large-scale welfare program. First, there is no risk carrying involved that would characterize the arrangement as an insurance contract, not only because that would run counter to the federal government's general policy of not insuring its risks (see 41 C.F.R. sec. 1-10.301 (1976)) but also because it would not make economic sense from a risk-management point of view. Rather, the carrier in these cases tends to become an agent of the government for distributing government funds according to government directions and subject to detailed rules concerning cost accounting, disbursement limitations, and procedures. The profit incentive, which is the driving force behind the presumed virtues of the private-enterprise system, is eliminated in these arrangements. At best, private carriers used in this way can help get government programs started fast by providing an established and experienced administrative machinery; at worst, they combine the bad elements of private business and government bureaucracy. In summary, we do not deny that private legal insurance carriers can be employed under certain conditions with good results in providing legal services to poor people at government expense; it is our opinion, however, that in such instances the carrier's operations and its relations to the persons it serves are dominated by welfare-administration principles and, as such, are distinguishable from its activities as a regular risk-spreading carrier of legal service benefits of the kind with which we are primarily concerned in this paper.Google Scholar

10. Because of the complexity of the subject, we found it necessary to treat special aspects of it in separate papers, some written by independent scholars and some with the help of research assistants. These papers, which form part of the background of the present report, will be referred to frequently. Some of them have already been published, and all will be included in the volume mentioned in the introductory note. They include a description of the various types of legal service plans (Pfennigstorf & Kimball, Typology, supra note 8), an analysis of legal expense insurance as practiced in Europe (Pfennigstorf, European Experience, supra note 5); a discussion of the federal preemption in the field of employee legal service plans (Werner Pfennigstorf & Spencer L. Kimball, Employee Legal Service Plans: Conflicts Between Federal and State Regulation, 1976 A.B.F. Res. J. 787 [hereinafter cited as ERISA paper]); and an analysis of the antitrust aspects of legal service plans (James E. Meeks, Antitrust Aspects of Prepaid Legal Services Plans, 1976 A.B.F. Res. J. 855). The other papers are: Werner Pfennigstorf & Patricia K. Pfaff, Legal Defense Programs for Medical Malpractice; Werner Pfennigstorf & Daniel P. Gallagher, Jr., Student Legal Services; Werner Pfennigstorf, Automobile Clubs as Carriers of Legal Expense Insurance [hereinafter cited as Automobile Clubs]; Werner Pfennigstorf & Thomas A. Witt, Regulation of Health Service Plans.Google Scholar

11. We use the term “intermediary” in its general sense—to connote a middleman—and not in any limited or technical sense.Google Scholar

12. Because it can have a profound effect on the attorney-client relationship itself, the insertion of an intermediary has been regarded with concern and suspicion by the legal profession. See, e.g., Barlow F. Christensen, Lawyers for People of Moderate Means: Some Problems of Availability of Legal Services 225-91 (Chicago: American Bar Foundation, 1970).Google Scholar

13. See Spencer L. Kimball, Bringing Legal Services to Market, in William Elliott Lectures, Historical, Legal and Value Changes: Their Impact on Insurance (University Park: College of Business Administration, Pennsylvania State University, 1977) [hereinafter cited as Marketing].Google Scholar

14. The various functions are described in Pfennigstorf & Kimball, Typology, supra note 8, at 415-29.Google Scholar

15. See Pfennigstorf & Kimball, Typology, supra note 8, at 462-65.Google Scholar

16. See Richard Hofrichter, Data Collection and Reporting for Legal Services Plans 58 (Washington, D.C.: Resource Center for Consumers of Legal Services, 1976). The utilization (loss frequency) figures are comparable with those of some established lines of insurance, where high frequency and low average losses are common. One of them is automobile collision insurance, where the claim frequency was about 11 percent in 1975. Insurance Facts 54 (New York: Insurance Information Institute, 1975). Utilization is determined by the nature of the benefits offered and by many other factors, and is therefore difficult to compare among different programs.Google Scholar

17. See the definition of “employee welfare benefit plan” in sec. 3(1) of the Employee Retirement Income Security Act of 1974 [ERISA], Pub. L. No. 93-406, 88 Stat. 829, 29 U.S.C. sec. 1001 (Supp. V 1975). All references to ERISA are to the act and its original section numbers. The act corresponds to 29 U.S.C. secs. 1001-1381. The regulation in these instances focuses on the preservation of assets. See also Pfennigstorf & Kimball, ERISA paper, supra note 10.Google Scholar

18. See Pfennigstorf & Kimball, Typology, supra note 8, at 456-57.Google Scholar

19. Id. at 457-61.Google Scholar

20. Id. at 458-59.Google Scholar

21. There is a growing awareness that members of nonprofit organizations may need better protection of their rights. See, e.g., Note, Membership Rights in Nonprofit Corporations: A Need for Increased Legal Recognition and Protection, 29 Vand. L. Rev. 747 (1976).Google Scholar

22. See, e.g., Spencer L. Kimball, The Purpose of Insurance Regulation: A Preliminary Inquiry in the Theory of Insurance Law, 45 Minn. L. Rev. 471 (1961).Google Scholar

23. For information about some of the companies that have already sold policies, see Pfennigstorf & Kimball, Typology, supra note 8, at 487-89. Several other companies have obtained approval for policy forms but have not yet written any business under them; for a collection of such forms, see Claude C. Lilly, Legal Services for the Middle Market 127-66 (Cincinnati: National Underwriter Co., 1974).Google Scholar

24. A typical catchall provision is Ga. Code Ann. sec. 56-408(11) (1971):Google Scholar

Miscellaneous insurance, which is insurance against any other kind of loss, danger or liability properly a subject of insurance and not within any other kind of insurance as defined in this Title, if such insurance is not disapproved by the Commissioner as being contrary to law or public policy.Google Scholar

Provisions of this kind exist in about 30 states. See the surveys in 1974 (vol. 2) NAIC Proceedings 651-53; in Lilly, supra note 23, at 189-209; and Ellen Broadman, Prepaid: When Is It Insurance? 1 New Directions in Legal Services 28-33, 49-54 (1976).Google Scholar

25. See note 24 supra and the reports by William B. Pugh in 1975 (vol. 2) NAIC Proceedings 534-35. Amending laws have been enacted in Minnesota, Texas, and Wisconsin. 1973 Minn. Laws, ch. 634, amending Minn. Stat. secs. 60A.06-.08 (West 1971); 1975 Tex. Gen. Laws, ch. 60, creating Tex. Ins. Code Ann. art. 5.13-1 (Vernon Supp. 1975-76); 1971 Wis. Laws, ch. 260, creating Wis. Stat. Ann. sec. 201.04(20) (Supp. 1975-76). The National Association of Insurance Commissioners (NAIC) has adopted a model act, which, however, suffers from several shortcomings that make widespread adoption by state legislatures unlikely. For example, it ignores the preemption of state laws with respect to employee legal service plans as provided in sec. 514 of the Employee Retirement Income Security Act of 1974 (ERISA). See Prepaid Legal Expense Insurance Model Act, 1975 (vol. 1) NAIC Proceedings 902 and the reservations expressed by Thomas E. Harris and Spencer L. Kimball, id. at 916-17.Google Scholar

26. See, e.g., Spencer Kimball & Herbert Denenberg, Mass Marketing of Property and Liability Insurance, prepared for the Department of Transportation Automobile Insurance and Compensation Study (Washington: Government Printing Office, 1970). The issue is one of rate discrimination. If they are actuarially supported by the claims and expense experience of the covered groups, lower group rates should be permitted. Wholesale prohibition is unjustified and should be abolished generally or at least for legal expense insurance. For a special exemption, see La. Rev. Stat. Ann. tit. 22, sec. 221 (West Cum. Supp. 1977), as amended by Louisiana Act No. 205, 1976 La. Acts; Cal. Ins. Code. Ann. secs. 12121-23 (West Cum. Supp. 1977).Google Scholar

27. See also pp. 427-29 infra, dealing with overutilization by subscribers. The coverages that are presently offered in the United States are by their nature susceptible to adverse selection, and group contracts with mandatory participation provide the most practical way of controlling adverse selection. See generally Pfennigstorf, European Experience, supra note 5, at 64-65. For an example of voluntary coverage, which resulted in adverse selection, see Pre-Paid Legal Plans: Little Interest on Campus, Student Lawyer (December 1975), at 7.Google Scholar

28. See in particular Herbert S. Denenberg, The Legal Definition of Insurance: Insurance Principles in Practice, 30 J. Ins. 319 (1963); Jan Hellner, The Scope of Insurance Regulation: What Is Insurance for Purposes of Regulation? 12 Am. J. Comp. L. 494 (1963); Kimball, Purpose, supra note 22; Edwin Wilhite Patterson, The Insurance Commissioner in the United States: A Study in Administrative Law and Practice (Cambridge, Mass.: Harvard University Press, 1927).Google Scholar

29. The authors tried to implement some of the modern concepts in the recent revision of the Wisconsin Insurance Code. See Wis. Stat. Ann. secs. 623.11 and 623.12 (West Special Pamphlet 1976) and explanatory comments thereto, 1971 Laws of Wis. 931-43, 956-59. See also Spencer L. Kimball, All Lines Authority: Implications for Solidity, 11 Forum 433 (1976) [hereinafter cited as Solidity]. Our involvement in the Wisconsin revision project is described infra note 95.Google Scholar

