I. Introduction: Why It Matters - Legal Ethics Forum



The Lawyer as Sports Agent: Ethical Dilemmas and Solicitation Table of Contents TOC \o "1-3" \h \z \u I. Introduction: Why It Matters PAGEREF _Toc260926686 \h 1II. Emergence of the Sports Agent and Athlete Representation PAGEREF _Toc260926687 \h 2A)More Than Just an Agent: The Expanded Role of Athlete Representatives PAGEREF _Toc260926688 \h 4B)Regulation of Sports Agents on the Federal and State Level: SPARTA, UAAA, RICO, & Other Statutes PAGEREF _Toc260926689 \h 5C)The Lawyer as Agent: A Look to the Model Rules of Professional Conduct PAGEREF _Toc260926690 \h 8i. A Lawyer-Agent Is not Engaging in a Distinct Profession from the Law PAGEREF _Toc260926691 \h 8III. Solicitation: Rule 7.3 PAGEREF _Toc260926692 \h 10A)Purpose and Roots of the Ban on Solicitation in the Legal Field PAGEREF _Toc260926693 \h 10B)Policy Overview: A Ban on In-Person Solicitation Protects Vulnerable Segments of the Population PAGEREF _Toc260926694 \h 11C) Permissible Solicitation: Friends, Relatives, Clients & Lawyers PAGEREF _Toc260926695 \h 12i. Direct Mail Solicitation & Mass Advertisement Provides Little Return for Sports Agents PAGEREF _Toc260926696 \h 13IV. A Fair Solution PAGEREF _Toc260926697 \h 15A)Athletes Expect Agent Solicitation PAGEREF _Toc260926698 \h 15B)Sports Clients Are Not Members of a Vulnerable Class PAGEREF _Toc260926699 \h 17C)Governing Bodies Are Unconcerned With Athlete Solicitation PAGEREF _Toc260926700 \h 18D)A Wasteful Alternative: Holding Out and Not Practicing Law PAGEREF _Toc260926701 \h 19V. Conclusion PAGEREF _Toc260926702 \h 20The Lawyer as Sports Agent: Ethical Dilemmas and Solicitation I. Introduction: Why It MattersSpurred by the exponential growth of athlete salaries in the mid to late nineteen-eighties, the responsibilities of sports agents and their legal counterparts began to expand and collide. Individuals looking to financially capitalize on this gain, or those simply attracted to the “glamour” associated with the sports industry, jumped into the fray and quickly tried to make their mark. While this expansion resulted in intense competition to enter the business, abuse and a myriad of unethical behaviors were rampant among practicing professionals. Agents became known for their overly aggressive tactics to recruit clients, unreasonable fees, and financial mismanagement. Many were even prosecuted under various criminal laws, ranging from tampering and extortion to racketeering. This widespread abuse led many client-athletes to turn to the legal profession for services formerly provided by agents. Established lawyers were (and still are) constantly seeking to expand their client base, while those aspiring to enter the industry aim to find “the next big athlete.” These efforts require agents that are lawyers to pay special attention to the ethical mandates of the legal profession that many non-lawyer agents are not subject to follow. This Note discusses the emergence of the sports agent as a profession, the shift towards the legal industry, and examines the legal conundrum lawyer-agents are placed in when trying to attract new clients while simultaneously abiding by the ABA Model Rules of Professional Conduct (“MRPC”), specifically those guidelines dealing with solicitation in Rule 7.3. In conclusion, I argue that it may be fairest to treat all agents alike, as an equal playing field will ensure parity among an entire class of professionals and benefit not only lawyer-agents, but athletes as well. II. Emergence of the Sports Agent and Athlete Representation Several decades ago sports agents were virtually non-existent, as athletes negotiated their playing contracts directly with sports franchises. Though several teams did allow athletes to have representation, relatives or friends stepped in for the majority of cases. In the 1970s, Major League Baseball and the Major League Baseball Players Association collectively bargained for an athlete’s right to be represented by an agent during their negotiation with a club, and athletes were soon able to reinforce their bargaining position and maximize their salaries through their agents. This negotiation style acted as a catalyst and soon spread to the majority of professional sports. Since then, various sports unions and the National Collegiate Athletic Association (“NCAA”) have attempted to control the agent-athlete relationship. In 1989, already fifty percent of those actively involved as representatives in the three major professional sports (baseball, basketball, and football) were lawyers, and the growth of the business over the years has produced an “oversupply of agents for a finite number of clients.” As of 2013, there are 4,300 professional athletes in the four major leagues (the aforementioned three in addition to hockey) and between 1,600 to 1,800 agents certified by their respective