New Opinion from the ABA Committee on Ethics & Professional Responsibility on Solicitation

A few days ago, the ABA Standing Committee on Ethics and Professional Responsibility published Formal Opinion 501 in which it reminds us that not only must attorneys refrain from engaging in improper direct solicitation of potential clients, they also have an ethical duty to ensure that their employees do not engage in such misconduct.  You can read the full opinion here.  The summary is as follows:

ABA Model Rule of Professional Conduct 7.3(a), amended in 2018, contains a narrowed definition of what constitutes a “solicitation.”  Rule 7.3(b) delineates the type of solicitation that is expressly prohibited.  Rules 8.4(a) and 5.3 extend a lawyer’s responsibility for solicitation prohibitions not only to actions carried out by the lawyer directly but also to the acts of persons employed by, retained by, or associated with the lawyer under certain circumstances.

Rule 5.3(b) requires lawyer supervisors to make reasonable efforts to ensure that all persons employed, retained, or associated with the lawyer are trained to comply with the Rules of Professional Conduct, including Rule 7.3(b)’s prohibition. Partners and lawyers possessing comparable managerial authority in a law firm must make reasonable efforts to ensure that the firm has training that reasonably assures that non lawyer employees’ conduct is compatible with the professional obligations of lawyers. Under Rule 5.3(c), a lawyer will be responsible for the conduct of another if the lawyer orders or with specific knowledge of the conduct ratifies it, or if the lawyer is a manager or supervisor and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.

Rule 8.4(a) makes it professional misconduct for a lawyer to “knowingly assist or induce another, to violate the Rules or knowingly do so through the acts of another. Failing to train a person employed, retained, or associated with the lawyer on Rule 7.3’s restrictions may violate Rules5.3(a), 5.3(b), and 8.4(a).

Many legal consumers obtain information about lawyers from acquaintances and other professionals. The Model Rules of Professional Conduct are rules of reason. Recommendations or referrals by third parties who are not employed, retained, or similarly associated with the lawyer and whose communications are not directed to make specific statements to particular potential clients on behalf of a lawyer do not generally constitute “solicitation” under Rule 7.3.

Ethical Grounds has a comment on the opinion here. The ABA Journal has a comment here. 

Tennessee adopts new rules on advertising and solicitation

 The Legal Profession blog has the story here.  You can read the amendments here.  The amendments cover Rules 7.1, 7.2, 7.3, 7.4, 7.5, and 7.6.

Tennessee adopts rules amending rules on attorney advertising

Just a few days ago, the Tennessee Supreme Court adopted proposed revisions to the lawyer advertising rules. You can read all about the amendments here.

Louisiana Supreme Court Amends Lawyer Advertising Rules

On May 6, 2021, the Louisiana Supreme Court issued an order revising the Louisiana Rules of Professional Conduct provisions governing lawyer advertising. The court’s revisions become effective on January 1, 2022. The Louisiana Legal Ethics blog has a summary of the major changes here:

Podcast on legal issues related to the regulation of the profession

In the most recent "Lawyer 2 Lawyer" podcast, podcast Professors Deborah L. Rhode and Scott Cummings talk about issues affecting the practice of the profession today.  You can listen to the program by clicking on the play button below or, if you can't see it, by going here.

New report on the market for legal services

Georgetown Law’s Center on Ethics and the Legal Profession and Thomson Reuters Legal Executive Institute recently released a new report on the "State of the Legal Market."  It concludes that there are "revolutionary changes" afoot in the market for legal services.

I have not had a chance to read the report, so I can't comment, but you can read it here.

California Appellate Court finds that LegalMatch.com operates as a referral service

Long time readers of this blog know that one of the most important topics of discussion over the last couple of years has been whether it would be unethical for lawyers to share fees with internet “lead generators” and other services that seek to match people looking for legal services with lawyers who are available to provide those services.

Part of that discussion is based on the application of rules that ban lawyers from providing “anything of value” to someone as compensation for recommending the lawyer’s services, such as Model Rule MR 7.2(b), a version of which has been adopted in almost all jurisdictions.