30. See, e.g., Allen L. Mayerson, Ensuring the Solvency of Property and Liability Insurance Companies, in Spencer L. Kimball & Herbert S. Denenberg, eds., Insurance, Government, and Social Policy: Studies in Insurance Regulation 146 (Homewood, Ill.: Richard D. Irwin, 1969).Google Scholar

31. So far, we know only of one case where a new insurance company was planned specifically to write legal expense insurance exclusively. Because of the inadequacies of the Oklahoma insurance code, it was organized in the form of an automobile club. For details, see notes 120, 121 infra. Specialized companies are common in Europe; see Pfennigstorf, European Experience, supra note 5.Google Scholar

32. See, e.g., Mayerson, supra note 30.Google Scholar

33. See supra note 28.Google Scholar

34. Examples can be found in almost any state insurance code in the form of special “enabling acts” for nonprofit hospital and medical services plans, dental service plans, vision service plans, and similar organizations. For a survey, see Pfennigstorf & Witt, supra note 10.Google Scholar

35. See, e.g., Or. Rev. Stat. secs. 750.300-.340 (1975), created by 1973 Or. Laws, ch. 97 (“legal service contractors”); Cal. Corp. Code sec. 9201.2 (West Cum. Supp. 1976), created by 1972 Cal. Stats., ch. 894; Tex. Stat. Ann. art. 320b (Vernon Supp. 1976-77) (“Prepaid Legal Services Act,” 1973 Tex. Gen. Laws, ch. 582).Google Scholar

36. We have experienced this problem repeatedly in our law-revision efforts in Wisconsin. See infra note 95.Google Scholar

37. Although Congress, in passing the McCarran Act in 1945, has expressed its conviction that continued regulation of the insurance business by the states is in the public interest, this decision is subject to reconsideration and reversal if the Congress is not satisfied with the performance of the states. For a more detailed discussion of this issue, see Spencer L. Kimball, The Case for State Regulation of Insurance, in Kimball & Denenberg, supra note 30, at 411.Google Scholar

38. For examples, see Spencer L. Kimball, Insurance and Public Policy: A Study in the Legal Implementation of Social and Economic Public Policy, Based on Wisconsin Records 1835-1959, at 9-13 (Madison: University of Wisconsin Press, 1960).Google Scholar

39. As an example of a modern law designed specifically for the situation of cooperative (mutual) legal service plans, see Ga. Code Ann. secs. 56-3501 to 56-3522 (Supp. 1976). The groups are not formally designated as mutuals, however, but are defined as “sponsors,” sec. 56-3505(a).Google Scholar

40. See, e.g., Schuur v. Detroit Auto. Club (Cir. Ct. Wayne County, Mich. 1932), in George E. Brand, ed., Unauthorized Practice Decisions 698 (Detroit Bar Assoc. 1937).Google Scholar

41. See also pp. 367-68 supra and note 21.Google Scholar

42. See also Pfennigstorf & Kimball, Typology, supra note 8, at 471.Google Scholar

43. Prepaid Legal Expenses Insurance Model Act, supra note 25, sec. 2(4)(b)(i).Google Scholar

44. Cal. Ins. Code sec. 119.6(a) (West Cum. Supp. 1976).Google Scholar

45. The California Insurance Department, however, seems to have misunderstood this distinction. Danny R. Jones of our Advisory Committee has called our attention to an incident in 1975 in which a California law firm offered to take care of its clients' legal problems in the event of bankruptcy. The insurance department refused to take action against the law firm, explaining that in its opinion the arrangement fell under the retainer exemption of Cal. Ins. Code sec. 119.6(a) (Deering 1976).Google Scholar

46. See text infra at pp. 392-400, dealing with support by providers.Google Scholar

47. On the broader issue, see Feinstein v. Attorney-Gen., 36 N.Y.2d 199, 326 N.E.2d 288, 366 N.Y.S.2d 613 (1975).Google Scholar

48. See text infra at pp. 424-26, dealing with overserving by lawyers.Google Scholar

49. Two rules come to mind. The first is the general prohibition of letting business interests interfere with professional judgment, expressed in DR 5-101(A) of the ABA Code of Professional Responsibility (1975)Google Scholar

Except with the consent of his client after full disclosure, a lawyer shall not accept employment if the exercise of his professional judgment on behalf of his client will be or reasonably may be affected by his own financial, business, property, or personal interests.Google Scholar

The second rule is DR 2-103(D)(4)(a) (1975), which defines one of the conditions under which a lawyer may cooperate with an organization that recommends, furnishes, or pays for legal services to its members or beneficiaries:Google Scholar

Such organization, including any affiliate, is so organized and operated that no profit is derived by it from the rendition of legal services by lawyers, and that, if the organization is organized for profit, the legal services are not rendered by lawyers employed, directed, supervised or selected by it except in connection with matters where such organization bears ultimate liability of its member or beneficiary.Google Scholar

In both instances the crucial point is that, by entering into arrangements involving substantial risk carrying on his part, he assumes the role of a profit-making entrepreneur in addition to and separate from his traditional role as a provider of professional services. Application of the rules depends on whether the division is properly recognized.Google Scholar

50. In addition, the difficulties that have persuaded several bar associations not to become risk carriers themselves, as explained infra in text at note 55, apply a fortiori to individual lawyers or law firms.Google Scholar

51. For details and references, see Pfennigstorf & Witt, supra note 10.Google Scholar

52. Even in the present version, there is a striking contrast between the positive tenor of the canon and the mostly restrictive and negative nature of the disciplinary rules following it. See generally on the problems of marketing legal services: Kimball, Marketing, supra note 13; Barlow F. Christensen, Regulating Group Legal Services: Who Is Being Protected–Against What–and Why? 11 Ariz. L. Rev. 229 (1969); Monroe H. Freedman, Advertising and Solicitation by Lawyers: A Proposed Redraft of Canon 2 of the Code of Professional Responsibility, 4 Hofstra L. Rev. 183 (1976); Comment, Advertising, Solicitation, and Prepaid Legal Services, 40 Tenn. L. Rev. 439 (1973); Note, Advertising, Solicitation and the Profession's Duty to Make Legal Counsel Available, 81 Yale L.J. 1181 (1972).Google Scholar

53. See note 7 supra.Google Scholar

54. See especially Junius L. Allison, Problems of Professional Responsibility Arising from the Development of Pre-Paid Legal Services, 4 U. Tot. L. Rev. 413 (1973).Google Scholar

55. See for a general discussion and for descriptions of particular organizations, Pfennigstorf & Kimball, Typology, supra note 8, at 489-99.Google Scholar

56. Dental care plans have been even more influential on the development of legal service plans than hospital and physicians' service plans. Indeed, dental care plans and legal service plans have much in common, including the uneasy coexistence of the insurance principle on the one side and the general objective of education for increased utilization on the other side. See, e.g., John H. Simons, Prepaid Dentistry: A Case Study, Research Series of the Center for Labor Research and Education (Berkeley: University of California, Institute of Industrial Relations, n.d.); William T. Brown, The History, Growth and Future of Dental Insurance, Best's Rev., Life/Health Ins. Ed., Oct. 1975, at 16. The California Lawyers' Service was patterned after the model of the California Dental Plan.Google Scholar

57. There are, however, indications that plan administrators are beginning to realize that regulation is not all bad but may actually be a benefit for marketing purposes. The administrator of Prepaid Legal Services of Kansas, Inc. (a nonprofit organization sponsored by the Kansas Bar Association and enjoying freedom from regulation on the basis of an attorney general's opinion) recently reported that some potential subscriber groups, when approached by marketing representatives, had expressed concern about the unregulated status of the plan. Statement of Jill Bremyer at ABA Regional Workshop on Implementation of Bar-sponsored Plans of Prepaid Legal Services, Kansas City, Mo., April 24, 1976.Google Scholar

58. See, e.g., Offical Opinion 75-29 of the Idaho Attorney General, Aug. 14, 1974, 1974 Ins. L.J. 613, 616.Google Scholar

59. Especially Jordan v. Group Health Ass'n, 107 F.2d 239 (D.C. Cir. 1939), and California Physicians' Serv. v. Garrison, 28 Cal. 2d 790, 172 P.2d 4 (1946). The Jordan case has been cited, e.g., in Opinion No. 74-25, Jan. 18, 1974, of the Kansas Attorney General.Google Scholar

60. For details, see Pfennigstorf & Witt, supra note 10.Google Scholar

61. The only states where Blue Cross and Blue Shield organizations are not accorded a special status are Indiana, where there is no enabling law; South Carolina, where hospital and medical service corporations are required to conform to the rules concerning mutual insurance companies. S.C. Code sec. 37-441 (Supp. 1975), enacted by No. 1098, 1968 S.C. Acts 2584; and Wyoming, where they are “deemed to be transacting the business of insurance and subject to regulation and taxation as an insurer,” Wyo. Stat. secs. 26.1-453.1 (1975 Cum. Supp.).Google Scholar

