Advertising and Solicitation

Subscribe to Advertising and Solicitation

Making big news this summer was the shut-down of Avvo Legal Services just a few months after it was acquired by Internet Brands.  (A couple of the many reports are here and here.)  Some speculated that the new corporate owner had no stomach to continue to fight for that portion of Avvo’s business model in the face of numerous state ethics opinions that found a wide variety of ethics problems with it.

The flat-fee service that Avvo offered through a network of lawyers required the lawyer to rebate a “marketing” fee to Avvo out of the fee that the lawyer received.  As we’ve pointed out, that raised issues of fee-splitting with non-lawyers; but other aspects of the model also troubled ethics boards.

Does “processing fee” = fee-splitting?

On another front now drawing notice, another on-line legal services provider is contesting charges in California district court that its own business plan violates false advertising and unfair competition statutes, including recently-filed allegations that it supports its business with spurious attorney ratings.

The suit is significant for highlighting that despite the demise of Avvo Legal Services, the ethics issues remain in light of the other players that continue to occupy the same space in the marketplace, and that litigation, not just regulatory action, sometimes results.

The plaintiff in the California federal case is LegalForce RAPC Worldwide, an IP firm.  In an amended complaint filed earlier this month, LegalForce alleges that it competes with defendant UpCounsel Inc. to “provide individuals and small businesses with affordable access to attorneys,” by using technology to match clients with lawyers specialized in corporate, patent and trademark law.

The allegations, which withstood an earlier motion to dismiss, include that UpCounsel’s model features a “processing fee” markup that constitutes impermissible fee-sharing with non-lawyers.

The amended complaint says that UpCounsel tries to attract consumers by promising to provide lawyers in the “Top 5%” of specialized IP and corporate practice niches in cities across the U.S, and that the representation constitutes false advertising, as there is no ranking system that could provide a basis for the claim.

“Reviews” outnumber lawyers, says complaint

In addition, according to the allegations of the amended complaint, UpCounsel falsely advertised superior consumer ratings for the lawyers in its network.  As an example, the plaintiff pointed to the rating given to IP lawyers in Cotati, California:

“Cotati Intellectual Property Lawyers, 5.0 ***** Based on 5450 reviews.”  “It is impossible for Cotati Intellectual Property Lawyers to have 5,450 reviews on UpCounsel,” says the amended complaint, because “Cotati is a small town … with a population of 7,455. There are only 21 attorneys in the city of Cotati licensed to practice law in California, and none of these 21 attorneys are listed on UpCounsel.”

LegalForce alleges that this same pattern of “perfect or near-perfect review scores” based on thousands of purported reviews is duplicated as to lawyers advertised by UpCounsel in other cities, such as Tallahassee and Savannah.

More to come…

The ethics issues regarding on-line legal service providers have not gone away just because Avvo has withdrawn from that market.  As Prof. Alberto Bernabe, a legal ethics professor at John Marshall Law School in Chicago, has pointed out, “Where Avvo left off, someone else will pick up…,” including, most recently, “Text a Lawyer,” an on-line platform where prospective clients can ask lawyers questions via text.

Regulators and litigation parties will surely continue to confront the ethical issues inherent in these platforms, although the ABA’s recently-passed revamp of some of the legal marketing rules in the Model Rules of Professional Conduct fails to address on-line referral providers.

After hard-fought proceedings, you’ve finally settled a contentious case on behalf of your client.  The plaintiff’s lawyer has brought suit against your client before, and likely will again:  the lawyer advertises and uses social media aggressively to locate claimants who have the same kind of issue with your client.

Your client asks, “Can’t we include terms in the settlement agreement that would rein in this lawyer?  Maybe raise the settlement amount enough to get her to agree to stop taking these cases?  Or at least, get some language that would stop the blog posts and the TV ads fishing for clients to sue us?”

The answers:  “No — and no.”  A new ethics opinion from Ohio’s Board of Professional Conduct underscores the point.

Restrictions on right to practice

Model Rule 5.6(b), adopted with only minor variations in almost every jurisdiction,* bars you from “participating in making or offering” a settlement agreement that includes a restriction on a lawyer’s right to practice.  The new Ohio ethics opinion expressly extends that prohibition to settlement agreements conditioned on restricting a lawyer’s communication of information “contained in a court record.”