For this reason, “lead generators” do not want to be considered to be “referral services.”  And this is why a recent opinion from an appellate court in California called Jackson v. LegalMatch.com is important (available here).

In this case, LegalMatch, an online company that connects people seeking legal representation with lawyers who pay a subscription, sued attorney Dorian Jackson after the attorney allegedly failed to pay his service subscription fees. In response, Jackson alleged the company was operating as an uncertified lawyer referral service, which would make it improper for the attorney to pay the fees.

The trial court found for the plaintiff LegalMatch, but the court of appeals reversed, thus preventing LegalMatch from being able to recover its fees and, also probably undermining LegalMatch’s ability to argue that is not a lawyer referral service in other states.

The opinion has re-generated an interest debate among the members of the Association of Professional Responsibility Lawyers, many of whom have expressed opposition to the type of ban imposed by rules like Model Rule 7.2 and support for the proposition that lawyers should be allowed to pay to participate in for-profit lawyer referral services.

California Legal Ethics has a comment on the case here.

Update on rules revisions

Faughan on Ethics has a short update on efforts to adopt Model Rule 8.4(g) around the country and on revisions on the rules regarding advertising and solicitation.

Texas Committee proposes new rules on advertising

As you probably remember, the ABA recently amended the rules related to advertising and solicitation.  Some states are now following its lead.

The Texas Committee on Disciplinary Rules has proposed revisions to Texas’s ethics rules on advertising that are open for public comment until March 1, 2019.  You can read the proposal here.  Brian Faughnan has a short comment on what he sees as the pros and cons here.

The Three Most Read Professional Responsibility Stories of 2018

Recently, the ABA Journal posted its “Top 10 most-read legal news stories of 2018.”  Three related to professional responsibility.  Michael Kennedy, of Ethical Grounds, discusses them here.

Where Avvo Legal Services left off, Basic Counsel picks up

Regular readers of this blog know I have been writing about Avvo Legal Services for a long time, and that I have expressed serious concerns about possible ethics violations in participating in it.  You also know that those concerns were shared by enough jurisdictions out there that Avvo Legal Services stopped providing services and is no longer in business.

But where it left off, a new platform has taken its place.  I have not reviewed the details on how it functions but from what little I have read so far, it is clear they are trying to address the concerns that made participating in Avvo such a risk for lawyers.

The new platform is called Basic Counsel and it seeks to enable attorneys to offer flat-fee, limited scope services, while complaying with every state’s professional conduct rules.

Bob Ambrogi, of Law Sites, describes the services in some detail here.  In a nutshell, consumers search or browse the site for the service they need in the location they need it. When a consumer buys a service, the fee is sent directly to the lawyer and Basic Counsel collects a separate “platform fee” from the consumer of 5 percent of the service cost (with a $10 minimum).  As the lawyer works on the client's case, the platform offers ways for the attorney to keep the client informed on the tasks progress and ways for attorney and client to communicate and share documents.

As Ambrogi points out, with regard to the potential ethics issues raised by a site such as this, there are clearly some differences between Basic Counsel and Avvo Legal Services.  For example, a concern of ethics bodies was that Avvo set the fee and defined the scope of the service. On Basic Counsel, the lawyer sets the fee and defines the scope.  Also, Avvo Legal Services collected the fee from the client and held it until the service was completed, which some said interfered with the lawyer’s duty to safeguard client funds. On Basic Counsel, the funds go directly to the lawyer.

Still another ethics issue for Avvo Legal Services was that it charged the lawyer a marketing fee, which some ethics bodies saw as fee splitting. Basic Counsel charges the client a platform fee, and Marchbanks says the fee is for the direct benefits the client obtains from using the platform — not for anything the attorney provides.

This sounds good, yet it is not clear to me how calling the fee a "platform fee" distinguishes it from Avvo's marketing fee when both are based on a percentage of the amount charged by the attorney.  It was that fact, which does not seem to be different in Basic Counsel's system, that got Avvo in trouble.  On the other hand, the percentage involved in Avvo was higher than the 5 percent charged by Basic Counsel.  In Avvo's case, the percentage also increased as the price for the services increased.

