Category Archives: AVVO fee sharing and referral fee plans

Avvo’s new parent company, Internet Brands, states it is discontinuing AVVO Legal Services effective July 2018

Hello everyone and welcome to this Ethics Alert which will discuss the communication sent by Internet Brands, which recently acquired AVVO, sent a letter to the Deputy Counsel for the North Carolina Bar Authorized Practice Committee, advising that it is discontinuing AVVO Legal Services “to align more comprehensively with our business and focus” and the discontinuation would be complete by July 2018.  The letter from B. Lynn Walsh, Executive Vice President and General Counsel of Internet Brands to the North Carolina Bar is here: https://www.responsivelaw.org/uploads/1/0/8/6/108638213/avvo_legal_services_discontinuation_letter.pdf

The North Carolina Bar had previously drafted a proposed opinion approving lawyer participation in Avvo Legal Services; however, the draft was sent back for further study.  According to the Internet Brands letter, the North Carolina Bar Authorized Practice Committee sent correspondence to AVVO dated March 16, 2018 posing questions to about AVVO Legal Services as it relates to the unauthorized practice of law.

According to the June 6, 2018 response letter, Internet Brands, which acquired Avvo in January 2018, the company has decided that AVVO Legal Services does not “align” with its “business and focus”.  The letter states:

“At Internet Brands, we are focused on our users, and making sure we provide them with accurate, and consumer-friendly information to help them navigate the difficult tasks of identifying and hiring lawyers. As part of our acquisition of Avvo, we have evaluated Avvo product offerings, and adjusted the Avvo product roadmap to align more comprehensively with our business and focus. Accordingly, we have decided to discontinue Avvo Legal Services. The discontinuation began this month, with completion expected by the end of July.”

As I previously blogged, AVVO Legal Services has generated much controversy with the Avvo Legal Services model, and multiple states have found that the service is unethical.  Recent Indiana Ethics Opinion 1-18 (April 2018) found that AVVO’s client referral services may violate Indiana Bar rules related to fee sharing with a non-lawyer, improper referral fees to a non-lawyer entity, potentially misleading communications, and the lawyer’s obligations related to professional independence and disclosure of limited representation.  That opinion is here: https://www.in.gov/judiciary/discipline/files/dc-opn-1-18.pdf.

Bottom line:  This letter and the decision by Internet Brands to shut down AVVO Legal Services is a bit surprising considering that AVVO has been vigorously defending the service in multiple states.  Apparently, Internet Brands concluded that AVVO Legal Services did not align with their “corporate vision”, or they saw that the various state Bars were not backing down, or possibly both.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier

about.me/corsmeierethicsblogs

NOTICE OF CONFIDENTIALITY:  This electronic communication and the information contained herein is legally privileged and confidential proprietary information intended only for the individual and/or entity to whom it is addressed pursuant to the American Bar Association Formal Opinion No. 99-413, dated March 10, 1999 and all other applicable laws and rules.  If you receive this transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon the communication is strictly prohibited.  Any unauthorized use, distribution, or disclosure of this communication is strictly prohibited.  If you have received this in error, please notify us immediately by return e-mail at the above telephone number and then delete message entirely from your system.  Thank you for your cooperation.

Advertisements

Leave a comment

Filed under 2017 New Jersey joint ethics opinion re AVVO lawyer referral services violate Bar rules, Attorney Ethics, AVVO Advisor fee splitting, AVVO Advisor- BOG opinion re lawyer referral service, AVVO fee sharing and referral fee plans, Avvo legal services, AVVO shutdown of AVVO Legal Services, Indiana ethics opinion 2018- AVVO Adviser violation of Bar fee and other rules, joe corsmeier, Joseph Corsmeier, Lawyer Referral Services, New Jersey joint ethics opinion improper referral fees and fee sharing and, New Jersey Supreme Court Order- no review of 2017 NJ AVVO joint ethics opinion, New York joint ethics opinion improper referral fees, Non lawyer compensation

New Jersey Supreme Court declines to review ethics opinion finding that AVVO’s referral program violates Bar Rules