62. See generally Robert D. Eilers, Regulation of Blue Cross and Blue Shield Plans (Homewood, Ill.: Richard D. Irwin, 1963); [1976] 1 HMO L. Manual (Health Law Center).Google Scholar

63. See, e.g., California Physicians' Serv. v. Garrison, 28 Cal. 2d 790, 801, 172 P.2d 4, 13 (1946).Google Scholar

64. See Denenberg, supra note 28, at 333.Google Scholar

65. See, e.g., Opinion of the Idaho Attorney General, supra note 58.Google Scholar

66. See, e.g., lines 141-47 of the New York Standard Fire Policy, N.Y. Ins. Law sec. 168(6) (McKinney 1966):Google Scholar

It shall be optional with this Company to take all, or any part, of the property at the agreed or appraised value, and also to repair, rebuild or replace the property destroyed or damaged with other of like kind and quality within a reasonable time, on ving notice of its intention so to do within thirty days after the receipt of the proof of loss herein required.Google Scholar

67. See, e.g., Herbert S. Denenberg et al., Risk and Insurance 93 (Englewood Cliffs, N.J.: Prentice-Hall, 1964).Google Scholar

68. See, e.g., Stephen J. Quiner, Title Insurance and the Title Insurance Industry, 22 Drake L. Rev. 711 (1973).Google Scholar

69. See also Physicians' Defense Co. v. O'Brien, 100 Minn. 490, 111 N.W. 396 (1907); Physicians' Defense Co. v. Cooper, 199 F. 576 (9th Cir. 1912). Contra, State ex rel. Physicians' Defense Co. v. Laylin, 73 Ohio St. 90, 76 N.E. 567 (1905); Vredenburgh v. Physicians Defense Co., 126 Ill. App. 509 (1906).Google Scholar

70. See text infra at pp. 409-10.Google Scholar

71. See, e.g., Ralph N. Jackson, in Transcript of Proceedings, National Conference on Prepaid Legal Services, Washington, D.C., April 27-29, 1972, at 238-39 (Chicago: American Bar Association, 1972).Google Scholar

72. See, e.g., Note, The Role of Prepaid Group Practice in Relieving the Medical Care Crisis, 84 Harv. L. Rev. 887, 972-73 (1971).Google Scholar

73. We have discussed this issue in more detail in Typology, supra note 8, at 470-72. As long as “preventive law” benefits are not routinely and regularly dispensed to all group members, they involve an element of risk and risk spreading; if all members receive them regularly, the full cost of the services falls on each member, and it may be difficult to keep the plan economically viable and attractive.Google Scholar

74. See generally 17 Vand. L. Rev. 336 (1963). Outside the field of taxation, not much attention seems to have been devoted to developing clear distinctions. See Note, supra note 21, at 749-50. In our view, the customary definitions place undue and formalistic emphasis on distributions to members or officers.Google Scholar

75. See Gordon Sinykin & Shirley S. Abrahamson, Management Contracts in the Insurance Industry: A Wisconsin Study, 1969 Wis. L. Rev. 693. Many states have outlawed such contracts. See, e.g., Wis. Stat. Ann. sec. 611.67 (West Special Pamphlet, 1976). Tex. Ins. Code Ann. art. 23.25 (Vernon Supp. 1975-76) subjects them to restrictions for legal service corporations.Google Scholar

76. See for more details, Dennis R. Reinmuth, The Regulation of Reciprocal Insurance Exchanges (Homewood, Ill.: Richard D. Irwin, 1967).Google Scholar

77. The beneficial aspects of provider-sponsored professional service plans are often specifically mentioned in the enabling acts. See, e.g., Title 40 Pa. Cons. Stat. Ann. sec. 6303(a) (Purdon Supp. 1976-77):Google Scholar

It is hereby declared that adequate professional health services are essential for the maintenance of the physical and mental health of the residents of this Commonwealth, and that it is necessary that provision be made for adequate professional health services to persons of low income who are unable to provide such services for themselves or their dependents without depriving themselves or their dependents of such necessaries of life as food, clothing and shelter.Google Scholar

78. Membership Standards of National Association of Blue Shield Plans, section 2:section 2. Nonprofit Operation Google Scholar

A Plan shall operate on a not-for-profit basis. A Plan organized under laws other than nonprofit enabling acts shall include in its bylaws a specific provision for operation on a nonprofit basis. No director, officer or any other individual shall receive, directly or indirectly, any profits from the operations of a Plan. Compensation for services performed or reimbursement for expenses incurred shall not be considered profit.Google Scholar

Bylaws and Membership Standards 13 (Chicago: National Association of Blue Shield Plans, 1976).Google Scholar

79. See Pfennigstorf & Kimball, ERISA paper, supra note 10.Google Scholar

80. See Jordan v. Group Health Ass'n, 107 F.2d 239 (D.C. Cir. 1939); California Physicians' Serv. v. Garrison, 28 Cal. 2d 790, 172 P.2d 4 (1946). But see also People ex rel. Roddis v. California Mut. Ass'n, 68 Cal. 2d 677, 441 P.2d 97, 68 Cal. Rptr. 585 (1968), where the California Supreme Court concluded that a certain method of operation involving a considerable amount of payments to outside providers as well as reimbursements to subscribers was not meant to be exempted from the insurance laws. The opinion in the Roddis case contains an illuminating report of the history of regulation of nonprofit service plans in California, from which it appears that the legislature was very much concerned about the vacuum created by the Garrison case and sought to fill it. The need for regulation was never in doubt–only the methods and jurisdiction were debated. This resulted in a pattern under which hospital plans are regulated by the insurance commissioner under secs. 11491 et seq. of the Insurance Code, and until recently other (especially physicians') health service plans were subject to regulation by the respective professional organizations and the attorney general; a recent law shifted the jurisdiction for the latter plans to the Department of Corporations. Cal. Health & Safety Code secs. 1340-95 (West Cum. Supp. 1976), created by 1975 Cal. Stats., ch. 941, effective July 1, 1976.Google Scholar

81. Cal. Corp. Code sec. 9201.2 (West Cum. Supp. 1976) permits the formation of nonprofit organizations for the purpose of defraying the cost of professional services of attorneys, and it subjects the corporations to supervision by the State Bar of California and the attorney general. N.C. Gen. Stat. sec. 84-23.1 (Supp. 1975) subjects nonprofit legal service corporations to regulation by the Council of the North Carolina State Bar (which is designated as an agency of the state) and expressly exempts them from the insurance law.Google Scholar

82. See, e.g., Or. Rev. Stat. secs. 750.300-.340 (1975); Ga. Code Ann. secs. 56-3501 to 56-3522 (1975); Tex. Ins. Code Ann. arts. 23.01-.26 (Vernon Supp. 1975-76). These statutes are discussed in more detail infra.Google Scholar

83. Feinstein v. Attorney-Gen., 36 N.Y.2d 199, 326 N.E.2d 288, 366 N.Y.S.2d 613 (1975).Google Scholar

84. Id. at 36 N.Y.2d 199, 204-5, 326 N.E.2d 288, 293-94, 366 N.Y.S.2d 613, 616-18.Google Scholar

85. See DR 2-103(D)(4) (1975). For details, see Pfennigstorf & Kimball; ERISA paper, supra note 10, at 832-42; text infra at pp. 446-47, dealing with jurisdiction.Google Scholar

86. For instance, the supreme court of New Jersey recently amended the New Jersey Code of Professional Responsibility to require reports on forms prescribed by the court. DR 2-103(D)(4)(g) as amended September 13, 1976, 99 N.J.L.J. Sept. 30, 1976, at 1, col. 3. Proposed forms, one each for plans that are subject to federal regulation under ERISA and those that are not subject to ERISA, were published in 99 N.J.L.J. Oct. 7, 1976, at 1, col. 4; they contain an impressive list of items on which information must be submitted. These detailed reporting requirements are in stark contrast with the court's lack of enforcement powers over the organizations. See also text infra at pp. 446-47.Google Scholar

87. This issue is discussed in more detail in the context of a general evaluation of alternative regulatory jurisdictions, text infra at pp. 446-47.Google Scholar

88. See generally for the theory and practice of mutual insurance companies, J. A. C. Hetherington, Fact v. Fiction: Who Owns Mutual Insurance Companies, 1969 Wis. L. Rev. 1068.Google Scholar

89. We refer to Blue Cross and Blue Shield plans in their classical form, as described by Eilers, supra note 62. Most recently, Blue Cross has been pushed, by its own weight as a major supplier (or rather financer) of health services and by public pressure for stricter control of rapidly rising health care costs, into a hybrid status that may eventually change it into a quasi-public institution. See Pfennigstorf & Witt, supra note 10.Google Scholar

90. This fact probably accounts for the low financial requirements in some of the enabling acts for health service plans, which are discussed in detail in Pfennigstorf & Witt, supra note 10; but it has not been expressly recognized except in the recently enacted Wisconsin service insurance corporations law. Wis. Stat. Ann. sec. 613.19(5) (West Special Pamphlet 1976), created by 1975 Wis. Laws, ch. 223, sec. 22, provides:Google Scholar