Why can't they make the platform fee a flat fee itself, not dependent on the value of the services?  It seems to me that would be a safer way to deal with this.  Otherwise, the door is still open for the interpretation that the fee constitutes sharing a fee with a non lawyer.

Having said that, as I have written about before many times, it is possible the rules can and will be changed to welcome this type of interaction because of the obvious benefits it provides to consumers.  But until that time, lawyers should be careful not to engage in conduct that has been interpreted to constitute sharing fees with non lawyers in violation of the rules.

Also, it is not clear whether lawyers should be concerned about confidentiality issues when it uses the platform to communicate and share documents with clients and prospective clients.

Florida Bar Board of Governors approves revised rule on qualifying provider fees and ethics opinion on “expert” and “specialist” -- UPDATED

On October 12, The Florida Bar’s Board of Governors voted to approve substantive revisions to Bar Rule 4-7.14 related to the use of “expert” and “specialist.”

Revised Bar Rule 4-7.14 would allow non-certified attorneys to call themselves “expert” or “specialist” if they can objectively verify that claim based upon the lawyer’s education, training, experience, and “substantial involvement” in the area of practice. The amended rule would also allow law firms to call themselves “experts” or “specialists” if that claim can be objectively verified for at least one lawyer in the firm.  The law firm making the claim would be required to have a disclaimer stating that not all firm members meet the same standards, if there are lawyers who do not qualify.

Lawyer Ethics Alert Blog has more information here.

UPDATE (11/17/18):  Legal Ethics in Motion has a short comment here.

UPDATE (8/2/19):  Lawyer Ethics Alert Blogs has a comment here.

Short comment on recent amendments to Model Rules on advertising and other forms of communication about legal services

Back in August I reported that the ABA had adopted a few amendments to the rules related to communication of legal services (aka advertising and solicitation) and later posted some links to a few comments about them.   Adding to that list, here is a link to a short comment by Legal Ethics in Motion.

Avvo fined by NY Attorney General's Office

As you probably know by now, Avvo Legal Services shut down earlier this year, but Avvo itself did not.  The controversial original directory and rating service is still in operation.  I say "controversial" because since early on there have been lawsuits and claims that its ratings system is misleading and that it favors attorneys that pay to join Avvo in order to build their profile.

Now comes news that Avvo has reached an agreement with the New York Attorney General’s Office according to which Avvo will pay a $50,000 fine and will state on its website that attorneys who "claim" their profile (presumably by paying a fee to Avvo) receive higher rankings, among other things.  Also, Avvo will no longer be able to claim that its ratings are “unbiased.”

The ABA Journal online has more on the story here.

Comments on the amendments to ABA rules on lawyer advertising

As I reported yesterday, the ABA just approved amendments to the Model Rules on advertising and solicitation.  I think the amendments are very good, and will encourage states to revise their own rules which hopefully will lead to more consistency among jurisdictions.

McCabe law offers a good summary of the changes here.  Brian Faughnan on Ethics has a short comment here.

Interestingly, not everyone is happy with the amendments.  The former counsel for Avvo, for example, thinks the amendments don't go far enough.  (He has suggested eliminating rule 7.2 entirely, something I don't agree with.)

Likewise, My Shingle concludes that "The bar needs leadership and action on these questions, not scriveners to reorganize paragraphs (message to ABA: computers can do that now!).  If these tepid rule changes are the best that the ABA can do, then we should just let the organization die on the vine right now, because it simply doesn’t have the ability to lead lawyers into the future."

Here is a video of the presentation to the House of Delegates.  The amendments are summarized quickly starting at the 6:10 minute mark.  If you can't see the video below, you can watch it here.


 

ABA approves amendments to the rules on attorney advertising

Last week, the ABA adopted some amendments to the Model Rules that regulate attorney advertising and solicitation.  You can read the amendments and the reports that goes with them here.

I read the amendments and they do a good job of clarifying and simplifying the rules, although they are not as comprehensive or radical as some expected.  Two rules have been eliminated, but the basic principles in them are preserved as part of the comments of the rules that are retained.  Also, the requirement that advertising material sent by mail be labeled "advertising material" has been removed.

