Friday follow-up – more proof that it’s risky for lawyers to work with Avvo Legal Services

I’ve written about this topic several times (some might say probably too many times) now, but here is the first example of people who — unlike me — actually matter reaching a very familiar sounding set of conclusions about something that quite obviously is the Avvo Legal Services program.

South Carolina put out an advisory ethics opinion back in the middle of July.  I don’t exactly know how I missed it before yesterday, but thanks to an ABA Journal online story about it, I’ve now learned about it.  It hits exactly the two issues that, outside of jurisdiction like Tennessee that have a separate barrier like RPC 7.6, I tried not-too-subtly to emphasize in one of my earlier posts present a real problem for any lawyer thinking about signing up with Avvo Legal Services.  The two issues that, amount to something of a Schylla and Charybdis scenario, are the rule against fee sharing with non lawyers – RPC 5.4(a) — and the rule against paying people for giving people something of value in exchange for recommending your services – RPC 7.2(c).

The South Carolina opinion, quite succinctly, walks through why the arrangement about which it was asked manages to sound like both a fee sharing problem and alternatively a payment for referral problem.  As to fee sharing:

[T]he service collects the entire fee and transmits it to the attorney at the conclusion of the case.  In a separate transaction, the service receives a fee for its efforts, which is apparently directly related to the amount of the fee earned in the case.  The fact that there is a separate transaction in which the service is paid does not mean that the arrangement is not fee splitting as described in the Rules of Professional Conduct.

A lawyer cannot do indirectly what would be prohibited if done directly.  Allowing the service to indirectly take a portion of the attorney’s fee by disguising it in two separate transactions does not negate the fact that the service is claiming a certain portion of the fee earned by the lawyer as its “per service marketing fee.”

As to the lawyer giving Avvo Legal Services money in exchange for a recommendation or referral of the lawyer’s services and whether the “marketing fee” can be considered the “reasonable costs of an advertisement”:

The service, however, purports to charge the lawyer a fee based on the type of service the lawyer has performed rather than a fixed fee for the advertisement, or a fee per inquiry or “click.”  In essence, the service’s charges amount to a contingency advertising fee arrangement rather than a cost that can be assessed for reasonableness by looking a market rate or comparable services.

Presumably, it does not cost the service any more to advertise online for a family law matter than for the preparation of corporate documents.  There does not seem to be any rational basis for charging the attorney more for the advertising of one type of case versus another.  For example, a newspaper or radio ad would cost the same whether a lawyer was advertising his services as a criminal defense lawyer or a family law attorney.  The cost of the ad may vary from publication to publication, but the ad cost would not be dependent on the type of legal service offered.

As the ABA Journal story indicates, Avvo continues to argue against this kind of result on the basis of things that maybe “ought” to be true but just aren’t “actually” true at the moment with respect to pretty much any state’s ethics rules.   Avvo also has in a variety of online spots advanced the argument that it is not even making referrals but just offering a marketplace.  All of this is extremely intellectually interesting from a distance of course because there are models for providing a “marketplace” that actually do work within the existing ethics rules, even ones where the company charges the attorneys for the privilege of getting to be in the marketplace.  But the approach in that regard doesn’t involve charging a fee that is only tied to successful outcomes – i.e., transactions where legal services are provided and fees paid.  (Although even that kind of approach can be made to work if the consumer is the one that pays the freight to the entity hosting the marketplace.)  A much less controversial approach along those lines would be like the eBay model of providing a marketplace, where the participants are paying a fee associated with being involved and they pay it whether they end up getting to a successful transaction or not.

Importantly, Avvo’s response to developments like this SC opinion also makes clear that it plans to carry on full speed ahead, as you’d expect it would given its size, its capital, and its investment in its approach.  That kind of reaction to regulatory barriers is very similar to other market disruptors in other industries who sort of take a “we’re so big and we’re so influential, we dare you to try to stop us” approach.  Uber would be a fine example, but as to Uber there is very little risk to the users or the drivers in being affiliated with the entity when regulators come calling.

As to Avvo Legal Services there are real, and potentially really serious consequences for participating lawyers.  Individual lawyers will make their own decisions, but South Carolina lawyers will have to be extremely reticent about doing business with Avvo Legal Services in light of this opinion.  And I don’t think the SC opinion will be the last to come out and to reach similar conclusions.  My guess is that this will be the first of several jurisdictions that will put out similar opinions.

Thus, if you are a lawyer that is thinking about participating in this kind of arrangement, or continuing to participate if you are already doing so, you know, of course, that no matter what Avvo won’t be the one getting reprimanded and they can’t serve your suspension for you, but it would be a pretty reasonable conversation to pursue to see if Avvo is willing to pay for the costs of your defense if you end up facing disciplinary proceedings over your participation.

 

“En” to the . . . ah . . . to the no, no, no!

So, blame my children for the Meghan Trainor reference, but it is a catchy tune and, actually, not the worst of messages of female empowerment.  Nevertheless, it fits my ramblings today too well for me to resist.

A blurb about a trademark infringement suit involving an Atlanta law firm that operates under a trade name caught my eye this week.  You can read a Law360 story about it here, but know on the front end that the headline is incorrect and that the reason it is incorrect is the core of my not-fully-formed point.

The short form of the story is there is this Atlanta law firm that operates under a trade name of Trusted Counsel, technically Trusted Counsel Ashley LLC.  Law firm use of trade names is not universally accepted in terms of advertising regulations, of course, as there are some states that simply do not permit their use.  In Georgia, trade names can ethically be used as long as they include the name of at least one attorney in the firm (hence the “Ashley” reference) and “does not imply a connection with a government entity, with a public or charitable legal services organization or any other organization, association or institution or entity, unless there is, in fact, a connection.”   Tennessee’s version of RPC 7.5(a) is simultaneously more, and less, permissive as there is no requirement that a name of a lawyer be included but a clearer provision that no trade name can be used if it would violate RPC 7.1 (i.e. be false or misleading).