The commissioner may reduce the minimum amounts of surplus required under subs. (1) and (2) if the commissioner finds, after a hearing under s. 601.62, that the extent and nature of providers' contracts under sub. (3), financial guarantees and other support by financially sound private or public corporations, a pressing social need in a particular community for the formation of a service insurance corporation, or other special circumstances, justify the proposed reduction in the required surplus.Google Scholar

91. See Mayerson, supra note 30.Google Scholar

92. For examples from the health service field, see infra notes 109-11.Google Scholar

93. See Eilers, supra note 62, at 99-109.Google Scholar

94. For instance, there are now nonprofit plans for dental care, vision care, pharmaceutical supplies (prescriptions), ambulance services, blood supplies, veterinary services, and others. For details and citations, see Pfennigstorf & Witt, supra note 10.Google Scholar

95. Pursuant to a law passed in 1965 by the Wisconsin legislature (1965 Wis. Laws ch. 406, creating Wis. Stat. Ann. sec. 13.84 (West 1972)), a special committee of the Legislative Council engaged in a comprehensive, decade-long revision of the Wisconsin insurance laws. Spencer L. Kimball has been the staff director, and Werner Pfennigstorf was a research associate and staff attorney from January 1967 to March 1970. For a description of the methods and procedures used in the revision, see Spencer L. Kimball & Herbert S. Denenberg, Modern Insurance Code Revision: Reflections on the Art of Legislative Reform, in Kimball & Denenberg, supra note 30, at 41. The main portions of the project were enacted between 1969 and 1976, including the chapter on nonprofit service corporations. Minor portions remain to be completed in the 1977 session of the Wisconsin legislature.Google Scholar

96. 1975 Wis. Laws, ch. 223, creating Wis. Stat. Ann., ch. 613 (West Special Pamphlet 1976) concerning “service insurance corporations.” See also note 89 supra. Extensive drafting notes appear in the session laws and also in West's Annotated Statutes.Google Scholar

97. See, e.g., W. Va. Code sec. 33-25-8(e) (1975). Minn. Stat. Ann. sec. 62C.09 subd.3 (West Cum. Supp. 1977) requires a “surplus” of 25 percent of claims and administration expenses of the preceding year. Many states prescribe a specific dollar amount and set not only a minimum but also a maximum figure (e.g., 55 percent of total annual expenses). For more details, see Pfennigstorf & Witt, supra note 10.Google Scholar

98. Conn. Gen. Stat. Ann. secs. 33-157(c), 33-168(c) (West Cum. Supp. 1976) specifically require a “reserve for contingencies” for Blue Cross and Blue Shield in the same amount as that required for accident and health insurance companies. And see infra note 103.Google Scholar

99. Even in the medical service field, where reliance on third-party financing (principally through Blue Cross and Blue Shield plans) is much greater than even the most optimistic observers expect for legal services in the foreseeable future, and where participation of doctors and hospitals in provider-sponsored plans is close to 100 percent, there have recently been indications that those plans cannot indefinitely resist (in response to pressure by regulatory agencies and consumer organizations) their providers' demands for what they consider adequate compensation without alienating them and risking withdrawal. Threats by hospitals and doctors to stop cooperating with Blue Cross and Blue Shield are becoming a frequent factor in hearings and disputes over rate increases. See, e.g., Commonwealth v. Mercy Hosp., 364 Mass. 515, 306 N.E.2d 435 (1974), and for more details, Pfennigstorf & Witt, supra note 10.Google Scholar

100. See note 99 supra.Google Scholar

101. See, e.g., Tex. Ins. Code Ann. art. 23.03 (Vernon Supp. 1975-76):Google Scholar

Each corporation complying with the requirements of this chapter before issuing any contract for prepaid legal services shall have and so long as it issues such contracts maintain such number of contracting attorneys as is sufficient in the determination of the State Board of Insurance to service the participant contracts contemplated by the corporation's plan of operation.Google Scholar

See also Pfennigstorf & Kimball, Typology, supra note 8, at 465-66.Google Scholar

102. Such a requirement makes it even more difficult to persuade lawyers to accept the expense, risk, and responsibility of being a participating attorney, as explained in the preceding paragraph.Google Scholar

103. As a parallel provision for health service plans, see, e.g., Cal. Health & Safety Code sec. 1377 (West Cum. Supp. 1976), which requires cash reserves for the anticipated expenses of four months if the volume of reimbursements to subscribers and payments to unaffiliated providers exceeds 10 percent of total expenses.Google Scholar

104. See the Wisconsin statute quoted in note 90 supra. For health service plans, Cal. Health & Safety Code sec. 1372 (West Cum. Supp. 1976) contains the following list of relevant factors:Google Scholar

Every plan shall demonstrate to the commissioner that it is financially responsible for and may reasonably be expected to meet its contractual obligations. In determining whether the conditions of this section have been met, the commissioner shall consider, but not be limited to, the following:Google Scholar

(1) The financial soundness of the plan's arrangements for health care services and a schedule of rates and charges adopted by the plan.Google Scholar

(2) The adequacy of working capital.Google Scholar

(3) Agreements with providers and subsequent providers for the provision of health care services.Google Scholar

105. A list of the factors to be considered in evaluating the financial needs of insurance carriers of all kinds is contained in the new Wisconsin insurance code, Wis. Stat. Ann. sec. 623.11(1) (West Special Pamphlet 1976):Google Scholar

1. (1)

   (1) Determination of amount. The commissioner shall, when necessary, determine the amount of compulsory surplus that an insurer is required to have in order not to be financially hazardous under s. 645.41(4), as an amount that will provide reasonable security against contingencies affecting the insurer's financial position that are not fully covered by reserves or by reinsurance.Google Scholar

   1. (a)

      (a) Types of contingencies. The commissioner shall consider the risks of:Google Scholar

      1. 1.

         1. Increases in the frequency or severity of losses beyond the levels contemplated by the rates charged;Google Scholar

      2. 2.

         2. Increases in expenses beyond those contemplated by the rates charged;Google Scholar

      3. 3.

         3. Decreases in the value of or the return on invested assets below those planned on;Google Scholar

      4. 4.

         4. Changes in economic conditions that would make liquidity more important than contemplated and would force untimely sale of assets or prevent timely investments;Google Scholar

      5. 5.

         5. Currency devaluation to which the insurer may be subject; andGoogle Scholar

      6. 6.

         6. Any other contingencies the commissioner can identify which may affect the insurer's operations.Google Scholar

   2. (b)

      (b) Controlling factors. In his determination, the commissioner shall take into account the following factors:Google Scholar

      1. 1.

         1. The most reliable information available as to the magnitude of the various risks under par. (a);Google Scholar

      2. 2.

         2. The extent to which the risks in par. (a) are independent of each other or are related, and whether any dependency is direct or inverse;Google Scholar

      3. 3.

         3. The insurer's recent history of profits or losses;Google Scholar

      4. 4.

         4. The extent to which the insurer has provided protection against the contingencies in other ways than the establishment of surplus, including redundancy of premiums; adjustability of contracts under their terms; investment valuation reserves whether voluntary or mandatory; appropriate reinsurance; the use of conservative actuarial assumptions to provide a margin of security; reserve adjustments after rate increases for policies written at earlier and less adequate rates; contingency or catastrophe reserves; diversification of assets and underwriting risks;Google Scholar

      5. 5.

         5. Independent judgments of the soundness of the insurer's operations, as evidenced by the ratings of reliable professional financial reporting services; andGoogle Scholar

      6. 6.

         6. Any other relevant factors.Google Scholar

For an overview, see Kimball, Solidity, supra note 29.Google Scholar

106. Formal control is sometimes shifted to consumer or public representatives in order to avoid antitrust or tax complications, with no real or immediate change in the philosophy of the organization. See Pfennigstorf & Kimball, Typology, supra note 8, at 490.Google Scholar

107. See Pfennigstorf & Kimball, Typology, supra note 8, at 494.Google Scholar

108. Attorneys enter into participating-attorney agreements directly with the Minnesota Education Association, under which they agree, among other things, to cooperate with the plan and to look for payment of their fees only to the association. The agreement does not provide for pro rata fee reductions in the event of insufficient funds and thus leaves the risk entirely with the association. Overall, therefore, the arrangement is more like that of a mutual insurance company than of a providers' organization.Google Scholar

109. One of the Blue Shield organizations operating in Ohio is organized as a stock company.Google Scholar

110. S.C. Code sec. 37-441 (Supp. 1975), enacted by No. 1098, 1968 S.C. Acts 2584, requires all hospital and medical service corporations to conform to the rules concerning mutual insurance companies and to be licensed and regulated accordingly.Google Scholar

111. This has been the case for the Wisconsin Physicians' Service, which has been operated as a division of the State Medical Society of Wisconsin.Google Scholar

112. This statement is based on an interview by Werner Pfennigstorf with H. Thomas Ellerby, secretary and associate general counsel of the Automobile Club of Southern California, on October 23, 1975.Google Scholar

