Virginia’s revised lawyer advertising rules – big win for APRL’s effort to streamline the advertising rules

[In the interest of full disclosure for those who might be new here, I am presently a member of the Board of Directors of the Association of Professional Responsibility Lawyers (APRL).]

For those who aren’t new here, you know full well my personal opinion on lawyer advertising and what the ethics rules should and should not try to do in terms of regulation.

Unsurprisingly then, I was pleased to learn of Virginia’s decision to adopt new lawyer advertising rules effective July 1, 2017 and to learn that they largely do the kinds of things that APRL has been advocating should be the approach to these issues through proposed revisions to the ABA Model Rules.

You can go read the order entered by the Supreme Court of Virginia earlier this week that lays out the full text of what will now be its only rules in the 7.1 through 7.5 series, Rules 7.1 and 7.3 and accompanying Comments that will become effective July 1, 2017, but here are a few highlights:

  • Rule 7.1 will read in its entirety: “A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services.  A communication is false or misleading if it contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.”
  • Rule 7.2 has been deleted and instead any issues that it used to address are now addressed, if at all, in paragraphs of the Comment to Rule 7.1.
  • One such Comment to Rule 7.1, [2], explicitly acknowledges that the right kind of disclaimer can cure something that might otherwise be argued to be “a statement that is likely to create unjustified expectations or otherwise mislead the public.”
  • Another such Comment to Rule 7.1,, [4], explicitly acknowledges that someone could be a “specialist in a particular field of law by experience,” and that such a person can communicate that specialty as long it is not done in a way that is “false or misleading.”
  • Rule 7.3 addresses all aspects of targeted solicitations and also addresses the prohibitions on providing payment or things of value to someone for a recommendation or referral.
  • As to solicitation, Rule 7.3 makes clear that it applies only to communications that are “initiated” on the lawyer’s end.  And, appears to not attempt to prohibit in-person or real-time solicitation of clients.
  • Instead, it limits its outright prohibition on solicitation to situations where the solicitation is directed to someone who has made known to the lawyer they don’t want to be solicited or when the solicitation “involves harassment, undue influence, coercion, duress, compulsion, intimidation, threats or unwarranted promises of benefits.”
  • It does contain a provision requiring an “ADVERTISING MATERIAL” disclaimer on “written, recorded or electronic solicitation[s]” but not if they are addressed to the universe of folks ABA Model Rule 7.3 has traditionally excluded from the in-person/real-time ban (other lawyers, family members, prior professional relationships, etc.)
  • Rules 7.4 and 7.5 are deleted altogether.

Kudos to the Virginia State Bar, the Supreme Court of Virginia.  One state down, 49 more (plus D.C.) to go.

Dear ABA – Embrace reform of the lawyer advertising rules. Please.

I have written in the past about the APRL white papers providing the rationale for, and data supporting the need to, reform the way lawyer advertising is regulated in the United States by state bar entities.  You can read those prior posts here and here if you are so inclined.

Jayne Reardon, the Executive Director of the Illinois Supreme Court Commission on Professionalism, over at the 2Civility blog has posted a very thorough report on events that transpired in Miami earlier this month and that reminds folks that the deadline put together by the ABA working group looking at whether to back APRL’s proposals is March 1, 2017.

I am a proud member of APRL – actually presently I’m even fortunate enough to serve as a member of its Board of Directors – but was not able to make it down to Miami for our meeting and the ABA meetings this year.  If you are a reader of this blog, you know that my view is that the only advertising rule that ought to be necessary is a version of RPC 7.1 that states, as does the ABA Model:

A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services.  A communication is false or misleading if it contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.

Period.  Full stop.

Now Jayne’s report from the ground mentions that some folks criticized or complained about APRL’s proposal because it would not apply only to advertisements by lawyers.  To me that is a feature, not a bug.  As I’ve also written and spoken about, RPC 7.1 is violated when a lawyer sends a fraudulent bill to a client saying they spent more time on something than they really did and that’s a good thing.  It also, for example, applies to lawyers who lie on their resumes as we saw with this recent instance of lawyer misconduct.

The concern expressed by someone that it could result in discipline against a lawyer politician (presumably one who would have to have lied about some aspect of their personal history I guess) does not give me much pause because if it were so applied it would likely fail First Amendment scrutiny because of the higher standards afforded to protect political speech rather than constitutional speech.

While I think RPC 7.1 ideally is the only rule that ought to exist, I recognize that people are going to insist there be some restriction on in-person solicitation so I also support APRL’s proposed approach to having an additional rule, over and above RPC 7.1, to address that.  As I’ve said before, my only quibble with APRL’s proposal on that front is as to how it defines a sophisticated user of legal services:

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.