Hello everyone and welcome to this Ethics Alert which will discuss the recent New Jersey Supreme Court Order denying a petition requesting review of the New Jersey Ethics Opinion which found that AVVO’s referral program violated that state’s Bar rules.  The case is In the Matter of the Advisory Committee on Professional Ethics Joint Opinion 732, The Committee on Attorney Advertising Joint Opinion 44, and the Committee on the Unauthorized Practice of Law Joint opinion 45, September Term 2017, Case No. 079852.  The Order is here is here: https://images.law.com/contrib/content/uploads/documents/399/11771/Avvo-Cert-Order.pdf

The June 1, 2018 Order denied a petition for certification by Consumers for a Responsive Legal System, an organization that represents Avvo and other online companies providing lawyer referrals.  The petition requested that the Court review a June 21, 2017 joint ethics opinion which found that Avvo facilitates improper fee-splitting and may not be utilized by New Jersey lawyers.

The joint opinion was issued by the New Jersey Advisory Committee on Professional Ethics, the NJ Committee on Attorney Advertising and the NJ Committee on the Unauthorized Practice of Law.  The Attorney General’s Office, representing the committees, and the New Jersey State Bar Association opposed the petition.  I blogged about the joint opinion in my Ethics Alerts here: https://jcorsmeier.wordpress.com/2017/06/27/new-jersey-joint-ethics-opinion-finds-that-fees-paid-to-avvo-for-client-referrals-violate-new-jersey-bar-rules/ and the joint opinion is here: https://www.dropbox.com/s/5plgfqgi26zuym1/ACPE%20732%20Avvo%2C%20LegalZoom%2C%20Rocket%20Lawyer%206.21.17.pdf?dl=0

The joint opinion was issued in response to a bar association inquiry requesting an opinion on “whether it is ethical for lawyers to participate in certain online, non-lawyer, corporately owned services to the public” specifically naming Avvo, LegalZoom and Rocket Lawyer and their referral programs.  The opinion found that the LegalZoom and Rocket Lawyer programs would be ethical if the programs were registered with the state; however, the opinion found ethics issues with the structure of Avvo’s “pay-for-service” programs and stated that lawyers are prohibited from participating in those programs.

According to the joint opinion, Avvo offers “Avvo Advisor”, which permits customers to buy a 15-minute telephone conversation with a lawyer for a $40.00 flat rate with Avvo keeping a $10.00 “marketing fee”, and “Avvo Legal Services,” where customers would pay flat fees to Avvo for legal services that would be provided by AVVO affiliated lawyers.  Avvo would then pay the lawyer and keep a “marketing” fee.  “The participating lawyer receives the set price for the legal service provided, then pays a portion of that amount to Avvo”. “The label Avvo assigns to this payment (“marketing fee”) does not determine the purpose of the fee. … lawyers pay a portion of the legal fee earned to a nonlawyer; this is impermissible fee sharing.”

The joint opinion also found that marketing fees that lawyers would be required to pay Avvo are not for advertising but are an impermissible “referral fee” under the definitions in New Jersey Bar Rules 7.2(c) and 7.3(d).  In addition, holding the lawyer’s fee until the service is provided violates the requirement that a lawyer maintain funds in a trust account under the rules.

The joint opinion concluded: “New Jersey lawyers may not participate in the Avvo legal service programs because the programs improperly require the lawyer to share a legal fee with a nonlawyer in violation of Rule of Professional Conduct 5.4(a), and pay an impermissible referral fee in violation of Rule of Professional Conduct 7.2(c) and 7.3(d).”

Bottom line:  The New Jersey Supreme Court’s denial of the petition to review the joint opinion leaves New Jersey as one state which has determined that a lawyer’s participation in the “AVVO Advisor” and “AVVO Legal Services” lawyer referral plans is a violation of that state’s lawyer ethics rules.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier

about.me/corsmeierethicsblogs

 

Leave a comment

Filed under 2017 New Jersey joint ethics opinion re AVVO lawyer referral services violate Bar rules, Attorney Ethics, AVVO Advisor fee splitting, AVVO fee sharing and referral fee plans, Avvo legal services, joe corsmeier, Joseph Corsmeier, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer independent professional judgment- AVVO and matching services, Lawyer matching services Avvo, Lawyer referral fees, Lawyer Referral Services, Lawyer responsibilities AVVO and Linkedin, New Jersey Supreme Court Order- no review of 2017 NJ AVVO joint ethics opinion

Indiana ethics opinion finds that AVVO Advisor services may violate referral, fee splitting, and advertising rules