113. For details of the history and present state of the regulation of automobile clubs, see Pfennigstorf, Automobile Clubs, supra note 10. The $200,000 deposit is required by a New Mexico law enacted in 1973. N.M. Stat. Ann. sec. 64-394(5) (Supp. 1975).Google Scholar

114. Allin v. Motorists' Alliance of America, 234 Ky. 714, 29 S.W.2d 19 (1930); State v. Bean, 193 Minn. 113, 258 N.W. 18 (1934); Continental Auto Club v. Navarre, 337 Mich. 434, 60 N.W.2d 180 (1953); Texas Ass'n of Qualified Drivers v. Texas, 361 S.W.2d 180 (Tex. App. 1962); Arkansas Motor Club v. Arkansas Employment Security Div. 237 Ark. 419, 373 S.W.2d 404 (1963).Google Scholar

115. See, e.g., Richard R. Mathison, Three Cars in Every Garage: A Motorist's History of the Automobile and the Automobile Club in Southern California (Garden City, N.Y.: Doubleday & Co., 1968).Google Scholar

116. For example, the Detroit Automobile Interinsurance Exchange, an affiliate of the Automobile Club of Michigan, had 24.3 percent of the total automobile liability insurance premium in Michigan in 1975. It is the largest auto insurer in that state. Automobile Insurance–1975, Best's Rev., Prop./Casualty Ins. Ed., Aug. 1976, at 10, 12.Google Scholar

117. Interview with H. Thomas Ellerby, supra note 112.Google Scholar

118. The formation of the AAIB Motor Club in 1976 as a subsidiary of American Automobile Insurance Brokers, Inc., in Chicago was explained as follows:Google Scholar

With the upsurge of motor clubs in this country, the independent insurance agent is losing a growing and profitable market to department stores and oil companies. As this trend continues, motor clubs will begin to solicit casualty, life and A & H insurance business, and this could result in a serious income loss for independent agents. AAIB Motor Club intends to reduce that threat.Google Scholar

Sherwin Ernst, president of American Automobile Insurance Brokers, as quoted in Nat'l Underwriter, Prop./Casualty Ins. Ed., Jan. 23, 1976, at 31, col. 2.Google Scholar

119. The standard definitions of auto clubs are loose, inclusive definitions. See, e.g., Okla. Stat. Ann. tit. 36 (Insurance Code) sec. 3101(15) (West 1976), created by 1973 Okla. Sess. Laws, ch. 127, sec. 1.Google Scholar

“Motor club service” means the rendering, furnishing or procuring of, or reimbursement for, towing service, emergency road service, insurance service, bail bond service, legal service, discount service, financial service, buying and selling service, theft service, map service, touring service, or any three or more thereof, to any person, in connection with the ownership, operation, use or maintenance of a motor vehicle by such person for consideration. [Emphasis added]Google Scholar

This definition, with a bit of interpretative effort, supports the notion that three of the specific services are needed. But the definition can be satisfied by an organization that offers nothing but bail bond service, legal service, and theft service (i.e., offering a reward in the event the member's car is stolen).Google Scholar

120. See Enter Pre-paid Legal Insurance, Pulse Okla. Bus., Sept. 1975, at 32. Oklahoma insurance law would permit the insurance commissioner to issue a license for legal expense coverage as “miscellaneous insurance” but it does not permit group contracts. See Okla. Stat. Ann. tit. 36 (Insurance Code) secs. 707(11) and 6001-6003 (West 1976).Google Scholar

121. The company, Professional Motor Service Club, Inc., of Ada, Oklahoma, claims to have about 25,000 subscribers, consisting mostly of schoolteachers, employees of small and mediumsized businesses, and members of Indian tribes. This figure places it among the most successful organizations providing legal service coverages. Its coverages and manner of operation resemble closely those of European legal expense insurers. See Pfennigstorf, European Experience, supra note 5.Google Scholar

122. Pfennigstorf & Kimball, Typology, supra note 8, at 473-83.Google Scholar

123. Pfennigstorf & Kimball, ERISA paper, supra note 10.Google Scholar

124. ERISA sec. 3(1). The definition specifically mentions “prepaid legal services” as a proper subject of an employee welfare plan.Google Scholar

125. ERISA sec. 514(b)(2)(A).Google Scholar

126. ERISA sec. 514(a)(b)(2)(B).Google Scholar

127. For details, see Pfennigstorf & Kimball, ERISA paper, supra note 10, at 792-98.Google Scholar

128. See, e.g., Ga. Code Ann. sec. 56-3503b (Supp. 1976); Hawaii, S. 1775-76 (1976).Google Scholar

129. See supra note 25.Google Scholar

130. For details, see Pfennigstorf & Kimball, ERISA paper, supra note 10, at 795-96.Google Scholar

131. See also Opinion of the New York Attorney General, Jan. 31, 1975, 1975 Ins. L.J. 158, 161, and Opinion of the Pennsylvania Attorney General, June 30, 1975, 1975 Ins. L.J. 480.Google Scholar

132. ERISA sec. 3(5).Google Scholar

133. Cases involving organizations of this kind have recently arisen in Arkansas and Illinois. Paul R. Merrion, Benefit Trust Put out of Action for Self-insuring Pooled Group Plans, Bus. Ins., Nov. 3, 1975, at 1; Arkansas Gets Interim Order Halting Sale of Prepaid Legal Insurance Plan, Nat'l Underwriter, Prop. & Casualty Ins. Ed., Nov. 14, 1975, at 23. The result does not depend on whether the respective state actually exercises its regulatory powers; however, unregulated carriers are subject to special treatment under ERISA. See Pfennigstorf & Kimball, ERISA paper, supra note 10, at 813-16.Google Scholar

134. See, e.g., Pfennigstorf & Kimball, ERISA paper, supra note 10, at 789 n.10; Paperwork Requirements of the Pension Reform Act of 1974: Joint Hearings Before the Subcomm. on Private Pension Plans and the Subcomm. on Financial Markets of the Comm. on Finance and the Select Comm. on Small Business, U.S. Senate, 94th Cong., 2d Sess. (1976).Google Scholar

135. See especially Stanley C. DuRose (then commissioner of insurance of Wisconsin) in statements made on behalf of the National Association of Insurance Commissioners and the state of Wisconsin, cited in Pfennigstorf & Kimball, ERISA paper, supra note 10, at 842-43.Google Scholar

136. 29 C.F.R. sec. 2520.104-20 (1976).Google Scholar

137. See, e.g., Senators Williams and Javits in 120 Cong. Rec. S15758 (daily ed., Aug. 22, 1974).Google Scholar

138. Pfennigstorf & Kimball, Typology, supra note 8, at 485-86.Google Scholar

139. Pfennigstorf & Gallagher, supra note 10.Google Scholar

140. For details, see Pfennigstorf & Kimball, Typology, supra note 8, at 484.Google Scholar

141. That would entail appropriate requirements to ensure the availability of the necessary financial resources; see text at notes 99-102.Google Scholar

142. See text infra at pp. 411-21, dealing with the control of quality. The ABA Code of Professional Responsibility, DR 2-103(D)(4)(e) (1975), requires “appropriate relief” in such cases without specifying whether the plan must assume all or part of the cost of the outside attorney.Google Scholar

143. See Pfennigstorf & Kimball, Typology, supra note 8, at 465-69.Google Scholar

144. See text infra at pp. 413-18 for details.Google Scholar

145. See Pfennigstorf, European Experience, supra note 5, at 84-85. More recently, representatives of the European legal profession have issued statements in support of strict separation. See Resolution passed in Dublin on November 21, 1975, by the Consultative Commission of the Bar Associations of the European Community (International Union of Lawyers), which states, among other things:Google Scholar

… the only acceptable solution from the legal as well as from the economic and professional ethics points of view is the absolute separation of legal expenses insurance (protection juridique, défense et recours, contre-assurance spéciale) from the other types of insurance, especially [liability insurance].Google Scholar

L'Assurance Défense en Europe/Rechtsschutz in Europa, July 1976, at 35 (French text). The passage quoted here is taken from the English text on p. 37 of the issue, with a minor change to make it a more precise translation of the French original. See also Jean-Régnier Thys, The Way to a European Solution in the Field of Legal Expenses Insurance, id. at 15; Simon Mosley, Legal Costs Insurance–Small Beginnings with Important Possibilities, 72 L. Soc'y's Gazette 924 (1975).Google Scholar

146. There are European precedents for this approach. The German Supervising Office has since 1960 permitted multiline companies to form legal expense subsidiaries on condition that they have their own separate executive board and completely separate facilities for processing claims. See Pfennigstorf, European Experience, supra note 5, at 86. So far, there have been no abuses serious enough for the office to reconsider its position.Google Scholar

147. For more detailed discussion and further references, see Christensen, supra note 12, at 253-91; Rick J. Carlson, Measuring the Quality of Legal Services: An Idea Whose Time Has Not Come, in Lester Brickman & Richard Lempert, eds., The Role of Research in the Delivery of Legal Services: Working Papers and Conference Proceedings 143 (Washington, D.C.: Resource Center for Consumers of Legal Services, 1976); Douglas E. Rosenthal, Evaluating the Competence of Lawyers, id. at 109; Michael J. Saks & Alice R. Benedict, Evaluation and Quality Assurance of Legal Services: Concepts and Research, id. at 181.Google Scholar

