An Unlikely Source Stirs Debate Over Avvo Legal Services

(Lawsiteblog)

A report published this week is sure to fuel debate over the ethics of lawyers’ participation in Avvo Legal Services and similar for-profit referral services. The report chides the legal profession for its resistance to change and — without using the word explicitly — portrays bar associations as hypocritical in taking stances against Avvo.

What makes this report all-the-more noteworthy is that it comes not from some legal reform group or industry source, but from an unlikely source — the Illinois Attorney Registration and Disciplinary Commission, the very body that oversees attorney discipline in that state.

I initially wrote about the report on Friday, while attending the 44th ABA National Conference on Professional Responsibility in Louisville, Ky., where many attendees were first learning of the report and making their way through its detailed, 124-pages.

The report recommends that Illinois loosen its professional conduct rules to allow attorneys to participate in for-profit referral services such as Avvo Legal Services. Allowing attorneys to participate in such services would help Illinois address the unmet legal needs of poor and moderate-income individuals in the state, the report argues.

“Prohibiting lawyers from participating in or sharing fees with for-profit services that refer clients to or match clients with participating lawyers is not a viable approach, because the prohibition would perpetuate the lack of access to the legal marketplace,” the report says.

At this point, the IARDC’s report is only a proposal. In a May 25 statement announcing the report, IARDC Administrator Jerome Larkin, who wrote the report, solicited public comments, which will be accepted through Aug. 31, 2018. (Comments should be sent to information@ardc.org.)

A report published this week is sure to fuel debate over the ethics of lawyers’ participation in Avvo Legal Services and similar for-profit referral services. The report chides the legal profession for its resistance to change and — without using the word explicitly — portrays bar associations as hypocritical in taking stances against Avvo.

What makes this report all-the-more noteworthy is that it comes not from some legal reform group or industry source, but from an unlikely source — the Illinois Attorney Registration and Disciplinary Commission, the very body that oversees attorney discipline in that state.

I initially wrote about the report on Friday, while attending the 44th ABA National Conference on Professional Responsibility in Louisville, Ky., where many attendees were first learning of the report and making their way through its detailed, 124-pages.

The report recommends that Illinois loosen its professional conduct rules to allow attorneys to participate in for-profit referral services such as Avvo Legal Services. Allowing attorneys to participate in such services would help Illinois address the unmet legal needs of poor and moderate-income individuals in the state, the report argues.

“Prohibiting lawyers from participating in or sharing fees with for-profit services that refer clients to or match clients with participating lawyers is not a viable approach, because the prohibition would perpetuate the lack of access to the legal marketplace,” the report says.

At this point, the IARDC’s report is only a proposal. In a May 25 statement announcing the report, IARDC Administrator Jerome Larkin, who wrote the report, solicited public comments, which will be accepted through Aug. 31, 2018. (Comments should be sent to information@ardc.org.)

The report comes in the wake of a spate of ethics opinions concluding that lawyers may not participate in Avvo Legal Services. Within the last two years, eight states have issued such rulings: New York, Ohio, Pennsylvania, South Carolina, New Jersey, Utah, Virginia (pending Supreme Court approval), and Indiana. One state, North Carolina, drafted a proposed opinion approving participation in Avvo Legal Services, but the draft was sent back for further study.

As I explained when it launched, Avvo Legal Services provides fixed-fee, limited-scope legal services through a network of attorneys. Ethics opinions that have ruled against the service differ in their analyses, but, generally speaking, they find problems with several core characteristics:

  • Avvo sets the fee the client pays for the service and defines the scope of the service, which opinions say can interfere with the lawyer’s independent professional judgment.
  • Avvo collects the fee from the client and holds it until the service is completed, which opinions see as interfering with the lawyer’s duty to safeguard client funds and refund unearned fees at the conclusion of the representation.
  • Avvo charges the lawyer a marketing fee, which opinions view as improper fee splitting with a non-lawyer or as giving something of value in exchange for a recommendation.
  • Avvo offers a money-back guarantee, which opinions see as an abdication of the lawyer’s professional independence.

The IARDC report addresses these concerns head on. It proposes a framework that would regulate both lawyers who participate in for-profit referral services and the services themselves. The framework would have two primary components:

  • Amend the Illinois Rules of Professional Conduct to allow lawyers to participate in qualified lawyer-client matching services and to pay the service “a fee calculated as a percentage of legal fees earned by the lawyer to whom the service has referred or matched a matter.” Note that while services such as Avvo typically characterize the fee paid by the lawyer as a marketing fee, this proposal would explicitly allow a percentage of the legal fee.
  • Create a new rule providing for the qualification and registration of lawyer-client matching services. Services would register with and be regulated by the ARDC and would have to meet certain standards, including that it will not interfere with an attorney’s independent professional judgment or require the attorney to violate the professional conduct rules.

The ARDC report suggests that there is some hypocrisy in the ethics opinions that prohibit participation in Avvo Legal Services. It points out that most states permit lawyers to participate in non-profit referral services and pay referral fees to those services. Many of those non-profit services are run by the same bar associations that have opined against for-profit services.

“Despite the fact that some bar associations have adopted flat-fee referral service approaches similar to Avvo Legal Services, many states either have prohibited their lawyers from participating in for-profit services like Avvo Legal Services, or have not proposed any modifications to their rules,” the report says.

The rationale for this discrepancy, the report says, “is the purported concern that a for-profit company will affect a lawyer’s independence and will control the lawyer-client relationship.” It notes that the same concerns exist for pre-paid legal services plans — perhaps to an even greater extent — yet states permit lawyers to participate in these plans.

The report recommends addressing this concern by directly regulating the referral service. This approach, it says, “would better protect clients, cultivate attorney-client transactions, and maintain the integrity of the legal profession.”

The report explicitly criticizes the legal profession for its resistance to change. “The legal profession’s resistance to change impacts potential clients’ access to the legal market and lawyers’ access to new and innovative ways to reach clients,” it says.

The detailed report is well worth reading. It includes a thorough examination of other states’ approaches to this issue, as well as discussions of potential constitutional and antitrust issues.

“The ARDC recognizes that the decision whether to allow client lawyer matching services requires examination of competing core values of the profession,” Larkin says in the statement announcing the report. “The obstacles consumers encounter in seeking lawyers to solve challenging legal problems and the under-employment of lawyers are among the circumstances warranting our attention and discussion.”

In Louisville, at the Conference on Professional Responsibility, where attendees included bar regulators, legal ethics professors, and practitioners, opinions were sharply divided on Avvo Legal Services. Yet, notably, no one could cite an instance of a consumer being hurt by using the service.

As one attendee put it, “This is how consumers want to do business.”

About: Shawn

Shawn is an expert legal analyst, lawyer, and journalist.


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