players associations competing for talent representation. While the field is accompanied by high return and stature, the demand and desire for attorneys has not cured the problems and ethical dilemmas plaguing sports representation, as new issues have come to light as a result of a different class of representatives entering the market. More Than Just an Agent: The Expanded Role of Athlete RepresentativesDespite greater wealth for athletes, agents, and franchises, higher levels of compensation have come with a price. Agents were soon expected to not only negotiate contracts on behalf of their clients, but were also put in charge of financial management and accounting, athletic training, investment, tax and estate planning and legal counseling. Today, attorneys, money managers, coaches and former athletes have all entered the profession and practice solo, in small groups, or in large “full service” firms. The standard agent-athlete contract establishes responsibilities and rights between the two parties, and usually calls for a good faith effort by the agent on behalf of the athlete. Agents are subject to common law agency requirements and because there is a fiduciary duty between agent and client, the agent owes loyalty, obedience, and reasonable care to the athlete. In addition, agents must avoid actual or apparent conflicts of interest and have a duty to disclose any information that might impede or compromise representation.An agent’s main function still remains to negotiate the athlete’s employment contract with a sports team and to maximize salary intake for as long a period of time as possible. Agents must be aware of league-specific collective bargaining agreements, salary caps, market values, and the philosophies and spending patterns of the team in question in order to most effectively negotiate a complete contract. In addition, agents help athletes obtain endorsement deals, speaking engagements, and a multitude of other functions mentioned above.Regulation of Sports Agents on the Federal and State Level: SPARTA, UAAA, RICO, & Other StatutesSports agents that recruit athletes out of college are regulated through the Sports Agent Responsibility and Trust Act of 2004 (“SPARTA”) and the Uniform Athlete Agents Act (“UAAA”). These acts have helped protect student-athletes and educational institutions from over-zealous and aggressive agents; however, there still continues to be a need for increased oversight as statutory regulation and enforcement is not a priority. While SPARTA is the sole federal statute that regulates agents, many states have adopted the UAAA, a model law enacted in 2000 intended to create a uniform system of rules to regulate agent conduct when recruiting student-athletes out of college. In the event of a violation, the NCAA does not have the jurisdiction to discipline an agent, only student-athletes and coaches, and it is important to note that the second an athlete loses his or her NCAA eligibility these statutes no longer apply. SPARTA demands agents abide by three duties: 1) a duty to be truthful, 2) a duty of disclosure, and 3) a duty to refrain from “buying” an athlete. An agent cannot lie or give false or misleading information; he must provide athletes and their parents (if the athlete is under 18) with a disclosure document containing a warning about the consequences of losing NCAA eligibility once he or she is signed with an agent; and, the agent is forbidden from giving the athlete (or anyone associated with him) anything of value. On the other hand, the UAAA requires agents to register with any state that has adopted the act, and in order to initiate contact with a student-athlete, the agent must be registered in his or her own home state and the state in which the athlete resides. In addition, the UAAA creates a duty of disclosure much like SPARTA, and prohibits the “buying” of student athletes. In addition, non-sports related statutes like the Racketeer Influenced and Corrupt Organizations Act (RICO) exist in conjunction with the above laws and professional players’ associations’ requirements in order to regulate agents. Players unions require sports agents to register as members and abide by their rules, and each sport includes regulations that command an agent to be ethical and competent in his representation of athletes. However, despite the enactment of these “ethical” rules, similar in many ways to the MRPC binding lawyers, there is no actual ban on initial client solicitation. In fact, for the student-athlete, many schools have a formal meeting process known as “Agent Day” where agents meet college athletes and talk about their services in a room set up and regulated by the school. As for professional athletes already in the market, agents are free to approach potential clients at will, and while soliciting athletes with existing representation contracts may run afoul