148. See text infra pp. 422-33.Google Scholar

149. Objections against closed-panel legal service plans have been raised on several other grounds than conflicts of interest. See, e.g., Allison, supra note 54: Christensen, supra note 12, at 253-91. Conflicts of interest are the only ones that directly affect the quality of the legal services. A great deal of concern has also been voiced about closed-panel legal service plans in connection with advertising and solicitation, which is the context in which they are treated in the ABA Code of Professional Responsibility. Advertising and solicitation abuses can also have an adverse effect on the quality of legal services, but only indirectly. We treat them separately, in pp. 435-37 infra.Google Scholar

150. In stating, as a fact, the identity of interests of the group and its members, the court may have idealized the nature of membership organizations. The history of the labor movement provides an abundance of examples of unions whose interests did not coincide with those of its members. We suggest that the conflict-of-interest question is one that must be decided separately for each individual group. See also note 21 supra.Google Scholar

151. See especially UMW, District 12 v. Illinois State Bar Ass'n, 389 U.S. 217, 222-25 (1967).Google Scholar

152. The interests of a liability insurer and its insured do not coincide beyond the limits of coverage; as soon as the third party's claim exceeds the coverage limits or there is a question whether the insured is covered at all, there is a conflict that makes it difficult and dangerous for a lawyer to represent both the insurer and the insured. For details, see Allen E. Smith, The Miscegenetic Union of Liability Insurance and Tort Process in the Personal Injury Claims System, 54 Cornell L. Rev. 645 (1969); Frank S. Hills & Richard J. Pivnicka, Development and Direction of the California Bad Faith Insurance Doctrine or “O Ye of Little Faith,” 1974 Ins. L.J. 22; Note, Legal Ethics–If an Insurance Company Uses an Attorney Employed to Defend the Insured as an Investigator to Prepare a Policy Coverage Defense, It is Estopped from Asserting the Defense: Employers Casualty v. Tilley, 496 S.W.2d 552 (Tex. 1973), 52 Tex. L. Rev. 610 (1974). Special sets of rules have been drawn up to define the attorney's obligations in such potential conflict situations; see, e.g., Guiding Principles of the American Bar Association National Conference of Lawyers and Liability Insurers, 20 Fed. Ins. Counsel Q. 93 (Summer 1970).Google Scholar

153. See Pfennigstorf, European Experience, supra note 5, at 4243, 69-71, 84-88.Google Scholar

154. DR 2-103(D)(4)(a) (1975).Google Scholar

155. Minn. Stat. Ann. sec. 60A.08, subd. 10 (West Supp. 1977):Google Scholar

Legal expense insurance. No contract of insurance written pursuant to the authority to transact the kind of business enumerated in section 60A.06, subdivision 1, clause (15) shall deny the insured the free choice of attorneys at law authorized to practice in the jurisdiction in which the service is rendered, nor shall there be any interference with the attorney-client relationship.Google Scholar

156. This is the meaning and purpose of DR 5-107(A) and (B) of the ABA Code of Professional Responsibility (1975)Google Scholar

(A) Except with the consent of his client after full disclosure, a lawyer shall not:Google Scholar

(1) Accept compensation for his legal services from one other than his client.Google Scholar

(2) Accept from one other than his client any thing of value related to his representation of or his employment by his client.Google Scholar

(B) A lawyer shall not permit a person who recommends, employs, or pays him to render legal services for another to direct or regulate his professional judgment in rendering such legal services.Google Scholar

157. See supra note 152, and ABA Code of Professional Responsibility DR 5-105(B) and (C) and EC 5-17 (1975).Google Scholar

158. See generally F. B. MacKinnon, Contingent Fees for Legal Services: A Study of Professional Economics and Responsibilities (Chicago: Aldine Publishing Co., 1964), and the critical observations in Jeffrey O'Connell, The Injury Industry and the Remedy of No-Fault Insurance 37-53 (Urbana: University of Illinois Press, 1971). The potential for conflicts has been recognized in the ABA Code of Professional Responsibility, which states, in DR 5-103(A) (1975), that “a lawyer shall not acquire a proprietary interest in the cause of action or subject matter” and permits contingent fees only under exceptional conditions, when the client would have no other means to obtain representation. See id., EC 2-20.Google Scholar

159. See also text infra at pp. 424-26.Google Scholar

160. See Pfennigstorf & Kimball, Typology, supra note 8, at 429. This is akin to the objectives of the military service plan. See Pfennigsstorf & Kimball, Typology, supra note 8, at 484.Google Scholar

161. DR 2-103(D)(4)(d) (1975).Google Scholar

162. This point was especially emphasized by the Supreme Court. See United Transp. Union v. State Bar of Mich., 401 U.S. 576, 585-86 (1971).Google Scholar

163. For a more detailed discussion, see Pfennigstorf & Kimball, Typology, supra note 8, at 466-67.Google Scholar

164. For details, see Pfennigstorf & Pfaff, supra note 10, and the description of the coverage in Physicians' Defense Co. v. Cooper, 199 F. 576 (9th Cir. 1912).Google Scholar

165. See Pfennigstorf, European Experience, supra note 5, at 16.Google Scholar

166. See Christensen, supra note 12, at 253-91; DR 5-107 of the ABA Code of Professional Responsibility (1975).Google Scholar

167. See text infra at pp. 422-33.Google Scholar

168. Inflated words like this are sometimes used by proponents of legal service plans.Google Scholar

169. This is the approach taken by the NAIC model act, supra note 25, at 912, which provides in sec. 14:Google Scholar

PROFESSIONAL ETHICS. The director shall report to the Attorney General for reference to the Supreme Court any information which the director considers to be of substance, of possible violations of the Code of Professional Responsibility.Google Scholar

See also Tex. Ins. Code Ann. art. 23.22 (Vernon Supp. 1975-76):Google Scholar

The State Board of Insurance shall refer any complaints received by it concerning the performance of any attorney connected with any corporation complying with this chapter to the Supreme Court of the State of Texas or to any person designated by the Supreme Court to receive attorney grievances from the public.Google Scholar

170. See Garrick F. Cole, Statute: An Act to Regulate Group Legal Service Plans, 11 Harv. J. Legis. 68, 119 (1973).Google Scholar

171. See Title Xl Part B (Professional Standards Review) of the Social Security Act, 42 U.S.C. secs. 1320c-1320c-19, created by the Social Security Amendments of 1972, Pub. L. No. 92-603, of October 30, 1972, 86 Stat. 1329. For Health Maintenance Organizations (HMOs), the establishment of quality assurance programs is required as a condition of eligibility for federal grants. Public Health Service Act sec. 1301(c)(8), 42 U.S.C. sec. 300e(c)(8) (Supp. II 1975), created by the Health Maintenance Organization Act of 1973, Pub. L. No. 93-222, of December 29, 1973, 87 Stat. 914. The subject of quality assurance for medical services is a highly controversial subject among the medical profession and health care administrators, and it is by no means certain that the PSROs will provide a universally acceptable solution. For a survey, see Richard H. Egdahl & Paul M. Gertman, eds., Quality Assurance in Health Care (Germantown, Md.: Aspen Systems Corp., 1976).Google Scholar

172. Very little has been done so far to put teeth into Canon 6 of the ABA Code of Professional Responsibility, which requires lawyers to represent clients competently. See F. Raymond Marks & Darlene Cathcart, Discipline Within the Legal Profession: Is it Self-Regulation? 1974 Ill. L.F. 193. See also the papers cited in note 152 supra.Google Scholar

173. See text infra at pp. 435-37.Google Scholar

174. See also Charles H. Baron & Garrick F. Cole, Real Freedom of Choice for the Consumer of Legal Services: Mr. Dooley and the Closed Panel Option, 58 Mass. L.Q 253 (1973); Garrick F. Cole, Freedom of Choice and Group Legal Services, 9 Suffolk U.L. Rev. 671 (1975).Google Scholar

175. See Pfennigstorf, European Experience, supra note 5, at 69-71. It has been reported that in Germany the percentage of insureds under legal protection insurance policies who request referrals has steadily declined. In the early 1950s, about 20 percent of the insureds selected their own attorneys, and the other 80 percent relied on the insurance company to select one for them; in 1975, however, about 90 percent of the insureds selected their own attorneys, and only 10 percent asked for a referral. Heinz Brangsch, Les avocats et les assureurs défense et recours dans la société contemporaine, L'Assurance Défense en Europe/Rechtsschutz in Europa, Sept. 1975, at 105. Some American closed-panel plans, such as the Legal Service Plan of the Laborers' District Council of Washington, D.C., and Vicinity, already are making efforts to respect their members' preference for specific lawyers within the panel.Google Scholar

176. See text supra at pp. 409-10.Google Scholar

177. DR 2-103(D)(4)(e) (1975).Google Scholar

178. For details, see Pfennigstorf & Kimball, ERISA paper, supra note 10, at 841. Presumably referral to another lawyer selected by the plan would be appropriate relief. The present version replaced an earlier version, adopted a year earlier (1974), under which plans were required to reimburse to participants who elected to employ outside council for any reason the amount that would have been incurred for providing the services through staff attorneys. DR 2-103(D)(5)(a)(v) (1974 version).Google Scholar

