April 13, 2018 / 9:50 PM / 2 months ago

Is this the case that will upend legal marketing?

(Reuters) - Morgan & Morgan is a nationwide firm of more than 350 lawyers, many with significant trial experience. The firm wins jury verdicts. It also has the legal chops to have been appointed to multidistrict litigation steering committees, including a spot on the expanded plaintiffs’ executive committee in the giant opioid litigation. Morgan & Morgan, in other words, is not a pure legal marketing shop that runs ads looking for clients who will then be referred to other firms.

But according to a Philadelphia personal injury firm, Rosenbaum & Associates, when Morgan & Morgan began running television, billboard and Internet ads in the Philadelphia market in late 2015, it was essentially acting as a referral firm. At the time Morgan & Morgan burst into the Philadelphia legal market, Rosenbaum alleged in an amended false advertising complaint filed last month in federal court in Philadelphia, no Morgan & Morgan lawyers were licensed to practice in Pennsylvania. And though the firm subsequently hired a newly-licensed lawyer for its Philadelphia office, Rosenbaum asserted that Morgan & Morgan continued to refer “all or nearly all” cases involving Pennsylvania plaintiffs to other personal injury firms.

Among Rosenbaum’s allegations: Morgan & Morgan’s ads deceived prospective clients by implying that the law firm was not a referral service and that its lawyers would personally handle their cases.

On Thursday, U.S. District Judge Mark Kearney of Philadelphia denied Morgan & Morgan’s motion to dismiss many of the allegations in Rosenbaum’s amended complaint. The judge’s April 12 opinion builds on a January ruling (2018 WL 327167) in which Judge Kearney first refused to toss Rosenbaum’s claims based on Morgan & Morgan television ads. The upshot of the decisions is that Rosenbaum can continue to obtain discovery to back his assertions that Morgan & Morgan misled prospective clients who believed the law firm running the ads – and not some other firm they hadn’t heard of – would be litigating on their behalf.

“While the Supreme Court has long upheld a lawyer’s First Amendment right to advertise her services, federal law prohibits businesses - including law firms competing for personal injury clients - from using false and deceptive advertising,” Judge Kearney wrote in Thursday’s opinion. “A personal injury law firm losing revenue may sue under federal law trying to affix responsibility for its lost business on a new competitor’s advertising campaign.”

Legal marketers – law firms in the business of generating and screening client leads through traditional and social media advertising - ought to pay close attention to this case as it moves ahead. So should law firms that rely on legal marketers to find clients. A lot of the allegations in the suit against Morgan & Morgan are linked to specific representations by the firm in its ads, and, if Rosenbaum wins, other marketers can simply avoid the kind of statements that got Morgan & Morgan in trouble.

But the case also asks, more broadly, whether legal marketers must disclose in ads that clients’ cases will be referred to other law firms or else risk Lanham Act liability to competing law firms. Morgan & Morgan revised its ad disclaimers after Rosenbaum first sued for false advertising. The firm removed a line in which it said it was not a referral service,” changing it to say that cases “may be referred to and handled by another firm as co-counsel.” Rosenbaum’s complaint argued that the revised language was still false because its lawyers, who aren’t licensed in Pennsylvania, don’t really act as “co-counsel.”

Morgan & Morgan said the issue of whether it is, technically, a referral service is an ethics matter, not a Lanham Act question, since there is “an absence of authority defining referral service,” as Judge Kearney described the predicament. Pennsylvania’s ethics rules say it is “misleading” for a law firm to advertise for cases that it knows it won’t actually handle – but Rosenbaum hasn’t asserted an ethics complaint and “all parties agreed (the court) could not rule on whether Morgan & Morgan violated the Pennsylvania Rules of Professional Conduct,” Judge Kearney wrote.

His solution is to allow discovery on this “mixed issue of fact and law” before he determines “whether telling potential clients of your interest in being their lawyer when, in fact, you do not intend to be their lawyer is unfair competition.” I think a lot of legal marketers are going to be interested in the answer to that question.

I reached out to Rosenbaum lawyer Ryan Cohen, who declined comment. Morgan & Morgan’s attorney Eric Soller of Pietragallo Gordon Alfano Bosick & Raspanti did not respond to my email.

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