of contract law (and is regulated by professional league rules), the practice is still commonplace. Therefore, while the rules in place act as a strong deterrent, keeping agents from freely taking advantage of their clients, solicitation is not an enumerated evil, and non-lawyer agents are free to do as they please when attempting to attract new clients.The Lawyer as Agent: A Look to the Model Rules of Professional ConductLawyer-agents are distinct from other sports agents because they identify as officers of the legal system and are members of a self-regulating profession. The Model Rules echo the lofty goals of the profession by stating that “lawyers play a vital role in the preservation of society.” Lawyers are subject to the court’s supervision and to “duties geared to protect the vigor, fairness, and integrity process of litigation.” Furthermore, lawyers have duties that are not neatly cabined into agency and owe current and potential clients confidentiality and fiduciary duties that many non-lawyer agents ignore and are not required to follow. As legal professionals, lawyers perform a public service, which sits at odds with the commercialization of ordinary business. Furthermore, all lawyers, including attorney-agents must follow the Rules of Professional Conduct that individual state bars publish. Though the MRPC has requirements of disclosure and truthfulness that are similar to the requirements of SPARTA and professional sports leagues, anti-solicitation rules govern many potential contacts a lawyer-agent can have with athletes. i. A Lawyer-Agent Is not Engaging in a Distinct Profession from the Law Because lawyer-agents are not engaging in a profession that is entirely distinct from and unrelated to the practice of law, like a teacher or musician, the probability of ethical violations becomes higher when the second occupation though “theoretically and professionally distinct, is one closely related to the practice of law, and one which normally involves the solution of what are essentially legal problems.” One case directly dealing with the application of the MRPC and a lawyer partially engaged in another profession arose in Arizona, where an attorney acted as a financial advisor in a transaction for a client and was subsequently brought before the Arizona Bar after a complaint was filed by the client alleging the lawyer acted improperly. The attorney defended his action in part on the basis that he was not practicing law but acting in his capacity as a financial advisor; however, the Supreme Court of Arizona noted that: “as long as a lawyer is engaged in the practice of law, he is bound by the ethical requirements of that profession, and he may not defend his actions by contending that he was engaged in some other kind of professional activity. For only in this way can full protection be afforded to the public.” This holding makes sense in terms of policy so long as the selection of an agent turns on his membership to the legal profession. Continuing the obligation of the profession beyond the scope of the practice protects the client’s interests; however, today, athletes are arguably drawn to the track record of an agent, and not their professional affiliation. Furthermore, client contact is so integral to the sports industry that allowing a rule in the MRPC to sit in direct conflict with customary practice seems unfair. When lawyer-agents have to compete with other agents that are not restricted by these rules, the level of competition is fundamentally flawed. In addition, if every ethical code of each regulated profession were to accompany its professionals into the realm of sports agency, a myriad of different ethical codes would conflict and co-exist around one another in an incredibly ineffective manner. Although this analysis can fall victim to the “slippery slope argument”, whereby an opponent may think there is nothing stopping to whole MRPC from not applying to lawyer-agents, this Note only calls for a narrow exception, giving attorney-agents the right to solicit clients because homogenous practices within an industry are beneficial to all parties, and lawyers, as opposed to other regulated professionals, make up the majority of sports agents. III. Solicitation: Rule 7.3 “A lawyer shall not in-person, live telephone or real-time electronic contact solicit professional employment when a significant motive for the lawyer’s doing so is the lawyer’s pecuniary gain.”Purpose and Roots of the Ban on Solicitation in the Legal FieldSolicitation is an unrequested communication a lawyer makes to a non-lawyer for the purpose of obtaining professional legal employment. In the legal field, anti-solicitation rules protect the public from potentially coercive and borderline abusive “sales pitches,” a problem rampant in the sports industry. This concern was at the heart of the landmark case Ohralik