The law firm, Trusted Counsel (which interestingly is the only part of the firm name apparently that has been trademarked by Trusted Counsel Ashley) has been operating since 2003.  That firm has sued a much newer arrival to the Atlanta marketplace, Entrusted Counsel LLC, claiming trademark infringement, Lanham Act violations, and even cybersquatting.

Now the headline in the Law360 story was that a Georgia law firm had been sued, but even the actual lawsuit doesn’t go so far as to make that allegation (though clearly the plaintiff hopes you will draw that inference), instead the lawsuit (which you can read but not print off at this site on Scribd) asserts that the source of the infringement and the reason for confusion is that both Trusted Counsel and Entrusted Counsel provide “legal services.”

It took me fewer than 5 minutes of clicking around on the web to see that Entrusted Counsel is a consulting outfit owned/operated by someone who is not a lawyer.  Now, I’m admittedly not an expert in trademark law so the fact that Entrusted Counsel isn’t a law firm and can’t practice law may not mean squat with respect to the merits of the trademark suit, but it certainly is an interesting little fact given all the recent hew and cry over the ABA resurfacing — albeit briefly and to no avail — the discussion about whether the ethics rules should be revised to permit outside, nonlawyer investment in law firms.

I can’t help wondering, if the roles were reversed, what would lawyers say if a consulting shop, owned by a nonlawyer, sued a law firm that had a similar name for trademark infringement.

Speaking of advertising regulations, the other tidbit making waves and news in legal circles this week is that New Jersey has decided to weigh in, yet again, on “accolade advertising.”  Quite a few years ago, New Jersey attempted to put its arms out and hold back the tide of “superlative” or “accolade” advertising among lawyers.  The effort, as it should have been, was ultimately futile.

Last month, the New Jersey Supreme Court Committee on Attorney Advertising issued a “Notice to the Bar,” to clarify just when, and how, lawyers in New Jersey are permitted to publicly discuss the fact that a third party has conferred upon them a rating or accolade of some sort.  What drives the regulatory impulses to seek to impose barriers on references to such ratings or accolades is, of course, the unfortunate belief that all entities that provide ratings somehow have an underhanded, “pay to play” component.  To whatever little extent anecdotal evidence can rebut such preconceived notions, I have been fortunate enough to be listed in Best Lawyers in America since 2009, to be listed as a “Super Lawyer” beginning in 2011 by MidSouth Super Lawyers, and was awarded an AV rating by Martindale Hubbell back in 2006 or so and have never paid a dime  to any of those entities to run an advertisement or even to receive a plaque acknowledging my inclusion.

Are there entities that do little by way of separating wheat from chaff other than to see if a lawyer will pay for an accolade?  Absolutely.  But, as indicated above in what it took to figure out that Entrusted Counsel doesn’t practice law, it takes about 5 minutes at most these days to go online and figure out what the score is.

You can read the entirety of the NJ guidance here if you really want to but prepare to be frustrated and to sense the begrudging nature of the whole discussion.  If you want just the short version, here is what they say a hypothetical lawyer could say in compliance with their requirements:

Jane Doe was selected to the 2016 Super Lawyers list. The Super Lawyers list is issued by Thomson Reuters. A description of the selection methodology can be found at www.superlawyers.com/about/selection_process_detail.html.  No aspect of this advertisement has been approved by the Supreme Court of New Jersey.

Or, here is how it would read if that hypothetical lawyer wanted to tweet about it:

Jane Doe was selected to the 2016 Super Lawyers list. The Super Lawyers list is issued by Thomson Reuters. A description of the selection met

The “Notice to the Bar,” explains that it was issued because the committee “has received numerous grievances regarding attorney advertising of awards, honors, accolades that compare a lawyer’s services to other lawyer’s services.”

I wish the NJ committee would have just hired Ms. Trainor to answer the phones, she could have told the complaining lawyers:

You need to let it go, you need to let it go.  Need to let it go.  Nah to the ahh to the no, no, no.

 

APRL’s supplemental advertising overhaul proposal

Back in June 2015, I dedicated a post here to praising APRL’s proposal to streamline ethics rules imposing outdated restrictions on lawyer advertising.  A proposal that recognizes that lots of states currently have advertising restrictions on the books that could not survive a constitutional challenge and that aren’t really even being sought to be enforced and that seeks to have the ABA revise Model Rules 7.1, 7.4, and 7.5 and replace them instead with a revised Model Rule 7.1.

At that time, the APRL proposal was limited to a focus on trying to overhaul the provisions that address general advertising in public media.  APRL has now issued a supplemental report that turns its attention to the over regulation of restrictions on solicitation, including targeted written communications directed at potential clients.

The entire proposal is worth reading, and you can download it from here, but these are the highlights:

Much like the prior proposal, the APRL supplemental report proposes to collapse a number of provisions in the ABA Model Rule down to one revised rule, Model Rule 7.2 which would replace the provisions in current Model Rule 7.2 and Model Rule 7.3.  The two most significant aspects of the proposal are: (1) a revised focus on what kind of communications should be treated as prohibited solicitations; and (2) two new exceptions to even those prohibited solicitations.

Rather than continue with a framework that treats “real-time electronic contacts” as an equivalent of an in-person solicitation and, therefore, prohibited generally, APRL suggests that the prohibition should really only apply in-person, live-telephone, and things that are the digital equivalent of face-to-face encounters and not things that are the digital equivalent of targeted mailings.