I’m going to send this post in to the ABA working committee as my own personal comment.  If you have a viewpoint on these issues (whether it jibes with mine or not), I’d encourage you to send your thoughts as well to them at this email address: modelruleamend@americanbar.org.  (Unless you don’t think lawyer advertising rules are strict enough already.  Then I’d encourage you to stay busy doing other things.  Kidding, just kidding.  But more like Al Franken’s kidding on the square actually.)

Yet another lawyer marketing network joins the fray.

It is often jokingly said that “you learn something new every day.”  I kind of like to think that I learn more than one new thing every day, but results fluctuate.  Last week, in connection with reading about the launch of a new legal marketing network that combines Martindale-Hubbell (which is also behind www.lawyers.com) and Nolo, I learned that Martindale and Nolo are owned by the same company, Internet Brands.  This same company also owns something with which I was entirely unfamiliar, Ngage Live Chat –  a live chat service for lawyers.

Nolo Press is well-known as one of the pioneers for consumers in the “do-it-yourself” approach to law.  The purchase of a pretty well-known commodity in the lawyer rating community by a company called Internet Brands and the fact of common ownership with Nolo seems like something I should have been aware of sooner, but c’est la vie, I guess.

This new marketing network, which will be called the Martindale-Nolo Legal Marketing Network, offers yet another indication of just how significant a push is being made by extremely well-funded companies further into the legal marketing and lead generation space.  Now, of course, like other networks when they have launched, this one claims that it is now that world’s largest legal marketing network.  I don’t have a good sense of whether that is true or not.

A deeper dive into the press release put out about this leaves me learning even more new things (which hopefully drives my per day average up for a while).  The same company that owns Martindale-Hubbell also owns TotalAttorneys.com and a few other services including something called DisabilitySecrets.com, something called DivorceNet.com and another something called DrivingLaws.org.  Total Attorneys is well known among legal ethics nerds such as myself, but if you haven’t paid a visit to its website in a while you might be surprised to see how much more expansive its offerings seem to be, in fact, it really seems like something that looks much more like a direct competitor with something like Martindale-Nolo but for the common ownership.  Interestingly, while the press release references it, I have a good bit of trouble finding it anywhere on the actual Martindale-Nolo website.

The same Martindale-Nolo press release also explains what is contemplated by this particular marketing network in terms of the three “core services” it will deliver, and these clearly include things that are quite likely to be scrutinized under ethics rules referencing payments for referrals versus advertising expenses and lead generation services… which likely means that participating lawyers, at least under current ethics rules like Model Rule 7.2, will need to make sure to pay close attention to terms and conditions.  (And in Tennessee it will be interesting to see if this arrangement finds its way into the basket covered by our special RPC 7.6.)

  • Highlytargeted lead generation, delivered through Martindale-Nolo’s business unit in Pleasanton, Calif., connecting more than 100,000 consumers to attorneys each month from its network of websites. These sites include the high-trafficked domains of Nolo.com, Attorneys.com, AllLaw.com, TotalAttorneys.com, DisabilitySecrets.com, DivorceNet.com, DrivingLaws.org, and a variety of other practice-specific sites. Nolo.com is also highly recognized by consumers for its extensive library of legal resources.
  • Professional websites and online profiles, delivered through Martindale-Hubbell’s flagship websites Martindale.com and Lawyers.com. These established websites display more than 1 million Martindale-Hubbell Peer Review Ratings and Client Review Ratings, as well as educational content to inform visitors about legal issues and processes. The New Providence, N.J.-based business unit has also built and hosted professional websites for more than 40,000 attorneys.
  • Ngage Live Chat, providing 24/7 live chat service for law firm websites. Based in Austin, Texas, Ngage Live Chat uses advanced conversion techniques to deliver twice as many leads to lawyers versus standard website forms or competing chat providers.

You can go take a look yourself at this new offering here, or if you really just want to marvel at how far and fast things have changed in terms of what you think about when you think about Martindale-Hubbell, just read the lead generation portion of the site – here.

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.

 

Traps for the Unwary – Avvo Legal Services Comes to Tennessee

I’ve written previously about the maelstrom of issues presented by Avvo’s expansion from its original core business as a lawyer rating service into new things such as Avvo Legal Services — an arrangement where it makes clients, who will have already paid Avvo for the legal services they want, available directly to lawyers to perform certain limited duration, flat rate services.  This is not lead generation, which finds blessing in a Comment to ABA Model Rule 7.2.  Avvo’s own marketing materials make this perfectly clear:

Get paying clients, not leads.