A settlement agreement can certainly bar both sides from disclosing non-public information (such as settlement terms, conditions and amount), and those are common clauses.  But preventing counsel from making a public announcement, or communicating to the media, or advertising about the case using information contained in case documents, violates Rule 5.6, said the Ohio Board.

The Board reasoned that an agreement prohibiting a lawyer from using public information interferes with the ability to market legal services in a way otherwise consistent with the Rules of Professional Conduct.  It also interferes with “the public’s unfettered ability to choose lawyers who have the requisite background and experience to assist in pursuing their claims.”  Rule 5.6(b) “prevents settlement agreements from being used to ‘buy off’ plaintiff’s counsel … in exchange for the lawyer foregoing future litigation against the same defendant.”  The Board also mentioned the conflict that such agreements create “between the interests of current clients and those of potential future clients.”

Expansive readings

The ABA Ethics Committee, as well as ethics committees in New York and the District of Columbia, have reached similar expansive conclusions about the reach of Rule 5.6(b).  The ABA Committee particularly disapproved in 2000 of settlement agreements conditioned on not “using” information in later representations against the same opposing party or related parties.  And the D.C. ethics opinion notes that the fact of settlement is usually reflected in public documents, thus making it a rule violation to condition the agreement on non-disclosure of that fact.

Underlying these opinions, as the D.C. ethics committee said, “is the intent to preserve the public’s access to  lawyers who, because of their background and experience, might be the best available talent to represent future litigants in similar cases, perhaps against the same opponent.”

Not a limit on duty of confidentiality

The Ohio opinion, and others, should not be read to alter your duty of confidentiality to your client.  Under Rule 1.6, absent client consent and other narrow exceptions, you already have a duty to keep confidential all information relating to the representation — and that would include otherwise public information, as we’ve noted before.  In contrast, the opinions centering on Rule 5.6(b) are about your ability to offer or accept settlement agreements restricting the right to practice.

Further, as Hofstra Professor Emeritus Roy Simon explains in his treatise on New York ethics law, you can get into ethics trouble even if a court might otherwise enforce the settlement agreement:  “A lawyer who makes or agrees to [a settlement in which a lawyer promises not to represent a client in later disputes with your client] risks professional discipline even if a court later holds that the agreement is enforceable.”

Client ABC’s — and the nuclear option

The restriction against participating in a settlement agreement aimed at reining in opposing counsel is a part of the ethical landscape that clients may not understand — especially when you need to turn down a request to pursue something that would be to the client’s advantage.

This is an issue that certainly merits explanation under Rule 1.4 in order to “permit the client to make informed decisions regarding the representation.”  And you also must “consult with the client about any relevant limitation on the lawyer’s conduct when the lawyer knows that the client expects assistance not permitted by the Rules of Professional Conduct or other law.”

The new Ohio opinion cautions that if worst comes to worst, and the client insists that you participate in accepting or offering settlement agreement with an impermissible condition, Rule 1.16(a)(1) requires you to withdraw from representation, in order to avoid violating Rule 5.6.  Hopefully you won’t need to exercise that nuclear option.

* An exception to the nearly-nationwide approach is Virginia’s Rule 5.6(b), which carves out settlement agreement restrictions on a lawyer’s right to practice that are approved by “a tribunal (in such situations as the settlement of mass tort cases) or a governmental entity.”

The ABA is proposing changes to the Model Rules on lawyer advertising, modestly streamlining them and trying to re-establish their relevance to the way lawyers and clients interact in the digital age.  The proposed amendments and their supporting memo fail to make any express adjustment for the elephant in the room — on-line referral services like Avvo, and especially whether engaging with them involves lawyers in paying impermissible referral fees, as some recent state ethics opinions have found.

Rundown on proposed rule changes

First, an overview.  The ABA’s effort is in response to a three-year study and package of recommendations from the Association of Professional Responsibility Lawyers (which we’ve previously mentioned here).  The ABA adopted many of APRL’s recommendations.

The ABA’s memo supporting the rule changes acknowledges that “the patchwork of inconsistent state attorney advertising rules is a prime example of a system that ‘fails to make sense’ in the current climate of social media, technology, and global lawyering.”  In other words, as APRL urged, the current Model Rules are at risk of becoming irrelevant.  The ABA noted that the people who complain about lawyer advertising are predominantly other lawyers, not consumers; and few states actively monitor lawyer advertising.