The two new exceptions are if the person being solicited is a sophisticated user of legal services or if the communication is one authorized by a court order requiring notification in a class action.  The second exception was already written into a portion of the comment to RPC 7.3 in the Model Rule and is just being proposed to be moved up to the black letter of the rule and fleshed out further.  The first exception is brand new but consistent with an understanding of the motivation behind the prohibitions on solicitation in the first place — a concern that the imbalance between a person trained in persuading others and a regular person facing a pending legal need could lead to overreaching on the part of the lawyer and decision stemming from coercion on the part of the regular person.  For someone who qualifies as a “sophisticated user of legal services,” which the proposal defines in a comment to be “an individual who has had significant dealings with the legal profession or who regularly retains legal services for business purposes.”  And, yet, acknowledging that as the “evil” to be prohibited, the fact that the Model Rules already, and the APRL revised proposal as well, still actually prohibits any and all solicitations that actually involve coercion, duress, or harassment  even if the targets would other be excepted.

One other aspect of the proposal worth noting is its more realistic and detailed approach to explicitly permitting online group advertising.

If I had one criticism of the APRL proposal, it is with the way it defines a sophisticated user of legal services.  The second part about regular retention of legal services for business purposes is likely where it should have stopped, as the first portion of the definition is pretty amorphous and subject to manipulation.  For example, would a recidivist offender who has gone through repeated jury trials and spent many years in prison someone who would qualify as having had significant dealings with the legal profession?  Seems like a pretty clear argument could be made that the answer would be yes.

As with the first APRL proposal, I have no real sense of how likely it will be that the ABA will take it up and accomplish the implementation of these common sense proposals.  And, even if that happens, then the actual impact on the profession will only come about if states undertake to adopt this kind of streamlined, common sense approach to these issues.

Unfortunately, after years of appearing to move in the right direction on the issues of lawyer advertising, the path my state has taken recently has been in the opposite direction.  Our court actually, most recently, took action to expand the 30-day off limits provision that the APRL report indicates has not been widely adopted to go beyond personal injury matters into divorce filings.

Algorithms, Artificial Intelligence, and Seeing If I Can Put a Dent In Figuring Out What Is Next for Law.

When you allow yourself to ponder just how quickly technological advances have changed the daily life of a lawyer, it becomes pretty easy to speculate about just how foreign the daily life of a lawyer 10 years from now will be when compared to what it is today.  When I stop to think about the fact that some of the biggest law firms in not just the United States, but the world, are directly involved in various efforts that will help reshape the landscape, it makes me wonder whether that actually makes it more likely, or less likely, to happen quicker than it might otherwise.  I’m almost positive I don’t know the answer to that question at all, but I think it is worth asking and whatever the actual answer turns out to be should be interesting.

I’ve written about Dentons in the past but, at the time, focused only on their at-least-arguably-controversial-stance on conflicts of interest flowing (or not) from their organization as a Swiss verein.  Despite its massive size as the globe’s largest law firm (or perhaps because of it), Dentons seems to be pretty heavily invested in a number of innovative efforts that have the potential to impact what the practice of law looks like in a few years.

There was an event in Nashville last month — a symposium at Vanderbilt Law School called Watson Esq. – Will Your Next Lawyer Be A Machine? focused on the current and potential role of artificial intelligence in the practice of law.  I’ve also mentioned at least once before that I happen to be serving on a special committee of the Tennessee Bar Association focusing on the Evolving Legal Market.  Several members of the special committee were able to attend, I was not among them.  One of the topics that was discussed at length was Ross – Aaron Arruda with Ross Intelligence was a speaker, a particular artificial intelligence research product, that itself uses aspects of IBM’s Watson technology to try to be, for lack of a more sophisticated description, a robot attorney..  A subsidiary of Dentons, NextLaw Labs, has been reported as having been very involved in assisting with the training and development of Ross.

This week it was announced that an entirely different law firm, Baker Hostetler (an extremely large law firm compared to many but not when compared to Dentons — the Ross Intelligence press release includes the information that Baker Hostetler has 940 attorneys in 14 offices) announced that it had agreed to license the Ross AI product from Ross Intelligence for use in connection with segments of its bankruptcy practice.  As the ABA Journal online piece explains, Ross really does sound like a scrappy young associate – one that is not at all concerned about work-life balance by the way:

Ross responds to lawyers’ questions in natural language by reading through the law, gathering evidence and drawing inferences.  The program learns from the lawyers who use it to refine its search results.  It also monitors the law and notifies users of new, relevant court decisions.

The other interesting piece of news involving (much more directly) the world’s largest law firm was its announcement that another of Dentons’ subsidiaries is jumping into the realm of lawyer referral services/referral networks.  This story offers some explanation for what is intended.   At some level, the NextLaw Global Referral Network could really be nothing more than just a variation on the affiliated law firm network concepts like Meritas or State Capital or ALFA —  arrangements which have tried, with varying degrees of success, to leverage mutual interests of firms to encourage reciprocal referrals of work.  The new Dentons-backed network attempts to distinguish its arrangement from other arrangements as being both free to join and not limited to one firm in a particular market.

The hook beyond just the sheer size of Dentons (it touts itself as having more than 7400 lawyers in more than 125 offices in 50+ countries and that Dentons already has 1000 firms it has referred matters to and 500 firms that have referred matters to it), although not elaborated upon in incredible detail in the ABA Journal story, seems to be the notion that something about its network will use “new technology that promotes reciprocal repeat referrals.”

