Lawyers' own ads could become ammunition under SB 37

California's new attorney-advertising law could expose lawyers to more than State Bar scrutiny and civil lawsuits. Their own marketing could also become ammunition for opposing counsel seeking to challenge their ethics and qualifications in court.

Attorneys and a Los Angeles County Superior Court judge discussed those risks during a legal ethics panel at the Consumer Attorneys Association of Los Angeles' annual convention in Las Vegas.

Marshall R. Cole of Nemecek & Cole said Senate Bill 37, which took effect Jan. 1, significantly broadened California's definition of attorney advertising and created new avenues for civil liability over unlawful solicitation and misleading advertising.

"People have an incentive now to look at these ads if they believe they're misled or if they're not compliant," Cole said.

The law broadly defines advertising to include written, recorded or electronic communications intended to encourage people to hire a lawyer or firm. It also creates private rights of action for specified violations.

That means lawyers must look beyond traditional television commercials and billboards to Instagram, TikTok, text-message campaigns and other communications that may be produced quickly and in real time, Cole said.

"It's hard to make sure you're in compliance when you're doing social media posts in real time," he said. "But guess what? It's the law."

Among other restrictions, SB 37 prohibits misleading statements about a lawyer's skills, experience or record and certain references to awards obtained through paid memberships. Contingency-fee advertising must disclose whether clients can be responsible for advanced costs if there is no recovery.

Cole urged lawyers to scrutinize how they promote past verdicts, particularly large judgments that were never collected.

"A law firm that says, 'We've got billions of dollars in verdicts,' but if you haven't collected any of those verdicts, isn't that a little bit misleading to someone who's not a lawyer?" he asked.

Lawyers should also monitor outside lead generators, Cole said, because misconduct by companies marketing legal services can create problems for the attorneys receiving the business.

SB 37 strengthens enforcement against unlawful solicitation and referral practices. For certain violations involving lawyer referral services, any person may sue for statutory damages of $5,000 to $100,000 per violation, or three times actual damages, whichever is greater, as well as attorney fees and injunctive or declaratory relief.

Cole predicted courts will eventually have to decide whether lawyers sued under the new provisions can file anti-SLAPP motions arguing that their advertising constitutes protected activity.

Los Angeles County Superior Court Judge Theresa Traber said she expects attorney advertising to surface in litigation beyond lawsuits brought directly under SB 37.

In class actions, Traber predicted defendants will seek discovery of plaintiffs' lawyers' advertising and use questionable marketing to challenge their adequacy to represent absent class members.

"They're going to put it before the court, and they're going to argue that these ads are misleading and undermines the ethical practices of putative class counsel, or liaison counsel," Traber said.

She has already encountered similar arguments in lemon law cases, where parties have cited opposing lawyers' advertising practices in motions in limine. Traber said she has generally found the advertising irrelevant, but SB 37 could change the analysis when the marketing itself allegedly violates professional rules.

The law could provide "another hook" for attorneys seeking to attack firms that regularly handle particular types of cases, she said.

Traber also pointed to SB 37's provisions targeting "runners" and "cappers" -- people paid to solicit or procure clients for lawyers -- and referenced allegations surrounding Los Angeles County's $4 billion settlement of sexual-abuse claims involving juvenile detention and other county facilities.

Downtown L.A. Law Group, which represents about 2,700 claimants in the settlement, is under investigation by the State Bar and Los Angeles County District Attorney's Office following allegations that recruiters paid people to file claims and that some claims were fabricated. The firm has denied wrongdoing and said it does not engage in or condone paying people to retain clients.

Traber did not name the firm but referred to the controversy over allegedly false sexual-abuse claims and welcomed the Legislature's effort to regulate client solicitation.

"I'm really glad that this bill has been put into place to put in mechanisms to control the entities who are involved in that process," she said.

The investigation is separate from disciplinary cases against four attorneys affiliated with Downtown L.A. Law Group that the State Bar dismissed without prejudice this week. Those cases involved allegations that the attorneys solicited and represented personal injury clients in states where they were not licensed. The reason for the dismissals is under seal, and the cases could be refiled.

The State Bar's investigation into alleged misconduct involving the county sexual-abuse litigation remains pending.

Cole said SB 37 could also raise questions about lawyers' professional liability insurance. Whether a malpractice policy would cover a lawsuit based solely on false or misleading advertising remains unresolved, he said, because insurers could argue that advertising does not constitute the rendering of legal services.

"I think it's going to be an interesting issue as these lawsuits start to come into the fold," Cole said.

For Traber, the broader lesson is that lawyers whose practices depend heavily on advertising and referrals must consider how their conduct outside the courtroom can affect their standing inside it.

"All of your arrangements with regard to advertising, fee sharing, financing, etc., have to meet the standards of the professional rules to the T," she said, "or else you're going to be in very big trouble."