The ABA’s approach, emphasizing consolidation and re-arrangement, differs from APRL’s, which had recommended slimming down the ad rules to just two, effectively excising three others.  As we’ve reported, Virginia’s revamped rules, effective this past July, take that approach.  The ABA’s proposal, in contrast, eliminates only current Rule 7.5 on firm names and letterhead (now there’s an anachronism); and it simply redistributes most of that rule’s content to the comments of other rules.

While there’s no radical surgery, the ABA proposal has some potentially helpful changes and clarifications.  Highlights:

  • “Solicitation” would be defined in a new subsection of Rule 1.0, “Terminology,” and would mean offering to provide legal services to a specific person in a particular matter.  Soliciting by “live person-to-person contact” (Skype and Facetime are specifically mentioned) would be generally prohibited — but exceptions would include if the lawyer knows the person is “an experienced user of the type of legal services involved for business matters.”  That’s potentially a big deal for business lawyers, whose potential clients would often meet that definition.  And texts, e-mail and “other written communications that recipients may easily disregard” are also excluded from the definition of live solicitation.
  • Putting a “Lawyer Advertising” disclaimer on targeted solicitations would be a thing of the past, causing gladness at firm marketing departments.  The ABA concluded “after much discussion” that such a disclaimer is no longer necessary because consumers have become used to receiving advertising material (!) and most “will not feel any compulsion to view the materials solely because they were sent by a lawyer of law firm.”
  • A new provision would permit nominal client gifts (at holidays, for instance), and clarifies that they are not barred as things of value in exchange for recommending the lawyer’s services to others.
  • It would no longer be necessary to include an “office address” on marketing communications, but only “contact information” of a responsible firm or lawyer.  The proposed change resolves an ambiguity that has created confusion, and is in line with modern day legal practice (including virtual offices), and the way that real-life ads now look.
  • The ability to claim to be a “specialist” in a practice area would be eased.  Implying that you are certified as a specialist in a particular area continues to be restricted to those certified by approved organizations.  But saying that you “specialize in” a particular field would be permitted “based on the lawyer’s experience, specialized training or education,” as long as the statement were not false or misleading.

Small change to referral fee comment

Now back to that elephant.  Recent ethics opinions — for instance, from New York and New Jersey — have specified that Avvo’s business model (and similar ones) violate state versions of Model Rule 7.2(b), which prohibits giving anything of value to a person for recommending the lawyer’s services (except for paying charges of non-profit and bar-association-approved agencies).

Under that provision, operations that are similar to Avvo Advisor and Avvo Legal Services have been found particularly problematic by state ethics boards.  As described in a recent Indiana Lawyer article, Avvo Advisor connects online consumers with a lawyer for a 15-minute consultation for $39.  Avvo forwards the fee to the lawyer and then collects a $10 marketing fee from the lawyer.  Avvo Legal Services provides fixed-fee document review, and services such as business formation or family law matters.  Avvo bills $149 to $595 for services, which is paid to the lawyer doing the work, and collects a marketing fee from the lawyer ranging from $40-$150.

The ABA proposal does not include any change to Rule 7.2(b).  It does add a section to the relevant comment, saying that “directory listings and advertisements that list lawyers by practice area, without more, do not constitute impermissible ‘recommendations.'”  That may be a small nod to Avvo, which in the past has suggested that at least in part, it merely functions as an on-line lawyer directory.

But the ABA’s small proposed change to the comment would not appear to touch on Avvo’s business of charging lawyers for obtaining referrals from Avvo, or similar business models.

Of course, the referral-fee issue is not the only ethics rule that state ethics opinions have cited when it comes to Avvo and similar on-line organizations.  As we’ve previously noted, in addition to the advertising rule on referral fees, other rules flagged include state versions of Model Rules 5.4 (independent judgment, fee-splitting); 5.5 (unauthorized practice of law); 1.15 (comingling lawyer and client funds); 1.16 (duty to refund unearned fees at end of representation); 1.5 (contingent fees); and 1.6 (confidentiality).

What comes next?

The ABA will host a public forum on the proposed amendments at its mid-year meeting in Vancouver on February 2.  Written comments on the proposed amendments are invited; the submission deadline is March 1.  The ABA Ethics Committee aims to submit a resolution and report on amending the advertising rules at the association’s August 2018 meeting.

Stay tuned for further developments.