I have no idea how that would actually work — or what that technology would have to encompass — the Dentons’ press release describes it as being a combination of transparency and an “algorithm,” but realistically it sounds like it would be the transparency and accompanying pressure — what the FAQs acknowledge as a “tracking system” — against “free riding,” that would do the trick.

Given the existence of rules like Tennessee’s RPC 7.2(c)  prohibiting the giving of anything of value to someone in exchange for recommending or publicizing a lawyer’s services, actual outright agreements to engage in reciprocal referrals are viewed as prohibited conduct because the quid acts as something of value for the quo and vice versa.

Time will tell whether Dentons will, as the headline of its press release touts, actually “disrupt any pay to play legal referral industry.”  The NextLaw network will have its own separate CEO and a dive into the Terms of Use of the network indicates that NextLaw Global Referral Network is itself organized as an LLC.  (Presumably NextLaw Global Referral Network LLC is, like NextLaw Labs, a subsidiary of Dentons.)

From the press release, it also appears clear that while Dentons and firms like Baker Hostetler may find themselves licensing the same AI software from Ross Intelligence some day, Dentons is much less interested in firms of that size and scope being a part of this global referral network.  The firms its looking for are:

primarily … small to mid-sized law firms, and firms of any size that are in one location, country or region, or that specialize in one practice area or industry sector.

A question I’d love to figure out the answer to is whether NextLaw Labs assistance in training and developing Ross also played a role in the development of whatever algorithm NextLaw Global Referral Network plans to use to encourage and increase repeated reciprocal referrals?

And, finally, although it is a round-about way to get there, the other topic a conversation like this brings me back around to is — when you are talking about giant law firms that already have subsidiaries that are pushing the notions of law-related services arrangements under RPC 5.7 to its very boundaries, how much actual difference would allowing outside investment in law firms really have on where the legal marketplace is headed?

Avvo Legal Services won’t work in Tennessee without RPC 7.6 compliance, but should it be so?

The evolution of Avvo from its origins as a lawyer-rating service to something with a much, much more extensive impact in the legal marketplace continued this week with the news of the launch of Avvo Legal Services.  Robert Ambrogi was, as often is the case, the first to break the news online about the development, briefly describing the nature of the service and helpfully linking to the FAQ Avvo offers attorneys about it.

The nutshell version of what exactly this is can be found in the Attorney FAQ under “What are Avvo Legal Services?

Avvo Legal Services are fixed-fee, limited scope legal services determined by Avvo and fulfilled by local attorneys.  Avvo defines the services and prices.  Attorneys choose which services they would like to offer in their geographical area.  Local clients purchase legal services, choose the attorney they want to work with, and pay the full price of the service up front.  The chosen attorney then completes the service for the client and is paid the full legal fee.  As a separate transaction, the chosen attorney pays a per-service marketing fee for the completed, paid service.

Now a writer at the Solo Practice University blog has already teed up a thoughtful piece asking some questions about fee-splitting concerns, which do seem significant when, despite the separate transactions involved there is no question that the “marketing fee” rises as the attorney fees charged rises, and whether it would be highly inadvisable for lawyers to run these transactions through their trust accounts.  I will, for the most, part omit further discussion of those two issues for now.

However, Avvo can say what it wants in its FAQ about why this service is not a lawyer referral service (just as it can attempt to analogize its marketing fee to a credit card processing fee if it thinks that might fly), but I don’t think there is any doubt that, under current ethics rules in a number of states, lawyers who participate with Avvo Legal Services will be taking on significant risk.

Should a lawyer in Tennessee, for example, want to participate in this arrangement (assuming a future roll out here), the likely outcome of any scrutiny would be that the lawyer would violate RPC 7.2(c) unless and until Avvo Legal Services can manage to obtain approval as a registered intermediary organization under our RPC 7.6.

This becomes clear when you look at each of those two Tennessee rules.

Our RPC 7.2(c) generally prohibits a lawyer from “giv[ing] anything of value to a person for recommending or publicizing the lawyer’s services” but provides 4 specific exceptions.  Two of those exceptions are unquestionably unavailable with respect to Avvo Legal Services (publicity in exchange for charitable sponsorships/contributions or purchase of a law practice).  One of the exceptions involves the usual charges of a registered intermediary organization permitted by RPC 7.6.  The other allows payment for “the reasonable costs of advertisements permitted by [RPC 7.2].”

Now, perhaps a lawyer handling cases through Avvo Legal Services could muster an argument that the “marketing fee” being paid is just the reasonable cost of an advertisement.  But nothing about the way Avvo Legal Services describes the program lends itself to such a view as everything about the explanatory materials point to the idea that the lawyer is paying for a result — a paying client — and not just an advertisement.  It’s also paying more for a more lucrative client engagement.  From paying $40 to earn $149 in attorney fees, up to paying $400 to earn $2,995 in attorney fees.

Nevertheless, paying the “marketing fee” could be justifiable under RPC 7.2(c) if it is the “usual charge” of a registered intermediary organization.

Given how broadly Tennessee RPC 7.6(a) defines the term “intermediary organization,” it seems difficult to figure a way that the Avvo Legal Services program would not meet the definition:

An intermediary organization is a lawyer-advertising cooperative, lawyer referral service, prepaid legal insurance provider, or a similar organization the business or activities of which include the referral of its customers, members, or beneficiaries to lawyers for the provision of legal services to the organization’s customers, members, or beneficiaries in matters for which the organization does not bear ultimate responsibility.

Whether or not Avvo Legal Services becomes properly registered will matter to Tennessee lawyers not only because then they could ethically pay a “usual charge,” but also because a Tennessee lawyer would be ethically prohibited by RPC 7.6(b) from “seek[ing] or accept[ing] a referral of a client, or compensation for representing a client, from” Avvo Legal Services unless several specific things were true.  For today’s purposes, the most significant would be that Avvo Legal Services would have to have “registered with the Board of Professional Responsibility and complied with all requirements imposed [on it] by the Board.”  RPC 7.6(b)(iv).