With more than 8 million visits to Avvo each month, we can connect you with clients who have already paid for limited-scope legal services.  There’s no chasing leads.

Earlier this week, Avvo Legal Services launched in 4 more states, including Tennessee.  Right around the beginning of 2016, I wrote a post about why I don’t think anyone can do business with Avvo Legal Services in my state unless they can show compliance with RPC 7.6.  From the best I can tell, Avvo Legal Services hasn’t registered appropriately — they are not listed here — and that’s no surprise because back when its General Counsel was kind enough to interact on my site with a comment, he stated that it wouldn’t be registering as an intermediary organization.

Fundamentally, as I hinted at in the second post I wrote about the ALS rollout, the problem for any lawyer trying to decide whether to take on the risk of working with Avvo Legal Services is that ALS continues to largely ignore the gap between what perhaps “ought” to be and what actually “is” when it comes to various attorney ethics rules.

It is hard to blame Avvo for that approach, of course, as it, and the folks behind it, are in the business of making money and aren’t going to be the people who are going to get in trouble if their business model is ruled not to comply with the attorney ethics rules.  The people at risk of getting into trouble in those circumstances are the lawyers that decide to do business with Avvo Legal Services.

I can’t find anything that would involve any changes to the Avvo Legal Services business model that would change my initial conclusion that Avvo is likely to be treated as an intermediary organization under RPC 7.6 in Tennessee.

Of course, even if I’m wrong about that, the second layer of risk for Tennessee lawyers is that the most likely routes that might exist for trying to categorize what is going on as something not regulated by RPC 7.6 will only strengthen concern that the “marketing fee” that the lawyer pays Avvo is really fee-sharing with a nonlawyer.

And, Avvo Legal Services certainly does its case against the idea that it is sharing fees no favors when its General Counsel tackles the issue with a statement (appearing in the Frequently Asked Questions part of this link) such as:

Fee splits are not inherently unethical.  They only become a problem if the split creates a situation that may compromise a lawyer’s professional independence of judgment.

 

Now, I have no personal beef with Josh King.  He has been kind enough to post comments at my blog before and. like me, he’s an active member of the Association of Professional Responsibility Lawyers, and he’s advocating for his client’s position.  But the assertion that fee splitting is not inherently unethical and that a fee split is only a problem if might compromise professional independence of judgment is simply not a correct statement of the law.  It perhaps ought to be how the ethics rules are set up and perhaps ought to be how lawyers are regulated, but it isn’t how things currently are.

In Tennessee and many other states, the sharing of legal fees with a nonlawyer is inherently not okay and only ethical if it can be shown to fit one of the exceptions in RPC 5.4(a).  Maybe those rules should be changed, but any lawyer agreeing to participate in an arrangement that runs afoul of them until any such change occurs is running a real risk.

Is it a risk worth taking for any particular individual lawyer?  Not my call to make, of course, but you’d have to be extremely desperate to take on that kind of risk for say the $109 you would get, after Avvo takes its $40 marketing fee, for doing a document review.

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?

The Wisdom of Ferris Bueller. The reality of Machiavelli.

Life moves pretty fast.  If you don’t stop and look around once in a while, you could miss it. – Ferris Bueller

Back in December 2015, during my Ethics Roadshow I talked a little bit about one of the items that had been rolled out for public comment by the ABA Commission on the Future of Legal Services, model regulatory objectives that might be used by jurisdictions to examine both how they regulate lawyers and how they might go about regulating others who provide legal services.  The discussion I had about this topic with audiences was way too disjointed at the time. (It is a topic that itself could have had an hour’s worth of dedicated discussion, but it was just one of many topics covered during the three hours of my presentation repeated across several cities in Tennessee.)  Earlier this week, a version of those regulatory objectives was adopted by the ABA House of Delegates after heated arguments and over significant opposition.  The ABA is now hawking Resolution 105 as a way to move the needle forward in an effort to ensure that those who provide legal services to consumers but are not lawyers are appropriately regulated.  Time will tell whether that effort will gain traction.

It was slightly less than a month ago that the news started to roll out about the planned launch of Avvo Legal Services and I wrote about it here. At the time, it was being tested in five cities.  Presumably, such testing was positive (or the outcome of the testing never really mattered) because now the news comes along that Avvo Legal Services has officially launched in 18 states.  Which states?  Well you can go read the article at the link, or you can see the list at the end of this post.