Greetings 2018!  Time for some ethics trend predictions to kick off the Year of the Dog (according to the Chinese zodiac).  Let it be a year in which you doggedly pursue ethical practice (ouch).  No more bad puns — here’s what’s hot as we begin the year:

Law firm cyber-security

No surprise here that the top trend is data security.  It’s one of the “chief concerns” of GC’s, and for good reason:  It’s not if, but when, a firm is going to experience a cyber-attack.  The latest ABA report says that 22 percent of law firms of all sizes were hit with a data breach in 2017, up from 14 percent in 2016; several of the biggest firms experienced attacks and various kinds of disruption in the past couple years.  But small and medium-size firms are just as vulnerable, say the data.  Of course, lawyers have an ethical duty under Model Rule 1.6(c) to take reasonable steps to safeguard the confidentiality of client data.  Ethics rules also require lawyers to have the technological competence to recognize and address the problem.  (See comment [8] to Rule 1.1.)  Trending:  More clients are insisting that firms establish data security policies and procedures.

The “Uber” effect – on-line service providers and other tech disruptors

Just as Uber disrupted an entire market segment with its ride-hailing model, on-line businesses like Avvo and LegalZoom have taken aim at legal services and how they are marketed.  But these on-line types of business raise legal ethics issues, including fee-splitting, handling client funds and professional independence.  (Excellent summary is here.)  Some innovative models, like the traffic-ticket-fighting site TIKD, are under fire for potential antitrust violations and the unauthorized practice of law.  And will consumers soon be taking their legal problems to chatbots?  Will legal teams soon be using artificial intelligence to analyze complaints and generate document drafts?  Trending:  State ethics regulators have come down against Avvo-like platforms, but they are still thriving.  How will the legal industry adapt?  (Hint:  Watch the progress of the ABA’s consideration of a revamp of the Model Rules on lawyer marketing and advertising, aimed at “bringing them into the 21st century” and reported here, in the Professional Responsibility Blog.)

Gender bias and sexual harassment in the profession

The ABA adopted Model Rule 8.4(g) in 2016, barring lawyers from engaging in harassing or discriminatory conduct; states are now considering whether to adopt the rule into their own lawyer conduct codes.  (Box score as of 8/1/17:  1 aye, 1 nay, many studying; and some commentators raise First Amendment concerns.)  But 40 percent of women in the profession report that they have been subjected to harassment and discrimination; and there have been several high-profile discrimination and pay-equity claims against prominent national firms and individuals.  The judiciary has been hit as well, with a prominent federal judge apologizing and retiring abruptly after sexual harassment allegations; and 695 law professors and former clerks are now petitioning Chief Justice John Roberts, seeking revision of judicial employee guides and support for reporting misconduct.  Trending:  Women in the profession are adding their voices to #metoo.

Lawyer health and wellness — mental and physical

Finally, we’d be remiss, in our first post of 2018, if we didn’t mention the personal aspect of lawyering:  keeping yourself safe and sane.  As a profession, more of us fight alcoholism, substance abuse, depression and anxiety than the general population, and those trends start developing in law school.  The statistics are alarming.  Trending:  a hopeful resolve, via a new, comprehensive ABA report, to come to grips with these systemic issues.  If you made a New Year’s resolution to stop drinking or drugging, or to address mental health issues that are affecting your legal practice, every state has a lawyer assistance organization to help you.  We’ve linked to the ABA’s state-by-state listing before; but here it is again.  If it helps one person, there’s no such thing as posting it too often.

Happy New Year.

 

A Philadelphia personal injury law firm has sued an out-of-state competitor in Pennsylvania federal court, claiming that its TV, billboard and on-line ads reaching the Philadelphia area are false and misleading, violating the Lanham Act and constituting unfair competition.

The case is a reminder that the ethics rules and disciplinary action aren’t the only exposure lawyers might have to a claimed violation of the limits on advertising legal services.

A widespread practice?

The complaint against the Orlando-based firm, Morgan & Morgan, says that its ads “mislead the consumer that [Morgan & Morgan and its lawyers] actively litigate claims in Pennsylvania when in fact their representation of personal injury claims is nonexistent or minimal.”

The complaint claims that the lawyers in the ads are not licensed in Pennsylvania, and it is alleged that Morgan actually refers all or substantially all the cases generated from its Philadelphia-area ads to other lawyers and firms.