Hello everyone and welcome to this Ethics Alert which will discuss recent (April 2018) Indiana Ethics Opinion 1-18 which found that AVVO’s client referral services may violate Indiana Bar rules related to fee sharing with a non-lawyer, improper referral fees to a non-lawyer entity, potentially misleading communications, and the lawyer’s obligations related to professional independence and disclosure of limited representation. The Indiana ethics opinion is here:  https://www.in.gov/judiciary/discipline/files/dc-opn-1-18.pdf

The ethics opinion describes and summarizes the AVVO Advisor program (and any other similar online non-lawyer legal referral services) business model as follows:

Technology and increasing competition in the legal profession and business in general have driven the expansion of a variety of online legal services. Significant growth has been apparent among online service providers offering consumers fixed-fee, limited scope services provided by local attorneys. Typical business models set a fixed fee for various legal services with a local attorney performing the actual legal work. The company, not the attorney, defines the types of legal services offered, the scope of the representation, the fees charged, and other parameters of the legal representation.

Common features of these arrangements include: 1) prearranged fees established by the online company; 2) a “marketing fee” received by the online company; 3) addition of a local attorney to a database accessible to and used by the prospective client to select the attorney; and 4) a caution from the online company that an attorney may decline representation, but that repeated refusals could result in the removal of the attorney’s name from the database.

According to the AVVO webpage, “Avvo Legal Services is currently available in these US states: Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Nevada, New Hampshire, North Carolina, New Jersey, New York, Ohio, Oregon, Pennsylvania, South Carolina, Texas, Utah, Virginia, Washington, and Wisconsin.” The listed practice areas include:  “Bankruptcy and debt, Business, Criminal defense, Divorce and separation, Family, Estate planning, Immigration, Landlord or tenant, Real estate” and states “If you need to update your practice area percentages, simply edit your Avvo profile.”

Under the AVVO Advisor business model, the potential client visits the AVVO website, selects the legal services needed, and pays Avvo a fixed fee.  Avvo then arranges for an “experienced lawyer” to return the prospective client’s call “within minutes.”  If a lawyer decides to participate, he or she agrees to provide certain legal services for a fixed fee.  Examples include a $39.00 flat fee for a “15-minute Family advice session”; a $995.00 flat fee for filing of an “uncontested divorce”; and a $295.00 flat fee for creating a “last will and testament”.

After the lawyer provides the legal services, Avvo sends the lawyer “100% of the client’s payment” and the lawyer sends to AVVO,  “(as) a completely separate transaction”, a “per-service marketing fee.”  According to AVVO’s “Attorney FAQ for Avvo Legal Services”, “Prices for these (legal) services vary from $295 for services like creating a last will and testament (individual), up to $2995 for preparing and filing a family green card application. Any applicable filing fees are not included in the price of the service; clients should pay those separately”.

“You (the lawyer) pay a marketing fee. As a separate transaction, we withdraw a per-service marketing fee from your withdrawals account. Fees are $40 – $400, depending on the service.”  The Attorney FAQs also state that “Attorneys in Florida who offer 15-minute advice sessions must carry at least $100,000 in legal malpractice insurance. This requirement does not currently apply to document review or start-to-finish services.”

Bottom line:  Indiana has now joined a lengthening list of jurisdictions which have published ethics opinions stating that the “AVVO Advisor” business model may violate lawyer ethics rules, including, in this opinion, the Indiana Bar rules related to fee sharing with a non-lawyer, payment of referral fees to a non-lawyer entity, potential misleading communications, and the lawyer’s obligations related to professional independence and disclosure of limited representation.  Other jurisdictions may publish ethics opinions in the future.  Stay tuned…

…and be very careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19, N., Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Leave a comment

Filed under Attorney Ethics, AVVO Advisor- BOG opinion re lawyer referral service, AVVO fee sharing and referral fee plans, Avvo legal services, er ethics opinion Avvo lawyer matching services improper fee splitting and referral fees, Indiana ethics opinion 2018- AVVO Adviser violation of Bar fee and other rules, joe corsmeier, Joseph Corsmeier, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer ethics opinions, Lawyer improper sharing of fees - Avvo and matching services, Lawyer matching services Avvo, Lawyer Referral Services, Lawyer responsibilities AVVO and Linkedin, misleading advertisement, New Jersey joint ethics opinion improper referral fees and fee sharing and, New York joint ethics opinion improper referral fees

Florida Bar’s Board of Governors finds that AVVO Advisor is a for-profit lawyer referral service and must comply with Bar Rules

Hello everyone and welcome to this Ethics Alert which will discuss the recent decision by the Florida Bar’s Board of Governors to approve a BOG committee’s conclusion that AVVO Advisor is a for-profit lawyer referral service and must comply with the Florida Bar Rules related to those referral services.