Tennessee lawyers can check, at any time, the list of entities that are properly registered with the Board in this respect at this link.  You’ll see that Avvo Legal Services is not on that list; of course, their current roll out explains that they are only launching in a few cities to start.  Presumably, Avvo Legal Services might pursue registration under our RPC 7.6/Supreme Court Rule 44 before opening the program up to lawyers in any Tennessee cities.

But should it have to?  What really is the rationale that would be used to justify why this sort of service should be off-limits to lawyers?

In jurisdictions that do not have Tennessee’s approach under RPC 7.2(c) and  RPC 7.6, this service may be more viable, albeit still burdened by a few thorny issues regarding arguments that this is fee sharing or what role Avvo Legal Services has (an agent/fiduciary for the client or an agent for the attorney or what exactly?) while it holds money paid by the client for the rendering of legal services.

Unlike Tennessee’s RPC 7.2(c), the ABA Model Rule does not include the words “or publicizing” and only imposes restrictions on the ability to pay someone for “recommending the lawyer’s services.”  Further, language in the Comment  to ABA Model Rule 7.2 further distinguishes between “recommendations” and “channeling” of work to the lawyer, as [5] indicates that while payments for recommendations are off limits altogether but that paying others for “channeling work” is only a problem if the channeling is “in a manner that violates RPC 7.3.”  Further, that same Comment elaborates 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 Rule 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).

Yet, even with that seeming additional flexibility in jurisdictions that track the ABA Model Rules approach, issues would remain that will depend significantly on how the program actually works — particularly the consumer side of the interactions.  The very next sentence of that Comment exhorts that a lawyer “must not pay a lead generator that states, implies, or creates a reasonable impression that it is recommending the lawyer, is making the referral without payment from the lawyer, or has analyzed a person’s legal problems when determining which lawyer should receive the referral.”

A review of what appears to be the consumer-side FAQ for Avvo Legal Services does not contain any explicit disclosure of the fact that the attorney providing the service will be paying Avvo Legal Services for getting to work for the client.  In addition to what it doesn’t say, it has some language that could be construed as at least “implying” a recommendation of the particular lawyer doing the work:

You will work with the lawyer you selected during checkout. For phone call advice sessions, you can also choose to speak to the next available lawyer. In that case, Avvo will connect you with a highly reviewed attorney who is experienced in your topic area and licensed to practice in your state.

But, again, a question worth asking is:  should this be something the ethics rules work to prohibit?  Avvo Legal Services certainly seems to think that this endeavor can be sufficiently profitable, which strongly implies that there are a large number of consumers of legal services who would be willing to make use of such an arrangement and, ultimately, a significant number of lawyers who would be willing to provide services to such consumers in this manner and on these financial terms.  So, the larger question ought to be — if the rules governing our profession will not abide this kind of arrangement, then what is the rationale for nixing it?

Just who exactly are we seeking to protect, and why?

New “Brick and Mortar” column out this week (+ 2 other things you should read)

Unfortunately, it does not appear to be up and online as of yet at The Memphis Bar‘s website, but the latest issue of The Memphis Lawyer is out, and I have a column in it.  The column — The Revised RPC 7.3(b)(3): The Road to Constitutional Infirmity is Paved With Good Intentions — talks about a revision to the Tennessee ethics rules that has been in effect since May 1, 2015 and should be of particular relevance to family lawyers.  (Regular readers of this blog may recall reading a bit about that development in this earlier post.)  My latest column also talks a bit about one of the last U.S. Supreme Court cases from last term — Reed v. Town of Gilbert — that may lay the groundwork for all content-based restrictions on commercial speech (including most restrictions on attorney advertising) having to survive “strict scrutiny” analysis to pass constitutional muster.

Once it is eventually up online, I’ll post an update of some fashion, but if you happen to be a lawyer in Memphis and your issue is sitting in your reading pile … well consider yourself warned.

In the meantime, let me suggest two other things deserving of a read and well worth your time.  (And I see in advance the humor of me suggesting that the two items be read as I am confident they both have more readers than I do.)

Karen Rubin has a smart take on something I had no idea existed — prepackaged blog content for lawyers.  She gets the ethics analysis quite correct (of course) and avoids explicitly making the kind of snarky statement I would have made:  If you are buying prepackaged blog content to pass off as your own to assist with proving yourself to be a “thought leader,” you’re not showing much “thought” and you certainly aren’t “leading.”  The one question I still have about the whole scheme is whether Checkpoint Marketing intends to sell the same canned content to multiple lawyers?  It’s a business model that works in t.v. ads for lawyers (though admittedly it worked better before YouTube because you were less likely to ever see the same ad concept in the other markets).  If multiple lazy bloggers lawyers can each buy the same stuff, it would seem likely to lead to even a greater level of embarrassment when a simple Google search for some particular phrasing in a post would pretty quickly reveal multiple astroturfish posts from different lazy bloggers “authors.”

The second is this New York Times piece on the revelation that the human being who is serving as General Counsel of Al Jazeera America, and who has a quite impressive resume of places of employment before that might not actually have ever been a lawyer at all during the last three decades or so.  It’s a fascinating read, and the story has now triggered Al Jazeera America to suspend the gentlemen and pursue an investigation.