The plaintiff, Rosenbaum & Associates, alleges that Morgan’s ads contain statements like “We’re all here for you,” and “Our family is here for your family,” falsely leading Philadelphia-area consumers to believe that Morgan will handle their claims.

Morgan has not yet answered the complaint.

Plaintiff-side personal injury firms with a national footprint often seek clients beyond their home turf via ad campaigns, referring the leads they get to lawyers and firms licensed to handle them, in return for part of the contingent fee.

However, as cited in the complaint, Pennsylvania ethics Rule 7.2, unlike the analogous Model Rule, prohibits advertising that is “a pretext to refer cases obtained from advertising to other lawyers.”  (My home state of Ohio, similarly prohibits the practice of soliciting clients solely for the purpose of referring them elsewhere.  A handful of jurisdictions require disclosure when an advertising lawyer intends to forward cases to another lawyer to handle.)

The times they may be a-changing

The rules governing lawyer advertising are potentially in a state of flux.  Online service- and referral-providers like Avvo and LegalZoom are working on several fronts to alter the landscape, including by seeking to change ethics rules that might limit their ability to market and carry out their operations.

The Association of Professional Responsibility Lawyers has two proposals on the table (2015 and 2016) that would  streamline the ABA’s Model Rules on advertising and, if adopted by states, would reduce regulations that some see as unwarranted interference in marketing legal services to consumers.

The APRL proposal is working its way through the ABA vetting process.  But at least one jurisdiction, Virginia, is not waiting; effective July 1, it slimmed down its lawyer advertising rules, patterning them after the APRL proposals.  And as we have noted, North Carolina is considering changes to its rules to make it easier for on-line service- and referral-providers to operate.

But in the meantime, just to add to the mix, be aware that regulatory or disciplinary action is not the only way that potential violations of the advertising rules might be addressed.

Indeed, although the complaint against Morgan cites Rule 7.2 of the Pennsylvania Rules of Professional Conduct, the claims for relief are solely based on alleged violations of the federal Lanham Act’s prohibition against false advertising, and the parallel state common-law ban against unfair competition.

That’s worth remembering as you navigate the legal advertising landscape.

Putting your law firm name on coffee mugs and giving away donuts to prospective clients is apparently not enough anymore.  Recent firm branding campaigns have included sponsorships of pro golfers and cricket players, including emblazoning the bats with the firm name.

That may be the trend of the future in Biglaw, but a much more modest marketing effort recently landed an Ohio lawyer in disciplinary trouble.

No Justice, no peace?

According to the opinion, from 1981-1997, the lawyer in question practiced with another attorney, who eventually became (and continues to be) a Justice of the Ohio Supreme Court.  Fast forward to 2015.  With the permission of the Justice, the lawyer began using their old firm name, including on business cards, and hung a sign outside the office saying “O’Neill & Brown Law Office (Est. 1981).”

That only lasted for a few weeks before the local bar association began investigating.  After the disciplinary authorities advised the Justice that the sign violated Ohio ethics rules, the Justice instructed the lawyer to remove his name from the sign, and eventually the lawyer did so.

False and misleading

The Ohio Supreme Court (with the Justice in question not participating) agreed with the Board of Professional Conduct that the firm name on the sign and business card, and the reference to the firm having been established in 1981 were false or misleading communications that violated Ohio’s version of Model Rule 7.1.  The court also found a violation of Rule 7.5(c), which prohibits using a judge’s name in a firm name or other firm communication, unless the judge regularly and actively practices with the firm.

By a 4-3 vote, the court imposed a two-year stayed suspension on the lawyer.  A significant aggravating factor contributed to the sanction:  this wasn’t the lawyer’s first rodeo — he’d been disciplined several times before, according to the opinion, including a previous suspension for threatening a judge who served as chair of the local bar grievance committee.  But in mitigation, the court noted that his conduct “did not involve the provision of legal services,” that no clients were harmed, and that the Justice participated in the decision to use the “O’Neill & Brown Law Office” name on the sign.

The three-judge minority would have imposed an “indefinite” suspension, which in Ohio is a term of at least two years.

Stick to the tchotchkes

A good lesson here.  A prominent legal moniker on your office sign may be good marketing, but it would be best to stick to the coffee mugs — or cricket bats.