I’ve always liked the Ferris Bueller and life does move pretty fast, but another quote somehow seems more appropriate in this moment, though it comes from someone much less lovable:

[F]or there is such a gap between how one lives and how one ought to live that anyone who abandons what is done for what ought to be done learns his ruin rather than his preservation. – Niccolo Machiavelli

Oh yeah, which states has Avvo Legal Services launched in and is looking to have lawyers participate:

  • Arizona (RPC 7.2(b) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services except that a lawyer may: 1) pay the reasonable costs of advertisements or communications permitted by this Rule; (2) pay the usual charges of a legal service plan or a not-for-profit or qualified lawyer referral service, which may include, in addition to any membership fee, a fee calculated as a percentage of legal fees earned by the lawyer to whom the service or organization has referred a matter, provided that any such percentage fee shall not exceed ten percent, and shall be used only to help defray the reasonable operating expenses of the service or organization and to fund public service activities, including the delivery of pro bono legal services. The fees paid by a client referred by such service shall not exceed the total charges that the client would have paid had no such service been involved. A qualified lawyer referral service is a lawyer referral service that has been approved by an appropriate regulatory authority….”)
  • California (Rule 1-600 (A) “A member shall not participate in a nongovernmental program, activity, or organization furnishing, recommending, or paying for legal services, which . . . allows any third person or organization to receive directly or indirectly any part of the consideration paid to the member except as permitted by these rules, or otherwise violates the State Bar Act or these rules.”)
  • Colorado (RPC 7.2(b) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services except that a layer may (1) pay the reasonable costs of communications permitted by this Rule; (2) pay the usual charges of a not-for-profit lawyer referral service or legal service organization….”)
  •  Florida (Rule 4-7.17(b) “A lawyer may not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may pay the reasonable cost of advertising permitted by these rules, may pay the usual charges of a lawyer referral service, lawyer directory or other legal service organization….”)
  • Georgia (RPC 5.4(a)(5) “A lawyer or law firm shall not share legal fees with a nonlawyer, except that: . . . a lawyer may pay a referral fee to a bar-operated non-profit lawyer referral service where such fee is calculated as a percentage of legal fees earned by the lawyer to whom the service has referred a matter pursuant to Rule 7.3. Direct Contact with Prospective Clients.”)
  • Illinois (RPC 7.2(b) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services except that a lawyer may (1) pay the reasonable costs of advertisements or communications permitted by this Rule; (2) pay the usual charges of a legal service plan or a not-for-profit lawyer referral service….”)
  • Massachusetts (RPC 7.2(c) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may: (1) pay the reasonable costs of advertisements or communications permitted by this Rule; (2) pay the usual charges of a not-for-profit lawyer referral service or legal service organization….”)
  • Maryland (RPC 7.2(c) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may (1) pay the reasonable cost of advertising or written communication permitted by this Rule; (2) pay the usual charges of a legal service plan or a not-for-profit lawyer referral service….”)
  • Michigan (RPC 7.2(c) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may: Michigan Rules of Professional Conduct Last Updated 2/4/2015 (i) pay the reasonable cost of advertising or communication permitted by this rule; (ii) participate in, and pay the usual charges of, a not-for-profit lawyer referral service or other legal service organization that satisfies the requirements of Rule 6.3(b)….”)
  • North Carolina (RPC 7.2(b) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services except that a lawyer may (1) pay the reasonable costs of advertisements or communications permitted by this Rule; (2) pay the usual charges of a not-for-profit lawyer referral service that complies with Rule 7.2(d), or a prepaid or group legal services plan that complies with Rule 7.3(d)….”
  • New Jersey (RPC 7.2(c) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that: (1) a lawyer may pay the reasonable cost of advertising or written communication permitted by this Rule; … (3) a lawyer may pay the usual charges of a not-for-profit lawyer referral service or other legal service organization.”)
  • New York (RPC 7.2(a) “A lawyer shall not compensate or give anything of value to a person or organization to recommend or obtain employment by a client, or as a reward for having made a recommendation resulting in employment by a client, except that: . . . (2) a lawyer may pay the usual and reasonable fees or dues charged by a qualified legal assistance organization or referral fees to another lawyer as permitted by Rule 1.5(g).”)
  • Ohio (RPC 7.2(b) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services except that a lawyer may pay any of the following: (1) the reasonable costs of advertisements or communications permitted by this rule; (2) the usual charges of a legal service plan; (3) the usual charges for a nonprofit or lawyer referral service that complies with Rule XVI of the Supreme Court Rules for the Government of the Bar of Ohio ….”)
  • Pennsylvania (RPC 7.2(c) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may pay: … (2)  the usual charges of a lawyer referral service or other legal service organization….”) (RPC 7.7(b) “A ‘’lawyer referral service’’ is any person, group of persons, association, organization or entity that receives a fee or charge for referring or causing the direct or indirect referral of a potential client to a lawyer drawn from a specific group or panel of lawyers.”)
  • Texas (Rule 7.03(b) “A lawyer shall not pay, give, or offer to pay or give anything of value to a person not licensed to practice law for soliciting prospective clients for, or referring clients or prospective clients to, any lawyer or firm, except that a lawyer may pay reasonable fees for advertising and public relations services rendered in accordance with this Rule and may pay the usual charges of a lawyer referral service that meets the requirements of Occupational Code Title 5, Subtitle B, Chapter 952.”)
  • Virginia (7.3(b) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services except that a lawyer may:(1) pay the reasonable costs of advertisements or communications permitted by this Rule and Rule 7.1; (2) pay the usual charges of a legal service plan or a not-for-profit qualified lawyer referral service ….”)
  • Washington (RPC 7.2(b) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may (1) pay the reasonable cost of advertisements or communications permitted by this Rule; (2) pay the usual charges of a legal service plan or a not-for-profit lawyer referral service….”)
  • Wisconsin (RPC 7.2(b) “A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may: (1) pay the reasonable cost of advertisements or communications permitted by this rule; (2) pay the usual charges of a legal service plan or a not-for-profit or qualified lawyer referral service. A qualified lawyer referral service is a lawyer referral service that has been approved by an appropriate regulatory authority….”)