According to a recent Bar Board of Governors informational release and the January 1, 2018 issue of the Florida Bar News, the BOG Review Committee on Professional Ethics responded to a lawyer inquiry regarding the status of AVVO Advisor and unanimously recommended that the lawyer be advised that Avvo Advisor, which is described as “a private for-profit company’s online system for connecting potential clients to lawyers for 15-minute consultations for $39”, is a lawyer referral service under Florida’s rules.  The Board of Governors voted unanimously at its December 8, 2018 meeting to approve the committee’s recommendation and opinion. The January 1, 2018 Florida Bar News article is here: https://www.floridabar.org/news/tfb-news/?durl=%2Fdivcom%2Fjn%2Fjnnews01.nsf%2F8c9f13012b96736985256aa900624829%2F3a1cd1f9be52b1f1852581fe004ede22.

As a for-profit lawyer referral service, AVVO Advisor will now be required to comply with Florida Bar Rule 4-7.22 or Florida lawyers will not be permitted to participate in the service.  Florida Bar Rule 4-7.22 requires that the services receive no payment that constitutes a division of fees, it must furnish or require lawyers to have professional liability insurance, it must affirmatively state in advertisements that the system is a lawyer referral service, and comply with the other requirements in the rule.   According to the BOG release, there are twenty-eight lawyer referral services which are current in their quarterly reports to The Florida Bar.

Florida Bar President-elect Designate John Stewart is quoted as stating: “This is a difficult question for this board, it’s going to set a lot of precedent for issues we are going to have to deal with that are related…The decision could affect a large number of our constituents. There are at least, anecdotally, a fair number of our constituents who participate in this program.”

The Florida Bar will provide a 90-day grace period on discipline under Rule 4-7.22 for lawyers who may be currently associated with Avvo Advisor. This would allow Avvo Advisor to file its first quarterly report and comply with Rule 4-7.22 or for the Florida lawyers to exercise other options if Avvo Advisor chooses not to follow Rule 4-7.22, Rules Regulating The Florida Bar.

The January 1, 2018 Florida Bar News, which went online on December 26, provides more information for Bar members about participating in Avvo Advisor.  The webpage “What you need to know about the Bar and AVVO Advisor” is here: https://www.floridabar.org/news/tfb-news/?durl=%2Fdivcom%2Fjn%2Fjnnews01.nsf%2F8c9f13012b96736985256aa900624829%2Fb5f5fefbce7ee680852581fe004f7f92.

Bottom line:  This decision by the BOG addresses only the Avvo Advisor service and it triggers the requirement that AVVO Advisor comply with Florida Bar Rule 4-7.22.  Those requirements include, inter alia, that there is no division of fees, that AVVO either have, or ensure that lawyers have, professional liability insurance, and that AVVO affirmatively state in any advertisements that it is a lawyer referral service.  If a lawyer is currently participating in this service, or is considering participating, he or she should act accordingly.

Be careful out there…

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier

about.me/corsmeierethicsblogs

 

 

 

 

 

 

 

 

 

 

Leave a comment

Filed under Attorney Ethics, AVVO Advisor- BOG opinion re lawyer referral service, AVVO fee sharing and referral fee plans, Avvo legal services, fee sharing, Florida Bar, Florida Bar lawyer referral rule revisions, joe corsmeier, Joseph Corsmeier, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer referral fees, Lawyer Referral Services, Lawyer responsibilities AVVO and Linkedin

Proposed Virginia Bar ethics opinion finds that AVVO and similar lawyer matching services are unethical

Hello everyone and welcome to this Ethics Alert which will discuss the recent approval of a Virginia ethics opinion which finds that AVVO and similar matching services unethical.  Proposed Legal Ethics Opinion 1885 is here: http://www.vsb.org/site/regulation/leo_1885

On October 27, 2017, the Virginia State Bar voted to approve a draft ethics opinion regarding online attorney-client “matching services”, such as AVVO, which are called “attorney-client matching services” (ACMS),. The opinion finds that a lawyer’s participation in the matching services would violate the Virginia Rules of Professional Conduct.