Just last month, we wrote about a North Carolina draft proposal that would ease the way via its ethics rules for Avvo and other on-line legal services to operate there.  Now, after a joint opinion from three New Jersey Supreme Court committees, the Garden State has turned thumbs down on such law platforms, citing issues including improper fee-sharing and referral fees.

Nix on Avvo, LegalZoom, Rocket Lawyer

The joint opinion bans participation in Avvo’s programs because of the “marketing fees” it collect from lawyers in exchange for participating in two of its offerings:  “Avvo Advisor,” in which clients talk to lawyers for 15 minutes for $40, with Avvo keeping $10; and “Avvo Legal Services,” where clients pay a flat fee to Avvo for access to affiliated lawyers, and then Avvo pays the lawyer net of its own fee.

The committees found that this arrangement violates New Jersey’s version of Model Rule 5.4(a), barring fee-splitting with non-lawyers, and it mattered not that Avvo called its cut a “marketing fee”:  irrespective of its label, said the committees, “lawyers pay a portion of the legal fee earned to a nonlawyer; this is impermissible fee sharing.”  In addition, said the committees, these payments signal a “lawyer referral service,” and payment of an “impermissible referral fee” under New Jersey’s Rules 7.2(c) and 7.3(d).

Icing the cake, the committees also raised a trust account issue, saying that Avvo’s practice of holding the lawyer’s fee until the conclusion of the matter violates the attorney’s duty to maintain a registered trust account and to hold client funds in it until the work is completed.

Avvo wasn’t the only on-line platform tagged — Rocket Lawyer and LegalZoom also were placed off-limits to New Jersey lawyers, but for a different reason.  While they do not require payment from lawyers to participate, and do not share the clients’ monthly subscription fees with lawyers, Rocket Lawyer and LegalZoom are “legal service plans” that have not been registered with or approved by the New Jersey Supreme Court, said the committees.  That places them outside the pale, even while not violating the fee-sharing prohibition.

A notice to the bar from the supreme court’s administrative office accompanied the joint opinion, listing the 46 state-approved legal service plans, including those offered through unions and government agencies.

What next?

As we’ve noted, the ABA’s Futures Commission sees the continuing onslaught of on-line platforms as something that is here to stay.  Nonetheless, this New Jersey ethics opinion joins other cautionary or negative ones issued by regulators in Ohio, Pennsylvania and South Carolina.  Against that backdrop, North Carolina’s recent consideration of rule changes may appear to be the outlier (although an Oregon state bar association task force also recently recommended ethics rule amendments that would be friendly to on-line service legal platforms).

Avvo responded to the New Jersey opinion, telling the New Jersey Law Journal that it is “attempting to address the pressing need for greater consumer access to justice, and we will continue to do so despite this advisory opinion.”

Will market pressure become a tsunami that will eventually sweep legal ethics considerations away?  It may take awhile to tell, but until then, look for more ethics opinions to come out with differing views, potentially creating a patchwork of inconsistent state approaches.  We’ll be watching with great interest.

Stand out from the crowd concept femaleAvvo Legal Services has been meeting with North Carolina bar regulators, resulting in a draft proposal that would amend several legal ethics rules and make it easier for Avvo to operate in the Tar Heel State, according to Prof. Alberto Bernabe, a Chicago law professor who has seen some of the relevant documents, and blogged about them last week.

Ethical problems?

Several state legal ethics opinions have recently found client-referral services using an Avvo-like model to be ethically problematic, including opinions from regulators in Pennsylvania, South Carolina, and my home state, Ohio.  Rule revisions in Florida now pending for approval by the state supreme court there likewise call aspects of the model into some question.

Some of the identified ethical issues raised by Avvo-like referral services, as identified by various ethics opinions are:

  • the company — and non-lawyers — control significant aspects of the attorney-client relationship, including functions that can constitute the practice of law (see Model Rule 5.5(a));
  • the structure can interfere with the lawyer’s exercise of independent legal judgment on behalf of the client (see Model Rule 5.4(c));
  • the way the fees are managed could constitute or invite commingling of clients’ funds and lawyers’ funds (see Model Rule 1.15(a));
  • the fee structure makes it difficult to comply with the duty to refund unearned fees at the end of the representation (see Model Rule 1.16(d));
  • a model where the lawyer is paid only after the representation is concluded makes the fees contingent on the outcome, which can violate the prohibition on contingent fees for certain kinds of cases (see Model Rule 1.5(d));
  • receiving and holding client funds paid in advance may violate the lawyer’s duty to hold those funds in a trust account (see Model Rule 1.15(c));
  • although part of the fee paid by the client and kept by the company may be designated as a “marketing fee,” the fact that such fees are calculated as a percentage of the full fee makes the arrangement likely to be impermissible fee-splitting with a non-lawyer (see Model Rule 5.4(a));
  • the business model can threaten the confidentiality of the lawyer-client relationship (see Model Rule 1.6).