Coming to praise rather than to bury (Part 2 of 2)

Yesterday, I offered a positive review of a recent ethics opinion from the New York City Bar.  Today, I want to talk through this Order on the Merits striking down Florida’s restriction in its ethics rules on the ability of lawyers to refer to themselves as a specialist in the absence of a board certification from Florida or an ABA approved third-party certification entity.  I said yesterday that praising a development on legal ethics out of Florida would be a change of pace, but that’s a bit misleading as I’m really praising a federal judge for reining in Florida bar regulators and that has been a more common event recently.

Before actually delving into the Florida ruling, I’d like to offer a little background that helps explain why I am so interested in this development.  For pretty much as long as I have been licensed to practice law (17+ years now), Tennessee’s ethics rules on lawyer advertising have included provisions that significantly limit a lawyer’s ability to say that s/he is a specialist or that s/he specializes in a particular area or field of the law.

The current version of our rule, RPC 7.4, articulates this restriction as follows:

(b) Except as permitted by paragraphs (c) and (d), a lawyer shall not state that the lawyer is a specialist, specializes, or is certified or recognized as a specialist in a particular field of law.

(c)  A lawyer admitted to engage in patent practice before the United States Patent and Trademark Office may use the designation “Patent Attorney” or a substantially similar designation.

(d) A lawyer who has been certified as a specialist in a field of law by an organization accredited by the American Bar Association’s House of Delegates, and who has registered such certification with the Tennessee Commission on Continuing Legal Education, may state that the lawyer “is certified as a specialist in [field of law] by [accredited organization.]”

Up until January 1, 2015, (d) of our rule read quite differently, referencing the need to have been certified as a specialist by the Tennessee Commission on Continuing Legal Education and Specialization instead of directly pointing to the ABA.  As a result of a petition filed late in 2013 by the Commission the rule was changed because the Commission explained that it didn’t and wasn’t qualified to figure out how to certify anyone other than by simply relying upon whether the ABA had accredited a certifying organization and the “and Specialization” was dropped from the name of the Commission as part of it admitting that really wasn’t doing that part of its job.  I suspect there are likely still quite a few lawyers in Tennessee that are not aware of the change that resulted from this Tennessee Supreme Court order.

Florida’s Rule 7-14(a)(4) goes a bit farther than Tennessee’s as it imposes restrictions not only on claims of being a “specialist” but explicitly to claims of being an “expert” as well, treating such statements as “potentially misleading” and prohibited unless:

(A) the lawyer has been certified under the Florida Certification Plan… and the advertisement includes the area of certification and that The Florida Bar is the certifying organization;

(B) the lawyer has been certified by an organization whose specialty certification program has been accredited by the American Bar Association or The Florida Bar as provided elsewhere in these rules.  A lawyer certified by a specialty certification program accredited by the American Bar Association but not The Florida Bar must include the statement “Not Certified as a Specialist by The Florida Bar” in reference to the specialization or certification.  All such advertisements must include the area of certification and the name of the certifying organization; or

(C) the lawyer has been certified by another state bar of the state bar program grants certification on the basis of standards reasonably comparable to the standards of the Florida Certification Plan … and the advertisement includes the area of certification and the name of the certifying organization.

A Florida personal-injury law firm, Searcy Denney Scarola Barnhart & Shipley PA, and each of its five-named partners individually, filed suit in the U.S. District Court for the Northern District of Florida challenging this restriction as unconstitutional.

On September 30, 2015, Judge Hinkle entered an order enjoining the Florida Bar from “enforcing Rule 7-14(a)(4), to prohibit the plaintiffs from making truthful statements on a website, blog, or social medium about their specialty or expertise.”  The opinion is succinct but very well done.  (NB: it also contains very good analysis of another challenged provision that should eventually fall but for which Searcy Denney’s claim was unripe – Florida’s rule banning statements in advertisements that are not “objectively verifiable.”)

The Court quickly states the crux of the problem with the rule’s application to the plaintiff law firm and its lawyers:

The application of this rule is clear: Searcy Denney cannot say it specializes or has expertise in mass-tort or unsafe product cases, or even in personal-injury cases, even though the firm undeniably has expertise in these areas.  Nor can any individual attorney claim to specialize or have expertise in mass-tort or unsafe-product cases, even if the attorney handles only cases of that kind, and even if the attorney has successfully handled many such cases.

The Court then works through an overview of U.S. Supreme Court and federal circuit decisions readily demonstrating that the three-pronged Central Hudson test applies to determine the constitutionality of any restrictions by a state on lawyer advertising.  Most importantly, for purposes of the issue before the Court, the second and third prongs of Central Hudson require that the restriction on speech must “directly advance[] the asserted government interest” and that the restriction on speech not be “more extensive than is necessary to serve that interest.”  Judge  Hinkle then recognizes that generally there has to be some “tangible evidence” offered to show that “the commercial speech in question is misleading and harmful to consumers” and that, as to the “fit” required between the ends and the means, it is a relevant consideration for the Court whether there are multiple, obvious alternatives that would be less burdensome than the challenged regulation.

Judge Hinkle then makes light work of the Florida Bar’s arguments in support of its rule.  The argument that a consumer “will be misled into believing that an attorney who ‘specializes’ or has ‘expertise’ in an area is board certified” gets brushed aside based on the lack of any evidence to support the assertion and the fact that a disclaimer would be a much narrower way to address the issue (as would educating people about what board certification means).  The Florida Bar’s second argument is rightly recognized by the Court as being a straw man of the “we have to be able to have some standards” variety.

The Court stresses that the Florida Bar can still prohibit untrue or misleading claims.  Thus, if a lawyer or law firm claims to have expertise in an area they do not or to specialize in something they do not, then the Florida Bar could still pursue them for discipline under other ethics rules.  But, as should be clear just in reading that it is within a collection of provisions entitled “Potentially Misleading Advertisements,” that is not the limit of this rule at all and, instead, the Florida Bar’s rule prohibits truthful speech.  A point easily underscored by reminding that there are many narrow fields where no certification is offered and the fact that law firms (unlike lawyers) cannot be board certified in Florida at all.

