Category Archives: New Jersey joint ethics opinion improper referral fees and fee sharing and

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

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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

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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

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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

 

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