v. Ohio State Bar Ass’n, which was prompted by “in-person solicitation, [the] dangers of deception, overreaching, undue influence, intimidation, and other forms of vexatious conduct” that were at the time, infiltrating the legal profession. Solicitation is also looked down upon for a number of reasons. First, it is said to lower the status of the legal profession, and in an effort to preserve the profession’s standards and dignity, in-person solicitation has been eliminated as an ethical communication. Since lawyers are officers of the court, undignified behavior negatively reflects on the entire profession and justice system. In addition, disallowing direct solicitation of clients in the legal industry is said to promote unity among members and to prevent client stealing, another issue extremely prevalent in the sports industry. Policy Overview: A Ban on In-Person Solicitation Protects Vulnerable Segments of the Population The policy behind solicitation rules is aimed at protecting those segments of the population that are more vulnerable to over-ardent lawyers. In-person contact keeps an individual from fully evaluating all available alternatives with “reasoned judgment[,]” and a lawyer’s presence can leave a situation “fraught with the possibility of undue influence, intimidation, and over-reaching.” For example, accident victims, hospitalized after a traumatizing event, should not be subject to an in-person solicitation in their hospital room amidst an already emotional event. This “ambulance chasing” is absolutely not tolerated in the legal profession, however; professionals in the sports industry do not see athletes as members of a “vulnerable” class. Once an agent drops an athlete, the calls and visits start almost immediately. Although changing one’s legal representation in the sports industry should not be analogized to an accident or traumatic event (although the athlete may feel a similar amount of emotional anguish), the difference of how lawyers and non-lawyer agents treat solicitation is obvious. C) Permissible Solicitation: Friends, Relatives, Clients & LawyersThis over-reaching issue is not present in all cases and the rules of professional conduct allow a lawyer to recommend his or her services to an individual that is “family, [or has a] close personal, or prior professional relationship with the lawyer.” This allowed category is presumably less likely to succumb to unethical pressures because there is an established pre-existing relationship, and the individual is better able to evaluate the propriety of employing the attorney. The model rules also note that there is far less likelihood of a lawyer engaging in “abusive practices against a former client, or a person with whom the lawyer has a close personal or family relationship, or in situations in which the lawyer is motivated by considerations other than the lawyer’s pecuniary gain.” In addition, other attorneys of the bar do not risk the same dangers of misrepresentation or invasion of privacy inherently threatening to members of the general public because they practice in the same profession. i. Direct Mail Solicitation & Mass Advertisement Provides Little Return for Sports AgentsAlthough in-person solicitation is the primary point of controversy among sports agents because it is the most effective way to convince a client to sign with an agency, direct mail solicitation and advertising are also relevant because many draft picks are contacted through these means. In Shapero v. Kentucky Bar Ass’n the Supreme Court relaxed the types of client contact lawyers were allowed to make and held that states may no longer categorically prohibit lawyers from sending letters to potential clients for pecuniary gain so long as the letters are truthful and non-deceptive. The Court went on to note that individuals receiving letters in the mail are not faced with the “coercive presence of a trained advocate or the pressure for an immediate yes-or-no answer . . . but can simply put the letter aside to be considered later, ignored, or discarded.” Therefore, following the rationale of Shapero, lawyer-agents, like all practitioners, may utilize written solicitation aimed at specific clients as an authorized means for increasing business, and can urge athletes to contact their office about a meeting so long as the lawyer’s communications are truthful, non-deceptive, and are labeled as advertisement. However, as a practical matter, Shapero has had little impact on the sports representation industry, as athletes known to need legal services are constantly bombarded with mail during and after their college careers. Although prospective clients receive a large volume of mail, the letters alone have little influence on the selection process of a representative. Client-athletes have come to expect in-person meetings with agents and lawyers, and if the meeting is