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.

Legal marketingLaw firm-branded coffee mugs; golf umbrellas with the firm logo; managing-partner bobble-head dolls — giving away law firm tchotchkes like these is often part of a firm’s marketing program.  (Well, maybe not the bobble-heads; I made that one up.)

But how about delivering doughnuts to banks and real estate agents to encourage them to refer clients to your law firm?

The South Carolina bar ethics advisory committee has recently given its OK to that caloric give-away — but only as long as the referral sources get the goodies whether or not they actually send any clients to the firm.

Giving away law firm swag, and more

The inquiring law firm wanted to initiate a weekly program that would involve a firm employee delivering doughnuts, discount coupons for legal services and cup-holders (with the firm logo, of course) to existing vendors, in order to promote the firm.

The vendors to receive the “Donut Friday” promotion included banks and real estate agents who were in a position to send clients to the firm for legal work, and the intent of the promotion was to encourage such referrals.  The promotion package also included a firm brochure and fee sheet.

As an initial consideration, the state bar ethics committee said that “the mere delivery of gifts or other marketing materials to a business generally, without delivery to specific individuals, does not constitute a solicitation” of legal business within the meaning of the state’s version of Model Rule 7.3.

That common-sense approach avoided a tortured analysis that would have necessarily centered on whether delivering a doughnut or a mug was a prohibited  “in person, live telephone or real time electronic contact” aimed at soliciting professional employment from a prospective client.

Quid pro quo for referrals?

But the law firm’s plan did require consideration of the state’s version of Model Rule 7.2(b), which bars giving “anything of value to a person for recommending the lawyer’s services,” with certain exceptions.

The committee viewed the key prohibition of the rule to be the element of quid pro quo.  “As long as the weekly donuts and other donut-box contents are delivered regardless of whether the vendor had referred clients to Law Firm that week, and regardless of how many, then the requisite quid pro quo for a … violation does not exist,” the committee opined.

On the other hand, if delivery of the diet-busting delicacies “were contingent on the referral of clients to Law Firm, the practice would violate the rule,” the committee explained.

The committee added that the inclusion of the firm’s brochure and fee sheet along with the sweets also invoked the state’s version of Model Rule 7.1, the general advertising rule prohibiting any false or misleading communication about the lawyer or the lawyer’s services.