And, what is most praiseworthy, is that near the end of the Order, Judge Hinkle cites to Peel v. Attorney Registration & Disciplinary Comm’n of Illinois, 496 U.S. 91,, 105 (1990), which should have been understood a quarter of a century ago by all states, including mine, that these kinds of restrictions on truthful speech cannot stand when supported, as they are, only on the basis of a “paternalistic assumption” that consumers of legal services “would automatically mistake a claim of specialization for a claim of formal recognition by the State.”

Two updates and a (hidden) microphone.

A few items for your consideration over this coming long, Labor Day weekend.

The first is an update on a proposed ethics opinion made the subject of an earlier post.  The Florida Bar’s Board of Governors has now ultimately decided to reject the approach that had been recommended by its advertising subcommittee, which proposed that would have treated text message communications to prospective clients as being the same as in-person, real time communications and, instead, will treat them similar to email and other written communications.  You can read the ABA Journal’s story on the ultimate outcome here.  As I wrote back at the time, while I disagreed with the interpretation of the particular rule they seemed to be trying use to ban text message solicitations, I actually would tend to conclude that these days text messages are the kind of real-time communication that makes sense to regulate the same way as telephone calls.  That being said, I really don’t have a problem with where Florida finally shook out on this issue.  And, frankly, if you go read the Florida rule that folks trying to send text message solicitations are going to have to comply with … it is hard to figure out an efficient way to do so where the substance of your message is not going to be drowned out by all of the required prophylactic language for written solicitations in Florida.  I mean, just focusing on two of the requirements, means that any such text message would have to start something like this … “Advertisement:  If you have already retained a lawyer for this matter, please disregard …. ”  I mean good luck getting anybody to actually open up and read that text.

The second is a further update on my 2015 Ethics Roadshow, the registration links for Nashville, Chattanooga, and Knoxville are now all up and available as well.  Like with the Memphis link, these links also tell you about my The Hitchhiker’s Guide to the Galaxy inspired theme for this year and give you the options for how you can submit topics or questions you’d like to see covered at the seminar.

If you are a lawyer in Tennessee, then one question you might have is what in the world to do if you begin to suspect that a conversation that you had with a client that you thought was private actually may have been recorded by a hidden microphone set up outside of the courthouse.  While that sounds like a fun, somewhat outlandish, hypothetical, my third item for your consideration is the news that this was reality in Knoxville, Tennessee for about two weeks.  The good news is that it is a question that, for now, would only be germane for that two week period and it sounds like (no pun intended) the equipment wasn’t really all that good and so not much was actually picked up in a fashion that could be comprehended.  You can read the story here.

There are real repercussions to the fact that there seems to be no place where one can venture outside your house or office and not be picked up on camera.  Some of those repercussions are good ones, some bad.  For lawyers, while I agree completely with the sentiment expressed in one of the first stories that broke the news of this situation that it would be reasonable for lawyers to expect there would be some significant advance warning and publicity efforts to alert the bar to the fact that this kind of audio surveillance equipment had been put into place, I also think that we have no choice but to assume that any conversation with our clients, about their cases, in public settings is risky.  That being said, we can’t guard against everything.  All we can do is think through whether, in any particular setting, we and our client can demonstrate that our expectation that we were having a communications that was private was reasonable.

Bad ethics opinion or the worst ethics opinion? – Ohio 2015-2 edition

Let’s play a little game called:  Bad ethics opinion or the worst ethics opinion?

Earlier this month, the Supreme Court of Ohio Board of Professional Conduct issued Opinion 2015-2 about whether/how a lawyer presenting at a legal seminar can distribute brochures to prospective clients and whether the lawyer can answer legal questions posed by the attendees at the end of the seminar.  You can go read the opinion here.  Go ahead, go read it.  I’ll wait.  You’ll probably figure out its multitude of flaws on your own, but if you don’t, you can come back here and continue reading.

So, now that you’ve read it (or just moved straight to this next paragraph to get the skinny), the Ohio Board concluded that a lawyer speaking to prospective clients at a legal seminar can make brochures and firm materials available somewhere near the exit but cannot personally hand the materials out.  That’s stupid, but not necessarily stupid wrong.  Just stupid in the general way that attorney ethics rules which appear to assume pliability of other human beings can end up being a bit stupid in their application a lot of the time.  Unlike the next topic, it at least stems from a plausible reading of Ohio’s RPC 7.3.

It’s the second conclusion offered by the Board that is stupid wrong.  Here’s the question being addressed by the Ohio Board –

May a lawyer stay after a seminar to answer follow-up questions of attendees or meet with attendees who sign-up to meet with a lawyer in advance of a seminar?

This should be a fairly straightforward question to answer, right?  Lawyer gives a talk to large group.  Lawyer doesn’t say to large group – “hey, hire me.”  Rather, lawyer attempts to demonstrate knowledge of area of law in hopes that s/he will convince one or more people in attendance that they might do well to retain lawyer for services.  At end of presentation, grown-up, functional, human being voluntarily approaches lawyer to ask a question.  What does the Ohio Board say about what can happen next?

A lawyer may not remain after a seminar to discuss personalized legal needs of attendees, even if attendees sign up to meet with the lawyer in advance of the seminar.  Instead, if attendees wish to meet with the lawyer, the attendees should be directed to call the law office and schedule an appointment to meet with the lawyer, or be instructed to contact a lawyer of their choice.