179. See especially Christensen, supra note 12.Google Scholar

180. See sec. 1301(a) and (b) of the Public Health Service Act as amended by the Health Maintenance Organizations Act of 1973 of Dec. 29, 1973, Pub. L. No. 93-222, 87 Stat. 914, which lists, in the form of a definition, the services that a HMO must provide. But the federal HMO act is essentially concerned with encouraging and subsidizing the development of HMOs rather than with supervising them. The minimum services constitute the conditions for federal support.Google Scholar

181. Requirements of this sort have become increasingly common in recent years. Coverage is mandated for the services of certain classes of health care specialists, such as chiropractors and podiatrists; for certain kinds of situations, such as pregnancy, childbirth, tuberculosis, alcoholism, drug abuse, or mental disorders; or for certain treatment methods, such as sanitarium care, psychiatric treatment, or kidney dialysis. For a recent example, see Wis. Stat. Ann. secs. 632.86-.90 (West Special Pamphlet 1976), created by 1975 Wis. Laws, ch. 223. Legislation of this kind is usually pushed by interested groups in the medical profession, and finds little or no opposition. It is indeed difficult to oppose–its benefits are obvious, and its costs are not immediately discernable. Sometimes there is an antiinsurer sentiment involved–as if the insurance companies had been unfairly holding back benefits that were due the consumers and had to be forced by the legislature to do their duty. In reality, of course, the benefits have their price, which must be paid by all consumers of health insurance, whether they need or want the coverage for themselves or not. According to Marvin C. Reiter of our Advisory Committee, insurance industry experts estimate that the mandated coverages have added 5 percent to the cost of health insurance, which is already plagued by inflation.Google Scholar

182. See, e.g., Mass. H.R. 2964 (Jan. 1975), proposed sec. 5(a)(1)(A) of ch. 176G:Google Scholar

Benefits package, including the provision of criminal defense services, which is reasonable in scope and extent and reasonably designed and expected to pay at least seventy-five percent of the total cost of legal service required during its period of operation by all of the plan's subscribers or members.Google Scholar

A similar requirement has been suggested by Cole, supra note 170, at 101.Google Scholar

183. Request made in negotiations with California Lawyers' Service, in 1975. The information was supplied by Philip J. Murphy, president of California Lawyers' Service.Google Scholar

184. But consider European proposals to establish a universal mandatory legal protection insurance system on social insurance principles. See Pfennigstorf, European Experience, supra note 5, at 21-22.Google Scholar

185. See Pfennigstorf & Kimball, Typology, supra note 8, at 425-26.Google Scholar

186. Id. at 442-43.Google Scholar

187. Labor Management Relations Act sec. 302(c), 29 U.S.C. sec. 186(c) (1970)Google Scholar

188. See Pfennigstorf & Kimball, Typology, supra note 8, at 476 n.137; according to information collected by the U.S. Department of Labor, only 3.6 percent of all employee welfare plans were jointly trusteed in 1973.Google Scholar

189. See text at note 75.Google Scholar

190. See Pfennigstorf & Kimball, Typology, supra note 8, at 456-57.Google Scholar

191. For more extensive discussions, see, e.g., Christensen, supra note 12, at 18-26; Barbara A. Curran & Francis O. Spalding, The Legal Needs of the Public (Chicago: American Bar Foundation, 1974).Google Scholar

192. See Pfennigstorf & Witt, supra note 10.Google Scholar

193. Id.Google Scholar

194. See also (for antitrust class actions) Benjamin S. DuVal, Jr., The Class Action as an Antitrust Enforcement Device: The Chicago Experience (II), 1976 A.B.F. Res. J. 1273, 1349.CrossRefGoogle Scholar

195. See note 171 supra.Google Scholar

196. The conflict is brought into sharp focus whenever the assets of an insurance company that falls into bankruptcy and has to be liquidated are insufficient to satisfy all creditors. State insurance codes have established elaborate lists of priorities for that purpose, and one view is that claims of policyholders to have unearned premiums returned should be subordinated to the claims of those who have had losses. See, e.g., Spencer L. Kimball & Herbert S. Denenberg, Delinquency Proceedings in Insurance: The Insurers Rehabilitation and Liquidation Act of Wisconsin, in Kimball & Denenberg, supra note 30, at 437, 445-46.Google Scholar

197. This is the practice of European legal expense insurers. See Pfennigstorf, European Experience, supra note 5, at 62-66.Google Scholar

198. Internal Revenue Code sec. 120, created by Tax Reform Act of 1976, Pub. L. No. 94-455 of Oct. 4, 1976, sec. 2134. The participants of union or employer plans for lower income workers are thus subsidized by the other taxpayers, for instance, self-employed individuals who have to pay individually for legal services or for a legal expense insurance policy.Google Scholar

199. Pfennigstorf, European Experience, supra note 5, at 66-69.Google Scholar

200. Id. at 67-68.Google Scholar

201. The European policy terms are designed for a system where attorneys' fees are to a large extent fixed by statute and are determined primarily according to the amount in issue rather than according to the amount of time spent. See Pfennigstorf, European Experience, supra note 5, at 35-38. The European merit-test approach should work as well in the United States, however. The principle is equally applicable; if necessary, different control devices could be developed here.Google Scholar

202. NAACP v. Button, 371 U.S. 415, 438-41 (1963). Reference is often made to the ancient offenses of barratry, champerty, and maintenance, which originated in medieval England in response to certain practices peculiar to the feudal system. They required a specific intent and had already lost much of their significance when the Supreme Court decided this case. See, e.g., Max Radin, Maintenance by Champerty, 24 Calif. L. Rev. 48 (1935); Champerty and Maintenance, 14 Am. Jur. 2d 841 (1964); Annot., 139 A.L.R. 620 (1942); Note and Comment, The South's Amended Barratry Laws: An Attempt to End Group Pressure Through the Courts, 72 Yale L.J. 1613 (1963).Google Scholar

203. See, e.g., ABA Code of Professional Responsibility DR 2-109 (1975).Google Scholar

204. See Pfennigstorf & Kimball, Typology, supra note 8, at 427, where we emphasized the deterrent effect of the protection enjoyed by legal service plan members. Even if we take this effect into account, however, and even if we consider that most of the services offered by present legal service plans do not involve court proceedings, we think it would be unrealistic not to assume that increased availability of legal assistance will lead to an appreciable overall increase in litigation. There is no indication in the existing surveys that the unsatisfied legal needs of the public are exclusively of a kind to be disposed of without litigation, nor is there any reason to assume that the often-deplored litigious attitude of Americans is limited to high-income levels and corporations. Given the means, the average citizen can be expected to seek to enforce or defend his perceived rights in court if other attempts fail, and the average lawyer will encourage him. We also think, on the basis of the European experience, that American legal service plans will in the foreseeable future have to expand the range and amounts of their coverages insofar as representation in court is concerned.Google Scholar

205. The issue was already addressed by Preble Stolz, Insurance for Legal Services: A Preliminary Study of Feasibility, 35 U. Chi. L. Rev. 417, 430-36 (1968), where he cites, at 432, “the general economic principle that expensive services should pay their own way.” We doubt that there is such a principle other than in the most general form that prices for all goods and services should ordinarily be established in the marketplace. If there is, it is surely subject to many qualifications, particularly where the quest for justice is involved, which defies measurement in economic terms.CrossRefGoogle Scholar

206. See ABA President Justin Stanley's recent suggestion that too many actions are brought and appealed without good reason and that therefore appeals should be limited in some way. Robert Enstad, How Many Civil Appeals Are justified? Chicago Tribune, May 28, 1976, sec. 2, at 4, col. 3.Google Scholar

207. For the useful concept of tax expenditures instead of tax revenues forgone when the deduction has no relation to the basic tax structure, see Stanley S. Surrey, Pathways to Tax Reform: The Concept of Tax Expenditures (Cambridge, Mass.: Harvard University Press, 1973).Google Scholar

208. See note 198 supra.Google Scholar

209. For a detailed discussion of the various ways in which insurance policies are controlled, see Spencer L. Kimball & Werner Pfennigstorf, Legislative and Judicial Control of the Terms of Insurance Contracts: A Comparative Study of American and European Practice, 39 Ind. L.J. 675 (1964); Spencer L. Kimball & Werner Pfennigstorf, Administrative Control of the Terms of Insurance Contracts: A Comparative Study, 40 Ind. L.J. 143 (1965).Google Scholar

210. See supra text at notes 20 and 21.Google Scholar

211. See supra note 64 and accompanying text.Google Scholar

212. See Pfennigstorf & Kimball, ERISA paper, supra note 10, at 848.Google Scholar

213. ERISA sec. 503.Google Scholar

214. ERISA sec. 502(a)(1)(B).Google Scholar

215. See generally Pfennigstorf & Kimball, ERISA paper, supra note 10, at 850-53.Google Scholar

216. See generally Jon S. Hanson, Robert E. Dineen, & Michael B. Johnson, Monitoring Competition: A Means of Regulating the Property and Liability Insurance Business (Milwaukee: National Association of Insurance Commissioners, 1974).Google Scholar