initiated by the lawyer it is clearly outside the scope of the contact permitted and approved of in Shapero. Therefore, the conundrum exists in treating non-attorney agents one way and attorney-agents another.In addition, although the MRPC permit a lawyer to advertise to the general public, in the form of a billboard, Internet banner advertisement, website, or television commercial, this allowance affords lawyer-agents little benefit. Sports representation is not suitable to mass marketing, as those qualified to play in a professional league are limited in number, and the use of general advertising does little to develop an agent’s client base. IV. A Fair Solution While trying to maintain professional standards is a noble goal, a ban on in-person solicitation, especially in the athlete context does not offer clear protection. The connections between solicitation and the erosion of professionalism are “tenuous”, and it is predicated on the assumption that “lawyers would conceal from themselves and their clients the real-life fact that they earn their livelihood at the bar.” Instead, lawyers are prevented from taking part in the open recruiting practices of agents and are placed in a “Catch-22” where they are at a clear competitive disadvantage. Assuming that a lawyer feels morally compelled to follow the professional ethical restraints placed on him by the legal profession, the lawyer-agent is left with an unfair disadvantage even though a lawyer may better represent a particular client. Therefore, a change in the prohibition on solicitation that currently binds attorneys in relation to potential clients in the sports industry may be beneficial to all parties. Athletes Expect Agent Solicitation The nature of the sports industry is such that athletes expect agent contact and solicitation. Because a referral system for sports clients is unrealistic, agents must reach out to potential athletes in order to convince them to sign, and clients have become accustomed to in-person solicitation. Although the legal system aims to gain business through referral, the system is not adequately suited for the urban settings of many agents because there is a nationwide scope of potential clients for agents to pick and choose from. Clients are not local, and even though an athlete may start in an agent’s hometown, many athletes pick a college based on the prestige of their athletic program. Therefore, agents have a broad geographical client base, which makes referrals harder to come by and less likely. In addition, competition in the industry runs so strong, and in-person recruiting so prevalent, that athletes have become accustomed to being approached about possible representation. Not only are agents constantly visiting universities across the country on their own through the likes of Agent Day, but many also have “runners,” individuals charged with securing a relationship with clients and their relatives. Runners are typically young so that they can fit in on a college campus while they attempt to establish some kind of rapport with a potential client based on trust or whatever the agent may have that an athlete wants (an advance of money, favors, etc.). Lawyer-agents are not privy to this benefit either because using a runner-like system would run into conflict with MRPC 8.4(a), which prohibits lawyers from knowingly assisting or inducing another to violate the Professional Rules, or to do so through the acts of others. In light of these interactions, it makes little sense to deny lawyers the right to have one-on-one access to clients. A lawyer’s business development is frustrated, and a client is denied valuable information concerning legal representation, including more competent representation and lower client fees. Sports Clients Are Not Members of a Vulnerable Class The traditional purposes for disallowing lawyer solicitation are valid and serve important state and societal interests. However, those interests are not served by prohibiting a specific subset of agents from soliciting clients. Although college athletes are young and impressionable, and the stories of agents offering athletes illegal incentives while still in college are among the top headlines, college athletes have come to experience “more high-powered, face-to-face contact than typical members of the general public.” Many athletes are subject to media scrutiny during their college careers and the student-athlete is many times mandated to give press-conferences, interviews, and appearances throughout his or her career. Although there is no doubt that unethical behavior on the part of the agent does occur, their acts should be regulated by a separate set of by-laws, not the MRPC solicitation rule. In addition, many college athletes have their parents help select agents, and if the athlete was heavily recruited out of high school, the in-person sales pitch