The opinion does not name any specific services; however, the description of the is similar to the business model of Avvo Legal Services, which allows consumers to purchase legal services for a flat fee.  The opinion describes a business model that it calls an “attorney-client matching service” (ACMS), which it describes as a for-profit entity that provides an online platform for matching attorneys and clients.  An ACMS gives a client a limited scope fee agreement, and the client pays the full fee to the ACMS.

The lawyer does not negotiate the scope of services or the fee or receive any of the client’s money until the services have been performed. Under ACMS’s terms, the lawyer agrees to provide flat fee legal services.  When the matter is completed, the attorney receives the full amount of the legal fee paid by the client.  ACMS then debits the attorney’s account for a “marketing fee” which varies depending upon the amount of the legal fee received.

The opinion identifies five problems with the ACMS business model:

  1. The lawyer is not properly handling the client’s advanced fee because it is allowing a third party to hold the funds. Thus, the funds are not being held in an IOLTA account as required.
  2. Since the lawyer has no access to the client’s money until he is paid in full by the platform, he is unable to fulfill his obligation to refund any unearned fees at the conclusion of the matter.
  3. Without being in control of the definition of the scope of legal services or negotiation of the fee, the lawyer may well be undertaking representation which violates any number of ethics rules. The services may not be appropriate to the client. The fee may not be commensurate with the value of the services provided. The services may be inadequate for the client’s needs. And so on.
  4. The payment of the marketing fee to ACMS constitutes the sharing of legal fees with a non-lawyer.
  5. The payment of the marketing fee constitutes payment for recommending the lawyer’s services.

The opinion criticizes the fact that Avvo holds the fee between the time that the prospective client pays for the services until the lawyer completes the services and states that “the ACMS collects advanced legal fees from a prospective client before the prospective client has had any contact with the lawyer whom she might engage” and that this is a violation of the Bar rules which require that advance fees be held in an the lawyer’s trust account until services are completed.

Under lawyer trust account rules, unearned fees are to remain in trust. As an ACMS is not a law firm, it cannot have an IOTA trust account or hold client fees in trust. Since the fees are not paid to the lawyer, the lawyer is unable hold the funds in trust if same is required under the Bar rules. In addition, under the Bar rules, a lawyer has an to refund any unearned fees at the end of the representation.

The opinion also discusses some potential solutions to the problems with the current model.  Regarding the issue of the lawyer not having control over the fee and the scope of the representation, the opinion did not flatly state that lawyers are prohibited from participating in the ACMS model. It concluded that a lawyer could participate if the lawyer consults with the client and is satisfied that the services can be performed competently and in compliance with the ethical rules before accepting a matter.  The lawyer would also have to exercise independent professional judgment to insure that the fee is not unreasonable or excessive.

The opinion held that the arrangement results in unethical fee sharing with the matching service and “(t)he fact that the ACMS executes a separate electronic debit from the lawyer’s bank account for its ‘marketing fee’ following the firm’s electronic deposit of the full legal fee to the lawyer’s bank account does not change the ethically impermissible fee-sharing character of the transaction.”  The opinion left the possibility that fee splitting might be avoided if the lawyer’s fee was based upon the number of clients received through the platform or the number of inquiries or clicks on their profile.

Bottom line: If this opinion is approved by the Virginia Supreme Court, Virginia will join five other states, New York, New Jersey, Ohio, South Carolina, and Pennsylvania, in disapproving or criticizing the AVVO business model. The New York and New Jersey opinions, which were issued this year, determined that the “marketing fee” taken from the lawyer’s account involves improper fee splitting.