Seriously?  As part of the ultimate explanation for their conclusion, the Ohio Board states that “[t]he lawyer cannot be the person to initiate contact with the prospective client following a presentation at a legal seminar.”

Which of those words is it that the Ohio Board does not understand the meaning of?  It seems pretty clear that they don’t know what the word “initiate” means.  There could be others that are tripping them up, I guess.

If the person has come up to the lawyer at the end of the seminar and asked a question, the lawyer has not initiated the contact.  This is not rocket science.  The ability of the Ohio Board to get this so badly wrong though is solid proof that, for some reason, smart lawyers’ brains turn to mush when they address questions of marketing.  It is also an indication of why alternative sources of legal assistance are making such a dent in the marketplace for legal services.

Luckily, even if I find myself speaking in Ohio (though I’m pretty sure no one from the Ohio Board will be inviting me any time soon), I won’t have to worry about compliance with the convoluted approach to their rules articulated in Opinion 2015-2, as even the Ohio Board acknowledges that none of these restrictions are necessary if the attendees of the seminar are also lawyers because solicitation of lawyers is not prohibited in the same way under Ohio RPC 7.3.

Kickstarter worked for the potato salad guy, but it is more like a nonstarter for fledgling lawyers.

It was about two years ago when a man from Ohio put up a Kickstarter to raise $10 to make potato salad and ended up receiving tens of thousands of dollars in donations.  I’m sure there were many people who were familiar with this concept before then, but for me that was the first I’d heard of the online phenomenon of crowdfunding.  Most recently, it seems like a good bit of the news on crowdfunding has been of the weird variety where people use it to raise money for police officers who shoot unarmed people.

I never thought I’d see lawyers interested in using crowdfunding to actually permit them to set up a law practice.  I didn’t think I’d see it for two reasons: (1) the ethics rules prohibiting nonlawyer investment in law firms would never allow something like that; and (2) if you are going to hope a collection of strangers with too much money on their hands will throw some your way, why wouldn’t you leverage it to do something much less stressful than practice law?

Yet, yesterday I read the stories about the new law school graduates drowning in student loan debt who were kicking around the idea and the resulting New York State Bar Association ethics opinion.   It is not entirely clear why this opinion, written and issued back on June 29, 2015, is just now surfacing in the news, but in tooling around and reading a few stories about the opinion I came across a second unexpected development —  much of the reporting on this opinion appears to be giving it a positive headline as if the newsworthy aspect of the opinion indicates that maybe a lawyer could pursue this.

Yet, thoughtful reading of the opinion demonstrates that is the wrong sort of headline.  The NYSBA opinion explains that from what it can decipher there are 5 types of crowdfunding endeavors.  One is sort of just syndicating a loan with many, many small loans from individuals for a project that might not get a large amount of funding from a bank or other institutional investor.  The committee spends no time talking about the ethical implications of that option because that still would just be more debt for these new law grads and the law grads making the request indicated that they were interested in crowdfunding to avoid being saddled with additional debt.

Two of the other five approaches, the investment model and a royalties model, are ones the committee explained are nonstarters from an ethics perspective because they involve either (the investment model) nonlawyer ownership in the firm in violation of RPC 5.4(d) or they amount to an arrangement in which there would be fee sharing between lawyer and nonlawyer in violation of RPC 5.4(a).  These obvious answers to the ethical issue are one of those two reasons stated above that I didn’t think I’d see lawyers exploring this model.

Finally, the two other types are the straight, no-strings-attached donation approach and the “reward” model, where you are overpaying for some small item in return approach.  As to the donation approach, the committee did not see any ethical problem with it.  (Also they were kind enough to not explicitly state that the only chance this would work is if you threw in an offer of some potato salad.  And, if you didn’t actually follow the potato salad story back when it happened, the guy did end up throwing a big party with the proceeds and giving some funds to charity so that at least had something of a happy ending.)

As to the reward model, the inquiring lawyers said that perhaps they would offer an informational pamphlet or agree to provide pro bono services to some charitable organizations.  The committee says that could be ethically viable but that there were some land mines, like making sure the informational pamphlet didn’t offer legal advice and complied with advertising restrictions and making sure that, if offers were made to do pro bono work for a charitable organization, that the lawyer could remain available to do so ethically.  In addressing this approach, the committee offered a call-back to a 2011 opinion it issued about “deal of the day” websites like Groupon.

What is really disappointing is, having gone to all of the trouble of putting out an opinion on this topic and even referencing its prior Groupon analysis, it might have actually been more helpful to address a variation on the reward approach which might be economically viable.  Could lawyers put up a crowdfunding offer where anyone who contributes say $50 today receives $200 in free legal services from this firm at any time in 2016?  Such an approach might just provide the level of seed money needed to start up the infrastructure of a law practice and might, assuming the lawyer can develop some regular clients (who weren’t also investors), allow the lawyer to eventually turn a profit.  Such an approach also would, in theory, be no more perilous from an ethics perspective than the Groupon situation.

But, really, the most valuable thing this ethics opinion does — in a fairly easy to observe way — is to lay bare how the absolute restriction on nonlawyer investment in a law firm goes way beyond what would be necessary to protect the espoused public interest being served — which it says in the Comment to the Rule is “to protect the lawyer’s independence of professional judgment.”  The regulatory concern is that if lawyers practice in a law firm that is controlled by non-lawyers then the lawyers will not adhere to their ethical obligations and will instead allow themselves to be directed to do whatever is necessary for the firm — and therefore the investors — to turn a profit.  Yet, if a law firm raised $50,000 in start up capital $25 at a time from 2,000 investors, would you really be worried that any of those 2,000 individuals would be in a position to control or direct the independent professional judgment of the lawyers in the law firm?  No, of course not.