North Carolina considers amendments

In light of these issues, Avvo has tried to allay concerns, including by saying that its model actually comports with ethics rules, and that it is providing advertising that is protected by the First Amendment.  (A recent Georgetown Law Journal article by Prof. Bernabe details Avvo’s arguments.)

According to Prof. Bernabe, North Carolina may now be considering a different regulatory approach:  amending its lawyer conduct rules to “make it acceptable for lawyers to participate in services like Avvo.”

Documents he has seen include a proposal to amend the fee-splitting rule to permit payment of a portion of the lawyer’s fee to an on-line platform if the amount is a reasonable charge for administrative or marketing services and there is no interference with the lawyer’s independent professional judgment.

Another proposed comment amendment would allow lawyers to participate in Avvo-like rating services without fear of being held in violation of the prohibition against giving something of value in exchange for a recommendation of employment.  (See Model Rule 7.2(b).)

Yet another amendment would allow the company to keep the client’s payment until the end of the representation, imposing on the lawyer the obligation of ensuring that such “intermediaries” “adequately protect client funds” — instead of placing such advance payments in the lawyer’s trust account.

Brave New World

Although nothing is certain yet, and the documents that Prof. Bernabe describes are certainly preliminary and might be incomplete, the path that North Carolina appears to be contemplating significantly departs from the road that bar regulators in other jurisdictions have so far taken.  Whether acquiescing to market trends — even ones that seem to be irresistible — is in the true best interest of legal consumers and the legal profession remains to be seen.

Woman with megaphone and speech bubblesBased on a perceived need to “simplify and modernize” lawyer advertising rules, the Commonwealth of Virginia’s supreme court has adopted a new set of regulations that will make it easier for lawyers there to market their services.  The slimmed-down rule, effective July 1, will consist of a single provision that bars false or misleading communications, plus a revised rule on soliciting clients.

Trimmed-down rules

The new Virginia regulation pares its Rule 7.1 down to two sentences:  one prohibiting “false or misleading” communications about the lawyer or the lawyer’s services; and one defining “false or misleading.”

The changes jettison separate former rules on law firm names and communicating practice specialties, moving those subjects to a few succinct comments in the revised Rule 7.1.

The revised Rule 7.3, on soliciting clients, deletes a former provision that completely barred in-person solicitation of clients in personal injury and wrongful death cases, and now permits all in-person solicitation except when it involves “harassment” and the like, and when the prospective client has informed the lawyer that it’s unwelcome.  The Virginia rule gives lawyers more lee-way than does Model Rule 7.3.

Less is more…

The new Virginia rules are patterned on the comprehensive proposals offered in 2015 and 2016 by the Association of Professional Responsibility Lawyers, which has urged the ABA to retire most of the Model Rules on lawyer advertising.  The Old Dominion is the first jurisdiction to embrace that approach.

In the ABA/BNA Lawyer’s Manual on Professional Conduct, the chair of the APRL committee that originated the revamp proposal, Mark Tuft, is quoted as saying that reacting to new modes of advertising like Facebook and Snapchat with more regulation is counterproductive.

“Virginia is the first state that has recognized that greater regulation in an effort to respond to advertising in the electronic age is not the way to go,” Tuft told the Lawyers’ Manual.

(For more comment on the Virginia rule reboot, see John Marshall College of Law Professor Alberto Bernabe’s recent blog post:  he questions whether the term “misleading” can be — well, misleading.  And Memphis lawyer Brian Faughn (who’s also an APRL board member) weighs in as well.)

New Model Rules — maybe

In response to the APRL’s proposals, the ABA’s standing Ethics Committee convened a working group to review the call for an advertising rule revamp; the working group plans to make its recommendations to the Ethics Committee next month, according to the Lawyers’ Manual.

The  ABA’s deliberations are at their beginning stages, and it would take some time before any changes made their way into the Model Rules on advertising.  And from there, state supreme courts would need to carry out their own vetting processes before possibly adopting any ABA model into a state’s lawyer conduct rules.