has become a routine. Therefore, the undue pressures that the MRPC foresee do exist, but they are commonplace and accepted among athletes and agents within the sports industry. Furthermore, the process of selecting a lawyer or agent, and the signing of the representation agreement can be analogized to the signing of a National Letter of Intent. All-star high school athletes are wooed by college coaches from across the country as early as their sophomore year, and ultimately must settle on a single destination, much like a college athlete is presented with a large amount of agent-options and is forced to settle on one. Although athletes may not have an exact picture of their legal needs, nor possess the requisite expertise to adequately assess presented information, banning lawyer-agents from in-person contact only exacerbates the problem. The MRPC address deception in provisions outside of the scope of solicitation and lawyer-agents are in a prime position to disclose and explain the inner workings of a contract negotiation not only between themselves and the athlete, but the athlete and their potential employer. Lawyer-agents can help an athlete make a fully informed decision that best suits their needs. Governing Bodies Are Unconcerned With Athlete Solicitation League players associations, the federal government, and state legislatures attempt to regulate agent conduct in various ways. However, these bodies have shown little to almost no concern over solicitation between representatives and athletes. Solicitation in the eyes of the industry is not an evil worth attempting to regulate, and the rules in place are aimed at eradicating player bribes, misleading business titles, and misinformation. In addition, the NCAA only forbids an athlete from signing a representation agreement with an agent during an athlete’s eligibility, and the NCAA Constitution anticipates face-to-face contact between student-athletes and agents. Regulation agencies are not concerned with agents approaching prospective clients, and lawyer-agents should not be penalized through the MRPC. Agent-client contact is an integral part of the sports industry, and it makes little sense to treat similarly situated agents differently. A Wasteful Alternative: Holding Out and Not Practicing Law A last option for lawyers attempting to avoid the solicitation rules of the MRPC is to hold out and engage in athlete representation solely as a sports agent. A lawyer in this situation would hold himself to general agency standards, which do not include the legal profession’s mandates regarding in-person solicitation. However, lawyers choosing this path must disavow their membership to a state bar, as an attorney cannot avoid violation of solicitation by “segregating” the two positions. A lawyer-agent will most likely openly discuss the general advantages of hiring someone with the experience and skills of a lawyer, therefore, by retaining that status, the lawyer-agent is at a minimum, “engaged in a law related occupation when acting as an agent.” In effect, disavowing “lawyer” ties must be a clear determination because any agent that still claims to be a lawyer is subject to statutes regulating the unauthorized practice of law. Another impermissible way of avoiding solicitation regulation would be for a group of lawyer-agents to form a corporation made up of non-lawyers to solicit potential clients. This scenario will most likely be met by disapproval from the courts because a variety of conflicts of interest may with the organization running afoul of other ethical mandates. Therefore, it seems most practical to draw a bright-line rule for lawyer-agents working in the industry and to allow these individuals to solicit clients like every other agent. V. Conclusion In today’s world a lawyer-agent is removed from the “confines of rendering legal advice” and is perhaps more qualified than a non-lawyer agent to conduct business in the sports industry; however, the legal profession’s ethical code is hampering the flow of information and the growth of business. In an industry so driven by personal contact, and consisting of an extremely large number of attorneys, it is unfair to keep attorneys from engaging in client solicitation. Although the sports industry contains problems the solicitation rule is directly aimed at eradicating, namely client stealing and over-zealous sales pitches, there are rules in place for each professional league that ban approaching represented clients, and the initial sales pitch is part of being a professional athlete. Therefore, the original goals of the ban on solicitation in the legal profession are not at issue in the sports world. An equal playing field keeps lawyer-agents from turning to unethical alternatives to bring in new clients and benefits all parties. ................
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