Category Archives: Avvo legal services

South Carolina ethics advisory opinion states that matching legal services such as those offered by Avvo are prohibited

Hello everyone and welcome to this Ethics Alert which will discuss the recent South Carolina ethics advisory opinion which states that marketing fees to non-lawyer companies collected as part of legal fees are prohibited.  The advisory opinion is here: http://www.scbar.org/Bar-Members/Ethics-Advisory-Opinions/Opinion-View/ArticleId/2455/Ethics-Advisory-Opinion-16-06

The July 14, 2016 ethics advisory opinion discusses a marketing program and fee arrangement similar to the one used by Avvo Legal Services.  Avvo states that the service matches lawyers willing to provide specific legal services to clients who pay a fee to Avvo, which includes a marketing fee.  Lawyers who participate then receive earned fees from Avvo once a month and Avvo takes its marketing fee from the lawyers in a separate transaction.

The South Carolina advisory opinion states that this type of fee arrangement/program constitutes improper fee sharing with non-lawyers, and, in the alternative, constitutes improper payment of a referral fee to a non-lawyer, which is also prohibited.

According to the opinion, “In the situation described above, the 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.’”

The opinion also states that marketing fees must represent the reasonable cost of the service, and these fees do not meet that criteria.  “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 services of one type of case versus another.”

“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 at market rate or comparable services.”

Avvo representatives have previously stated that their “matching services” fee arrangement does not violate lawyer disciplinary rules.  I discussed Avvo’s program in my January 15, 2015 Ethics Alert, which is here:  https://jcorsmeier.wordpress.com/2016/01/25/lawyer-directory-website-avvo-is-offering-fixed-fee-legal-services-on-a-limited-basis-and-plans-to-expand-the-services/

An online FAQ about the legal services program on Avvo’s website states that “(l)ocal 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.”

Avvo General Counsel Josh King also stated in the FAQ that Avvo is not acting as a lawyer referral service and that lawyers should not be concerned about fee splitting since “(f)ee 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.  We believe that Avvo Legal Services fees, like credit card fees, would involve the sort of technical fee split that would not create such a potential for compromise.  Nonetheless, we have tried to keep things simple and clear by making the per-service marketing fee a separate charge.”

Bottom line:  The South Carolina ethics advisory opinion makes it clear that Avvo’s (and other similar) “matching service” arrangements constitute improper fee splitting and improper referral fees.  Lawyers who are interested in participating should carefully review their jurisdiction’s Bar rules and/or consult with and consult their Bar or consult with a lawyer familiar with their jurisdictions Bar rules before considering participation in the service.

Disclaimer:  this Ethics Alert is not an advertisement and does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Please note:  Effective June 27, 2016, my new office address is:

29605 U.S. Highway 19 N., Suite 150, Clearwater, Florida 33761

E-mail addresses and telephone numbers below will remain the same. 

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

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Lawyer directory website Avvo is offering fixed fee legal services on a limited basis and plans to expand the services

 

Hello and welcome to this Ethics Alert blog which will discuss the recent decision by the lawyer directory website Avvo to offer legal services to individuals through selected lawyers for a fixed fee and charge the lawyers a marketing fee to participate.  An ABA article dated January 12, 2015 discussing Avvo’s plans is here: ABA 1-12-16 Avvo legal services article

According to the ABA article, Avvo recently began testing the new service and it plans to offer the services more broadly over the next few months.  The service is called Avvo Legal Services offers a variety of limited-scope legal services at a fixed fee. The legal services include review of legal documents such as business contracts and nondisclosure agreements as well as more complicated matters such as uncontested divorces and citizenship applications.

According to the article, Laura Moriarty, Avvo’s vice president of communications, stated that Avvo is testing the service in Atlanta, Chicago, Dallas, Houston and Phoenix and will begin offering the services in additional markets in February 2016. “Moriarty declined to identify the markets where it will initially be offered except to confirm that one will be Massachusetts.”

The ABA article states that “Avvo first got into the business of offering legal advice last year when it launched Avvo Advisor, a service that provides on-demand legal advice by phone for a fixed fee of $39 for 15 minutes. With this new service, Avvo will determine the types of services to be provided and the prices. Attorneys who sign up will be able to select which services they want to offer. When a client buys a service, Avvo sends the client’s information to the attorney. The attorney then contacts the client directly and completes the service.”

“Clients will be able to choose the attorney they want from a list of those within their geographic area who have registered to participate. Clients pay the full price for the service up front.  After the service is completed, Avvo sends the attorney the full legal fee, paid once a month for fees earned the prior month. As a separate transaction, the attorney pays Avvo a per-service marketing fee. This is done as a separate transaction to avoid fee-splitting, according to Avvo. Attorneys pay nothing to participate except for the per-case marketing fee.”

“Among the services to be offered will be document review for $199, for which the attorney will pay a $50 marketing fee; formation of a single-member LLC for $595, with a $125 marketing fee; uncontested divorce for $995, with a $200 marketing fee; and green card application for $2,995, with a $400 marketing fee.  The terms of the service require attorneys to contact a new client within one business day for a 30-minute introductory call. If the attorney determines the client is not the right fit, the attorney can decline the representation.”

An online FAQ about the legal services on Avvo’s website states that “(l)ocal 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.

Avvo General Counsel Josh King also states in the FAQ that Avvo is not acting as a lawyer referral service and that lawyers should not be concerned about fee splitting since “(f)ee 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. We believe that Avvo Legal Services fees, like credit card fees, would involve the sort of technical fee split that would not create such a potential for compromise. Nonetheless, we have tried to keep things simple and clear by making the per-service marketing fee a separate charge.”  The FAQ is here:  Avvo legal services FAQ

Bottom line:  Although it is clear that AVVO (a third party non-lawyer website) is attempting to structure this legal services arrangement in a way to avoid ethics issues, whether this arrangement is ethical or unethical is subject to further analysis and interpretation by each jurisdiction regarding fee splitting and potential lawyer referral issues.  Lawyers who are interested in participating should carefully review their jurisdiction’s Bar rules and/or consult with and consult their Bar or consult with a lawyer familiar with the Bar rules before agreeing to participate.

Be careful out there!

Disclaimer:  this e-mail is not an advertisement and does not contain any legal advice 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.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

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Filed under Attorney Ethics, Avvo legal services, joe corsmeier, Joseph Corsmeier, lawyer fee splitting, Lawyer Referral Services