But following Virginia’s example, it is possible that states won’t necessarily wait for the ABA, and instead might consider — or even embrace — the APRL’s approach directly.

Is it good for the profession?

The way we market our legal services is a subject that can generate strong opinions — but however you feel about it, lawyer advertising is here to stay.  (Bates v. State Bar of Arizona, 433 U.S. 350 (1977).)  The public now gets its information about legal services in a multitude of ways that were never dreamed of in 1983, when the ABA promulgated its Model Rules.  The current rules in most jurisdictions are cumbersome and over-complicated, yet do nothing to make lawyer marketing dignified or in keeping with a learned profession.  (For example, how about putting your firm advertising on a condom package? Or calling yourself “The Gorilla“?)  We might as well move toward a streamlined set of regulations that will at least make it easier to communicate with the public about what we have to offer.

LinkedInLinkedIn last week announced a “rethinking” of its endorsement feature, first launched in 2012.  Starting with its mobile app, the service says it has “improved targeting,” so people looking at your profile will see the endorsements for you that are most relevant to them.  Coming on the heels of this development, a new Ohio ethics opinion reminds us that we should be monitoring endorsements and other kinds of testimonials to ensure they are within ethical bounds.

LinkedIn endorsements — power of suggestion

According to LinkedIn (which has achieved near-universal penetration of the lawyer user market), more than 10 billion endorsements have been shared on its platform in the last four years.  For the uninformed, in LinkedIn-speak, an “endorsement” results from one of your connections clicking a link on your profile page, saying that you have “skill” in a list of areas that you have created and pre-set.  For instance, 50 people might say that you are skilled in “legal research,” and their little profile pictures (if they have them) are arrayed next to the endorsement.

Apparently, LinkedIn (which was acquired this summer by Microsoft) will now harness the power of its millions of users to calculate which of your skills would be most relevant to someone searching for you.

Clearly, endorsements can spotlight your particular accomplishments and skill set, but of course they come with some ethics considerations to be aware of.

Trust, but verify

First, you are responsible for monitoring testimonials and reviews of clients that are posted on websites that you control, as Advisory Opinion 2016-8, issued October 7  by the Ohio Supreme Court’s Board of Professional Conduct points out.

The Board said that websites that permit clients and others to “endorse” a lawyer are advertisements, and lawyers must ensure that they comply with the Buckeye State’s versions of Model Rules 7.1 and 7.2.  In particular, “false, misleading, or non-verified testimonials in the form of client comments or endorsements should be removed by the lawyer when he or she has control over the content of the profile.”  (Ohio’s rule imports from its prior Code of Professional Responsibility the prohibition on claims that are nonverifiable, i.e. not capable of being factually substantiated.)

So, if you have listed yourself on your LinkedIn profile (which you do control) as having skill in “Tax Law,” and a client “endorses” you for that skill, and you indeed have that skill, you presumably are within the bounds of good ethical practice.  (Don’t scoff at this seemingly-self-evident proposition.  Some lawyers in South Carolina got in ethics trouble when their marketing company  set up a website that claimed skillsets that they didn’t have.)

But if you set up your LinkedIn skill section to invite endorsements for being the “World’s Greatest Corporate Advisor,” that presumably would not be ethical, at least in Ohio, since such a claim would be non-verifiable.  And if you set up the section to claim skill in tax law but, like me, barely got through your law school tax course (thanks for the courtesy C+, Professor Lou Geneva), then you are definitely outside the bounds.

Second, if you accept endorsements and always “endorse back” the person who has endorsed you, you should think about your state’s version of Model Rule 7.2(b), which says that “A lawyer shall not give anything of value to a person for recommending the lawyer’s services…” with some non-relevant exceptions.  If you make your own endorsement contingent or conditional on receiving one in return (or vice versa), then you would potentially run afoul of Rule 7.2(b).  Quid  pro quo endorsements are obviously ethically suspect, as my St. Louis-based ethics friend Michael Downey points out in this 2013 interview.

Know the rules of your road

LinkedIn endorsements are optional — I simply haven’t set up my own profile to accept them, for instance.  But if you like endorsements for their potential to inform people about you and your skills, be aware of your jurisdiction’s rules and ethics opinions on the subject, and use endorsements wisely.