Be careful out there…and stay tuned.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19, N., Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Leave a comment

Filed under Attorney Ethics, AVVO fee sharing and referral fee plans, Avvo legal services, joe corsmeier, Joseph Corsmeier, Lawyer discipline, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer improper referral fees and fee splitting, Lawyer improper sharing of fees - Avvo and matching services, Lawyer independent professional judgment- AVVO and matching services, Lawyer unreasonable fee, New York joint ethics opinion improper referral fees, Non lawyer compensation, Virginia ethics opinion AVVO and lawyer matching services improper

New York ethics opinion finds that fees paid to Avvo for legal services violate referral, fee splitting, and advertising Bar Rules

Hello everyone and welcome to this Ethics Alert which will discuss recent (August 8, 2017) New York Ethics Opinion 1132 which found that lawyers in New York are prohibited from participating in AVVO’s client referral services.  This opinion found that the referral services violate the Bar rules since they involve improper “vouching for” (and recommendation of) the lawyer, improper lawyer referral fees, and fee sharing with a non-lawyer.

The companion New York Ethics Opinion 1131 (August 8, 2017) sets forth the structures of various web-based services and attempts to explain how those services could comply with the New York Bar Rules.  Both New York State Bar Ethics Opinions are here: http://www.nysba.org/EthicsOpinion1132/ and here: http://www.nysba.org/EthicsOpinion1131/ .

NYSBA Ethics Opinion 1132 states that, since Avvo Legal Services provides ratings of lawyers using the service based on various qualifiers such as years in practice, information provided by the lawyers, volunteer bar work and other publicly available information, and offers to find a client “the right” lawyer with a money-back guarantee, there is an implied recommendation as to the lawyer’s “credentials, abilities, competence, character, or other professional qualities”; therefore, the marketing fee is “an improper payment for a recommendation in violation the New York  Bar Rules.

The opinion also states that since “the Avvo website also extols the benefits of being able to work with highly rated lawyers,” it creates a reasonable impression that it is recommending its top-rated lawyers. and the satisfaction guarantee “also contributes to this impression.”

“Avvo is giving potential clients the impression that a lawyer with a rating of ‘10’ is ‘superb,’ and is thus a better lawyer for the client’s matter than a lawyer with a lower rating. Avvo is also giving potential clients the impression that Avvo’s eligibility requirements for lawyers who participate in Avvo Legal Services assure that participating lawyers are ‘highly qualified.’” The opinion states that Avvo Legal Services’ “satisfaction guarantee” also contributes to the impression that Avvo is recommending its lawyers’ services “because it stands behind them to the extent of refunding payment if the client is not satisfied.”

According to the opinion, Comment 1 of New York Rule 7.2 prohibits a lead generator not only from stating that it is recommending a lawyer, but also from implying or creating a reasonable impression that it is making such a recommendation.

NYSBA Ethics Opinion 1132 concludes:

“This opinion does not preclude a lawyer from advertising bona fide professional ratings generated by third parties in advertisements, and we recognize that a lawyer may pay another party (such as a magazine or website) to include those bona fide ratings in the lawyer’s advertisements. But Avvo Legal Services is different.  It is not a third party, but rather the very party that will benefit financially if potential clients hire the lawyers rated by Avvo.  Avvo markets the lawyers participating in the service offered under the Avvo brand, generates Avvo ratings that it uses in the advertising for the lawyers who participate in Avvo Legal Services, and effectively ‘vouches for’ each participating lawyer’s credentials, abilities, and competence by offering a full refund if the client is not satisfied. As noted earlier, Avvo says: ‘We stand behind our services and expect our clients to be 100% satisfied with their experience’” Accordingly, we conclude that lawyers who pay Avvo’s marketing fee are paying for a recommendation, and are thus violating Rule 7.2(a).”

NYSBA Ethics Opinion 1131 sets forth the structures of various web-based services and attempts to explain how those services could potentially comply with the New York Bar Rules.  That opinion concludes:

“A lawyer may pay a for-profit service for leads to potential clients obtained via a website on which potential clients provide contact information and agree to be contacted by a participating lawyer, as long as (i) the lawyer who contacts the potential client has been selected by transparent and mechanical methods that do not purport to be based on an analysis of the potential client’s legal problem or the qualifications of the selected lawyer to handle that problem; (ii) the service does not explicitly or implicitly recommend any lawyer, and (iii) the website of the service complies with the requirements of Rule 7.1.  A lawyer who purchases such a lead to a potential client may ethically telephone that potential client if the potential client has invited the lawyer selected by the service to make contact by telephone.”

The opinions also briefly discuss the potential confidentiality issues related to AVVO’s “money back guarantee”.