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?

I give you sprinkles today in hopes you will help me make it rain tomorrow?

About three months ago, I wrote about a New York ethics opinion that blessed a marketing effort that I stressed would likely be unethical in Tennessee.  That situation involved a lawyer giving client’s a rebate if they agreed to post a review of the lawyer’s work at an online site.

In a fairly decent sign about how competitive the market for legal services continues to be these days (and how risk averse lawyers can be when it comes to pursuing marketing concepts that other businesses don’t think twice about), South Carolina has issued a more recent opinion weighing in on the appropriateness of another marketing gimmick.  Karen Rubin over at her law firm’s blog offers a good treatment of the South Carolina opinion blessing the proposed “Donut Fridays,” (which also included koozies, marketing materials, a fee rate sheet, and a $50 off coupon for consultations) an effort to curry favor with those in a position to refer work to the law firm, that you can go read here.  The right conclusion was reached both that this was not an improper, in-person solicitation in violation of RPC 7.3 and that, as long as the law firm gives the donuts without regard to their effectiveness in generating referrals (i.e. irrespective of whether this approach produces a good return on investment), then there is no violation of RPC 7.2.

In the end, I certainly don’t disagree with the conclusion reached by the South Carolina opinion and think, unlike the New York rebate-for-a-good-Avvo-review scheme, the same conclusion would be reached in Tennessee.  There would be no inherent violation of Tennessee’s RPC 7.2(c) for a similar “Donut Friday” or, for you fans of The Lego Movie, a “Taco Tuesday.”

I do want to say though that it is really pretty remarkable that any ink had to be spilled on an opinion to address this situation at all.  There is a lot of cognitive dissonance out there among lawyers when it comes to ethics and business development efforts.  For example, the same kinds of lawyers who might think “Donut Fridays” requires close scrutiny likely would not give a second thought to sending a bottle of wine or other thank you gift to another lawyer who referred them a revenue-generating case.  The thank you gift which, fairly obviously, only gets sent because of the prior referral is arguably much more difficult to justify in any jurisdiction with the kind of rule S.C. and Tennessee have.  (And, please understand, I am not saying those are unethical.  I’m just saying … it’s a lot harder to explain than Donut Fridays.)

Beyond that, the only other point I’d like to make — and would have like to see given further treatment in the S.C. opinion — is that the aspect of the arrangement can actually be thorny is the coupon.  With respect to the South Carolina law firm making the inquiry, the inclusion of a fee rate sheet in the box with the donuts and the coupon was very helpful because it provides something tangible that would show that the coupon is in no way deceptive or misleading in terms of being ephemeral in value.  In the absence of the rate sheet though, the issue can be much more complex as can be seen in the wave of ethics opinions that were issued examining whether lawyers could participate in “Deal of the Day” website-style promotional campaigns, including this one issued by the ABA back in 2013.