Wednesday, February 10, 2016

Avvo expands its Legal Services program to 18 states; Should attorneys be concerned? (part 2)

A few days ago, I posted a long comment expressing my concern over the new Avvo Legal Services, which it describes as an online legal services marketplace now offering fixed-fee, limited-scope legal services through a network of attorneys.  Many others have raised similar concerns.  See, among many others, Solo Practice University; Simple Justice and the comments to stories in the ABA here, here and here.

Coincidentally, yesterday Avvo announced it has now expanded the service to 18 states, covering about 70 percent of the US population.  I first read the story in Law Sites, which describes the news and the service and quotes Avvo's general counsel and CEO.  I left a comment expressing my opinion about one of their claims and asking for an explanation, and the General Counsel for Avvo was kind enough to reply.  You can read our exchange in the comments below the story here and judge for yourself as to whether Avvo's explanation makes sense to you.

I find it interesting that when challenged on whether lawyers paying for the service could be found to be in violation of the rule against sharing fees with non-lawyers, Avvo's GC claimed the rule is unconstitutional as applied under the First Amendment.  (Is Avvo arguing that because it calls the fee a "marketing fee," paying the fee makes it advertising?  I don't know.)  This means that in the last couple of days I have read of Avvo claiming that the transaction is not fee sharing because it is a separate transaction, that the transaction is not fee sharing because it is paying for advertising, that if the transaction is fee sharing, it is allowed by the rules, and that if it is not allowed by the rule, the rule in unconstitutional.

Also, I don't understand why Avvo doesn't instead argue that it is covered by comment [5] to Rule 7.2 which says that "a lawyer may pay others for generating client leads, such as Internet-based client leads, as long as the lead generator does not recommend the lawyer, any payment to the lead generator is consistent with Rules 1.5(e) (division of fees) and 5.4 (professional independence of the lawyer), and the lead generator’s communications are consistent with Rule 7.1 (communications concerning a lawyer’s services)."

This is an interesting relatively new comment that I have not seen interpreted in any cases.  (If you know of one, please send it my way - I'd like to see it.)  My sense is that this comment was adopted precisely to be more lenient with respect to the ban to pay others for referring clients, by opening the door to online services that connect clients with lawyers -- which is precisely what Avvo does.  The problem is that there are a few things in the comment that have not been tested (at least to my knowledge).  What is a "client lead"?  Does that refer to information or to an actual client?  If the intent is to allow payment for information but not for an actual client, then the comment won't help Avvo.  Again, I have not done the research to know how "leads" has been interpreted (or is meant to be interpreted).

Also, and more importantly, what does it mean when it says that the payment won't violate Rule 7.2 as long as it is "consistent with" Rules 1.5 and 5.4.  Is "consistent with" the same as "complies with" or is there a difference?  If it means that in order for the payment not to violate 7.2 the lawyer also has to comply with 1.5(e) and 5.4, that means that payment to a non-lawyer will be in violation of 7.2 because sharing a fee with a non lawyer is by definition a violation of 5.4 and irrelevant to 1.5(e) which is about sharing fees with other lawyers.  Since internet "lead generators" are not likely to be lawyers, I think that "consistent with" means something other than "complies with."

Viewed that way, the question becomes whether allowing payment to a non-lawyer for finding and sending a client to the lawyer threatens the policies and concerns for which we decided to adopt the requirements in 1.5(e) and the ban in 5.4.   And I think Avvo can make a case that allowing this type of payment does not.  I don't know how convincing the argument will be before the authorities, but you can make the argument.   Which is why I don't understand why not go for this argument rather than the strange argument based on the First Amendment (which appears to be based on a forced interpretation of what the speech in question is and an incorrect reading of the constitutional standard that applies (note that Avvo's GC argues the state has to show harm, an argument the Supreme Court dismissed in Ohralik).  

Having said all that, it seems Avvo is here to stay and that at least for now states are tolerating it.  However, it will be interesting to see what happens in the near future.  It will be interesting to see if attorneys ask their local Ethics Commissions to issue opinions on whether sharing fees with Avvo is ethical.  Hopefully some will and we will begin to see the responses in different states. 

It will also be interesting to see if states will then create regulations to apply to the non lawyers in the legal marketplace.  The ABA just adopted a resolution urging jurisdictions to regulate the non lawyers in the legal services marketplace according to the policies and values of the legal profession.  Ironically, this may lead to a finding that it is not a good idea to abandon the ban related to sharing fees with a non-lawyer. 

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