217. See text supra at pp. 413-18.Google Scholar

218. A lawyer shall not knowingly assist a person or organization that furnishes or pays for legal services to others to promote the use of his services or those of his partner or associate or any other lawyer affiliated with him or his firm except as permitted in DR 2-101(B). However ….Google Scholar

219. See supra note 7.Google Scholar

220. See Kimball, Marketing, supra note 13.Google Scholar

221. For recent surveys of actions taken to force professional organizations to adopt or support a more liberal attitude toward advertising, see, e.g., Bruce B. Wilson, Advertising by Lawyers Can Be Beneficial, N.Y.L.J., Dec. 29, 1975, at 1, col. 2; Charles H. Baron, Lawyer Advertising Gets Press, New Directions in Legal Services, April-May 1976, at 6. Generally, see supra note 52. In the summer of 1976, the Antitrust Division finally filed a suit against the ABA itself; see Justice Department Charges Code Advertising Provisions Violate Federal Antitrust Laws, 62 A.B.A.J. 979 (1976); H. Blair White, Advertising Lawsuits and F.T.C. Investigation Are Pending, 62 A.B.A.J. 1567 (1976); William B. Spann, Jr., The “Advertising Issue,” 81 Com. L.J. 381 (1976).Google Scholar

222. Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976), in which the Court declared unconstitutional state restrictions on price advertising for prescription drugs, as a violation of First Amendment rights of information. Although the Court cautioned against premature expansion of the decision to other transactions, pointing to the differences between pricing personal professional services and goods such as drugs, which come in identical quality and easily measurable quantities, it is certain to spur demands for further relaxation of advertising restrictions for lawyers.Google Scholar

223. DR 2-102(A)(5), (6) of the ABA Code of Professional Responsibility, as amended Feb. 17, 1976.Google Scholar

224. Discussion draft of Dec. 5, 1975, and Special Report … Recommending Amendments to and Continued Study of Canon 2 of the Code of Professional Responsibility, submitted to the House of Delegates, Feb. 1976. The recommendation submitted in February 1976 was more limited than the discussion draft, reflecting the committee's reduced expectations of obtaining approval. The weaker proposal was defeated and replaced by an even weaker substitute proposed by the Committee on Professional Discipline. See supra note 223. The Ethics Committee, however, is likely to continue seeking support for its original proposal, and we think it will ultimately succeed.Google Scholar

225. Proposed DR 2-101(A) and (B) of the discussion draft of Dec. 5, 1975, supra note 224. Similar changes have also been proposed by Freedman, supra note 52, at 198-203, and Note, supra note 52, at 1192-1201.Google Scholar

226. See Pfennigstorf & Kimball, ERISA paper, supra note 10, at 800-803, 832-42.Google Scholar

227. See text supra at pp. 413-18.Google Scholar

228. For a more detailed discussion of these and other antitrust issues, see Meeks, supra note 10.Google Scholar

229. For details, see George R. Currie & Warren H. Resh, The Separation of Powers: Control of Courts and Lawyers, Wis. Bar Bull., Dec. 1974, at 7; Note, The Inherent Power of the Judiciary to Regulate the Practice of Law-a Proposed Delineation, 60 Minn. L. Rev. 783 (1976).Google Scholar

230. Id.Google Scholar

231. Supra note 7.Google Scholar

232. Supra note 222.Google Scholar

233. One such area is antitrust. See Meeks, supra note 10. Another area is the regulation of employee legal service plans, where sec. 514 of ERISA has preempted the field. See Pfennigstorf & Kimball, ERISA paper, supra note 10, at 832-42.Google Scholar

234. See note 229 supra.Google Scholar

235. See McCarran Act of March 9, 1945, Pub. L. No. 15, 59 Stat. 33. For details, see Kimball, supra note 37.Google Scholar

236. See Pfennigstorf & Kimball, ERISA paper, supra note 10.Google Scholar

237. See the survey of applicable rules in the various states in New Directions in Legal Services, April-May 1976, at 15. Ohio and New Jersey require more extensive information that amounts to an annual report, discussed infra. See also supra note 86.Google Scholar

238. See John Danner et al., Group Legal Services in California: A Survey Analysis, at 3 (Project on Group and Prepaid Legal Services, University of California, Berkeley, School of Law, 1973) reprinted as Supplement to section on Surveys, Part III, Surveys of Operating Plans, following p. 26, in ABA Compilation of Reference Materials on Prepaid Legal Services (1975). The authors cite suggestions by “knowledgeable observers” to the effect that the number of unreported arrangements in California may equal or exceed the number of the plans officially registered.Google Scholar

239. In some states (e.g., Missouri), the information is not even available for inspection by the public, let alone published. In California, only names and addresses are made available to the public, and all other information is kept confidential. See Danner et al., supra note 238, at 3. What value confidential information has if no regulatory framework exists is not at once apparent. When a plan takes on substantial prepaid features, simple registration usually is not sufficient even if the information is publicly available.Google Scholar

240. ERISA secs. 103 and 104.Google Scholar

241. DR 2-130(D)(4)(g) (1975). The rule has been adopted in some but not in the majority of the states. See the survey in New Directions in Legal Services, April-May 1976, at 15, and note 75 supra.Google Scholar

242. ERISA sec. 104(a)(1). The secretary may, however, “reject” a report under certain conditions and may, if no new report is submitted within a specified time, cause an audit to be made or bring action in court. It is also true that the secretary may scrutinize the annual reports for indications of financial instability, violations of the law, and other abuses or dangers, and he may take enforcement action within the limits set by the law. Finally, summaries of the report must be sent to all plan participants, and the full report must be made available to participants on request.Google Scholar

243. Synopsis attached to the report of the Ad Hoc Study Group to Make Recommendations Regarding the 1974 Amendments to the Code of Professional Responsibility, section and Committee Reports to the House of Delegates, American Bar Association, 1975 Midyear Meeting, Chicago, III., Feb. 24-25, 1975, at 110.Google Scholar

244. 29 C.F.R. sec. 2520.104-20 (1976). See also Pfennigstorf & Kimball, ERISA paper, supra note 10, at 806 and 843.Google Scholar

245. See Financial Condition Surveillance Handbook for Insurance Department Examiners, Draft Pilot Project Edition, January 1, 1975, in 1975 (vol. 1) NAIC Proceedings 357.Google Scholar

246. See Illinois Insurance Department Rule 9.27.Google Scholar

247. See Employee Welfare Funds Division, Office of the Commissioner of Insurance, State of Wisconsin, Analysis of Problems and Discrepancies Discovered Through Examinations or Other Division Activities, 1972 (vol. 2) NAIC Proceedings 396.Google Scholar

248. ERISA sec. 504(a).Google Scholar

249. Cal. Corp. Code sec. 9201.2 (West Cum. Supp. 1976) & sec. 9505 (West 1955).Google Scholar

250. Rudolph Janata, Prepaid Legal Services: The Ohio Experience, 41 Ins. Counsel J. 50 (1974), and Report of the Prepaid Legal Services Committee of the Ohio State Bar Association, 46 Ohio B. 523-24 (1973). The nature and effect of that statement give rise to some interesting peculations: If indeed the organization qualifies as an insurer under the insurance laws as interpreted by the commissioner, the supreme court's failure to act would hardly seem sufficient to absolve the commissioner from the duty to enforce the insurance law against it, that is, to require it to apply for a license or stop doing business. If, on the other hand, the organization is not subject to the insurance laws, it is hard to see whence the commissioner could derive the power to audit it. A simple request by the supreme court is no sufficient basis for administrative action against an organization not within a regulator's jurisdiction. Recently, new rules have been proposed that would create a special commission with powers to conduct investigations. See proposed Regulations for Group Legal Services Plans, sec. 201(2)(d), 49 Ohio B. 979, 983 (1976).Google Scholar

251. See, e.g., William C. Whitford & Spencer L. Kimball, Why Process Consumer Complaints? A Case Study of the Office of the Commissioner of Insurance of Wisconsin, 1974 Wis. L. Rev. 639.Google Scholar

252. It is particularly important whenever a commercial profit-motivated administrator has control or a considerable amount of discretion.Google Scholar

253. ERISA sec. 503.Google Scholar

254. Prepaid Legal Expense Insurance Model Act, supra note 25, sec. 2(3), (4).Google Scholar

255. See note 45 supra.Google Scholar

256. See Pfennigstorf & Kimball, ERISA paper, supra note 10, at 850-53.Google Scholar

257. Cal. Ins. Code sec. 119.6 9(West Cum. Supp. 1976), added by 1974 Cal. Stats. ch. 1161.Google Scholar

258. See the proposed rule for regulating legal service plans in Ohio, supra note 250.Google Scholar

259. See supra note 155.Google Scholar

260. DR 2-103(D)(4)(a) (1975).Google Scholar

261. Pfennigstorf & Kimball, ERISA paper, supra note 10, at 818-19, 838-39.Google Scholar

262. See supra note 7.Google Scholar

263. DR 2-103(D)(4)(a) (1975).Google Scholar

264. See supra note 169.Google Scholar