More on the demise of Avvo Legal Services -- UPDATED

A few days ago I reported that the company that recently bought Avvo has decided to discontinue Avvo Legal Services ("ALS"). 

There have been a couple of comments, but I am a little surprised I have not seem much reaction to the news.  Law Sites has a report with some links, but no opinion one way or another.

The only opinion statement I have seen so far is by Professor Milan Markovic, over at the Legal Profession blog, in which he laments ALS's demise, stating that "My personal view is that the ethical concerns regarding Avvo Legal were overblown because Avvo Legal neither recommended one attorney over another nor interfered with attorneys' professional independence of judgment.  ...[T]o address lack of access to justice, the organized bar should embrace Avvo Legal and other companies that promote awareness of the law and the availability of lawyer assistance.  Instead we continue to ignore the demand side of lack of access to justice while regulators experiment with supply-side solutions such as "navigators", "LLLTs," and alike that I fear will prove ineffectual." 

UPDATE 7-26-18:  Faughnan on Ethics has published a comment on Avvo's demise here.

Office Depot Legal Services is back

Back in March I reported that Office Depot was set to start offering a pre-paid legal services plan.  Yet, when I went to check their website, I found out the program had been deleted.  I wondered if the idea had been scratched but could not find out more information.

Fast forward to this week.... and voila'.  The service is back up and running.  I still don't know what happened back when they first rolled out the website, but now it is back and functioning.  You can go check it out here.

If I understand it correctly, the program is a pre-paid legal services agreement for small businesses, not a referral service, which is an important distinction.  Services are provided by a firm with which the services seems to have an exclusive agreement.

If you go to the website, you can type in a zip code to "find your nearest firm."  I typed the zip code for the Chicago suburb I live in and the result was one law firm in the city of Chicago.  I typed in the zip code for downtown Chicago (which we call "The Loop" by the way), and got the same result.  I tried the zip code for Los Angeles and, again, the result was just one firm.

In other words, this program seems to have only one firm available for the consumer, which is very different from the Avvo Legal Services model in which the service would generate a list of options for the client from where the client could choose their favorite, and from a referral service which chooses (or at least helps choose) a lawyer for the consumer.

I have not seen any reaction or comments on the service in other blogs or legal ethics sites.  But that is not necessarily surprising.  Other than the fact that the service is owned by Office Depot, I am not sure there is anything new here.  Pre-paid legal services plans have been around for a long time and are mentioned in Model Rule 7.2 and its comment, which states that a lawyer who accepts assignments from a legal service plan must act reasonably to assure that the activities of the plan are compatible with the lawyer's professional obligations.

Avvo Legal Services is dead

Whether participating in Avvo Legal Services violates rules of professional conduct was one of the most debated questions in legal ethics recently.  Long time readers of this blog know I have written extensively, both here and in law reviews, on the subject, which is why I was dumbfounded when I saw the news today.

Internet Brands, the company that recently acquired Avvo has announced that Avvo Legal Services will be discontinued by the end of the month.  

That's it. No more explanation. They are not going to continue to argue there are no ethical issues to worry about.  They are not going to continue to try to convince that the rules should be changed. They are not going to continue to argue that the rules are unconstitutional.  They are done. Avvo Legal Services is dead.  

Evidently, whether that is a good thing or a bad thing depends on what your opinion is about the service, the company and the regulations involved.  That, we can debate some other time.  For now, the interesting question is simply "why?"  Why now?  (particularly because it seemed that the position to recognize and allow services like Avvo Legal Services seems to be gathering support.)    Was it the opinions of the bar associations that held it would be unethical to participate in Avvo Legal Services?  Was it that it was not profitable?

I don't know.  Others have concluded that Internet Brands did not want to fight the regulatory agencies, stating that "[f]rom a business perspective, it is understandable that Internet Brands didn’t want to continue this service given the regulatory obstacles it faced." 

But that's not exactly what the spokesperson for the company said in a letter disclosing they are discontinuing the service.  There, all they say is that "[a]s a part of our acquisition of Avvo, we have evaluated the Avvo product offerings, and adjusted the Avvo product roadmap to align more comprehensively with our business and focus. Accordingly, we have decided to discontinue Avvo Legal Services.”

