Originally, I had plans to do another of those three-in-one posts for today, but we have some news from Tennessee, so we are pivoting to just focus on that development.
I’ve written previously about the Court’s proposal to improve upon the approach to intermediary organizations in Tennessee. Well, yesterday, the Court entered an order adopting those proposed rule revisions effective January 1, 2022.
This means that, starting next year, this better, but not perfect, approach to addressing entities that offer “matching” and similar services between lawyers and consumers of legal services will come into existence.
No longer will such entities have to register in any fashion with the Board of Professional Responsibility because Tenn. Sup. Ct. R. 44 is being deleted. As a result, it will no longer be inherently unethical for a lawyer to accept fees from a client who found their way to the lawyer through an unregistered service.
Instead, whether it is ethical for a lawyer to do business with such an entity will turn significantly more on how transparent the arrangements are and the lawyer will be charged with doing the due diligence about any such entity.
Now, I mention that the new rules approach isn’t perfect — because it is not — but also as a way of justifying highlighting what I anticipate will remain as the “thorniest” issues for lawyers who want to work with such entities.
First, what will we mean when we say, “such entities?” As revised, Tennessee’s RPC 7.6 will apply to lawyer-advertising cooperatives, lawyer referral services, lawyer matching services, online marketing platforms, prepaid legal insurance providers, and “other similar organization[s] that engage in referring consumers of legal services to lawyers or facilitating the creation of lawyer-client relationships between consumers of legal services and lawyers willing to provide assistance for which the organization does not bear ultimate responsibility.”
Now, this still has a “catch all” concept, but it might be “better” than the previous catch all in terms of likely to snag fewer companies in its net. Regardless though, it constitutes an improvement in terms of the perspective of both lawyers and consumers, as well as servicer providers, because even if swept into the net, these entities will not have to go through any registration process with the Board.
Second, what will be the easy issues for lawyers to navigate. I think that it will be pretty easy for a lawyer to know whether the organization is trying to direct or regulate the lawyer’s professional judgment, and whether the organization is owned or controlled by the lawyer or their law firm. It will also be easy, perhaps not as easy, but still easy for the lawyer to ensure that the function of the referral arrangement is fully disclosed to the client at the beginning of the interactions with the lawyer and whether the organization “makes the criteria for inclusion available to prospective clients” including payments and fees at the beginning of the client’s interactions with the organization.
Finally, the sticking points. What will be significantly more difficult for the lawyer to determine will be whether the organization, including its agents or employees, are doing anything that involves improper solicitation under RPC 7.3 in Tennessee and whether the organization is only requiring the lawyer to pay “a reasonable sum representing a proportional share of the organization’s administrative and advertising costs.”
And, candidly, this last piece is where the need for further reform exists — it shouldn’t matter what the organization and the lawyer agree is going to be paid in terms of compensation as long as that deal is made fully transparent to the client.
Until then, this rule also at least provides some further protection for lawyers if they end up struggling with being able to figure out these two tougher sticking points because if they discover a problem after they get involved, they don’t have to immediately stop participating. Instead, they can first seek to get the organization to correct the noncompliance. Only if they cannot convince the entity to correct things do they have to withdraw from participation. Importantly, withdrawal from participation in the arrangement is what is required and not withdrawal from representing any client that may have found their way to the lawyer through the program.