Bottom line:  New York has now joined the list of jurisdictions finding that Avvo’s “marketing fee” taken from fees paid to lawyers using its client generation services violate ethics rules and are impermissible referral fees.  This New York ethics opinion (like all ethics opinions) is advisory only; however, it is the most recent finding that the fee charges in AVVO’s plan constitute improper referral fees and fee sharing.  Other jurisdictions (such as a pending North Carolina opinion) may also publish ethics opinions in the future.  Stay tuned…

…and be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19, N., Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

1 Comment

Filed under and recommendations, Attorney Ethics, AVVO fee sharing and referral fee plans, Avvo legal services, er ethics opinion Avvo lawyer matching services improper fee splitting and referral fees, Ethics and nonlawyer compensation, joe corsmeier, Joseph Corsmeier, Lawyer advertising, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer ethics opinions, Lawyer improper referral fees and fee splitting, Lawyer Referral Services, New Jersey joint ethics opinion improper referral fees and fee sharing and, Non lawyer compensation

New Jersey joint ethics opinion finds that fees paid to Avvo for client referrals violate New Jersey Bar rules

Hello everyone and welcome to this Ethics Alert which will discuss the recent New Jersey joint ethics opinion which found that lawyers in New Jersey are prohibited from participating in client referral services provided by AVVO because the services involve improper lawyer referral fees and fee sharing with a non-lawyer.  The joint ethics opinion is here: https://www.dropbox.com/s/5plgfqgi26zuym1/ACPE%20732%20Avvo%2C%20LegalZoom%2C%20Rocket%20Lawyer%206.21.17.pdf?dl=017  and the New Jersey Supreme Court Notice to The Bar of the joint ethics opinion is here: https://www.judiciary.state.nj.us/notices/2017/n170621i.pdf

The joint ethics opinion found that none of the legal service plans interfered with the independent professional judgment of participating lawyers, and Avvo’s procedure of holding fees until the legal services are performed does not violate lawyer trust account rules.

The joint opinion also describes the services offered by three companies’ websites.  Avvo offers two legal services products through its website: “Avvo Advisor” and “Avvo Legal Services”.  Individuals who use “Avvo Advisor” pay a flat fee for a 15-minute phone conversation with a lawyer, while consumers who use “Avvo Legal Services” purchase specific services, such as an uncontested divorce, for a flat fee.  Avvo then deposits the flat fee into the lawyer’s bank account and withdraws a “marketing fee.”

The ethics opinion found the “marketing fee” is an impermissible referral fee, and not a permitted fee for the cost of advertising, as well as an impermissible shared fee between a lawyer and the non-lawyer.  The ethics opinion referred to ethics opinions in Ohio, South Carolina, and Pennsylvania that found marketing fees charged by “Avvo-type companies” were improper referral fees or constituted impermissible fee sharing.

The opinion found that services provided by LegalZoom and Rocket Lawyer appear to comply with the ethics rules if they were registered with the courts’ administrative office, as required by New Jersey’s rules.  LegalZoom’s “Business Advantage Pro” and “Legal Advantage Plus” charge a flat monthly fee for legal advice and consumers can purchase additional services from participating lawyers at a discounted rate.  LegalZoom keeps the monthly subscription fees.  Rocket Lawyer’s legal services plan charges a flat fee for limited legal advice on document-related matters and a free 30-minute lawyer consultation.  Rocket Lawyer keeps the subscription fees and participating lawyers can offer legal services at discounted rates.

Bottom line:  This ethics opinion is the most recent which has reviewed the recent legal services plans of AVVO (and other entities) and found that the fee charges in AVVO’s plan constitute improper referral fees and fee sharing.  Other jurisdictions may weigh in with their own ethics opinions in the future (or the rules may be changed).  Stay tuned…

…and be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19, N., Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

1 Comment

Filed under Attorney Ethics, AVVO fee sharing and referral fee plans, Avvo legal services, er ethics opinion Avvo lawyer matching services improper fee splitting and referral fees, Florida Lawyer Ethics and Professionalism, joe corsmeier, Joseph Corsmeier, Lawyer ethics, Lawyer Ethics and Professionalism, lawyer fee splitting, Lawyer responsibilities AVVO and Linkedin, LegalZoom, New Jersey joint ethics opinion improper referral fees and fee sharing and