Whether the closing of Avvo Legal Services is "good news" or "bad news" depends on your view of the service itself, and reasonable people can disagree about that (although, as your probably know, almost all the published ethics opinions that addressed it held it would be unethical for lawyers to participate).   

But I am sure that Avvo's demise will not mean the demise of entities trying to do what Avvo was doing, ie, profit by creating ways to connect prospective clients with lawyers.  This may be the last we hear of Avvo Legal Services, but I am sure it won't be the last we will hear of such matchmaking services.

Illinois disciplinary agency publishes comprehensive report recommending changes to the rules and the creation of a new regulatory system to allow lawyers to participate in for profit referral services and other "matching" services

A couple of weeks ago I participated in a panel on the debate over for-profit services that help “match” potential clients with lawyers who are looking for clients such as Avvo Legal Services.  As long time readers of this blog know, this is a topic I have been writing about for some time.  (To see my previous posts on the subject, go here and scroll down.)  To see an article I wrote on the subject go here.  (An update to this article with more recent developments since its publication is forthcoming.)

As I have chronicled here and elsewhere, all of the published opinions, and one proposed opinion have concluded that participating in for profit matching services such as Avvo Legal Services would violate, or likely violate, rules of professional conduct.  Only one proposed opinion has suggested the opposite.  Having said that, it should be noted that the vast majority of jurisdictions have not published any opinions on the subject which may mean that the regulators don’t see the question as a problem that needs to be addressed. Also, California allows for profit referral services, while others may not allow them, but seem to tolerate them.

Given the state of affairs, in some of my writings about this topic I have suggested that Avvo would be better served by seeking to get jurisdictions to change the rules so it would be allowed to do what it wants to do (rather than argue that what it is doing was not against the rules - a battle it seems to be losing.)

Which brings me to today’s news: the day before I spoke at the conference, the Illinois Attorney Registration and Disciplinary Commission (ARDC) published the most comprehensive report on this issue in which it suggests amendments to the Illinois rules of professional conduct in order to allow attorneys’ participation in for-profit referral services such as Avvo Legal Services.

In doing so, it is the first jurisdiction to publish such a recommendation.  (North Carolina has been considering one, but it has not been officially published yet.)

The report, which you can find here, is very comprehensive (124 pages long) and I have not had a chance to read it all, but I looked at some sections and here is a quick review.

First of all, it should be noted that the report is just that; a report.  It is not a final recommendation or a decision of any sort.  And it is subject to changes since the ARDC is now seeking comments on it.  But it does have suggestions on how to approach the issues.

Second, given those suggestions, it is clear that the report sides with what I have called the “Justice gap” theme in the debate.  [See, "Justice Gap vs. Core Values: The Common Themes in the Innovation Debate" 41 Journal of the Legal Profession 1 (2016)]  This refers to the position that we should do what we can to help provide more access to legal services, even if doing so involves taking innovative approaches that seem to go against tradition.  As the report states, “[p]rohibiting lawyers from participating in or sharing fees with for-profit services that refer clients to or match clients with participating lawyers is not a viable approach, because the prohibition would perpetuate the lack of access to the legal marketplace.”

What is new, and may be controversial, in the report is that it does not only suggest changing the rules that apply to lawyers, it suggests creating a regulatory system to apply to the non-lawyers who want to provide for-profit referral services that would require them to meet certain standards and to register with, and be regulated by, the ARDC.  According to the report, this approach would be better to protect clients and the integrity of the legal profession.

The ARDC will accept comments through at least Aug. 31, 2018. Comments should be sent to information@ardc.org.  More here.

As expected, the report has generated some debate already.  Here are some links to comments about it.

Carolyn Elefant writes that the proposal is a very bad idea, but not for the reasons that the jurisdictions that have published opinions have argued.

Law Sites describes the report here.

Legal Profession blog comments here.

Robert Ambrogi comments on the report at Above the Law.

Finally, here is a podcast discussing the report with its author.  (if you can't see the podcast play button below, you can go here to access it.)