Change with the Times or Stick to Tradition?
A pro-and-con piece about whether online-based legal services (like Avvo and LegalZoom) conflict with traditional ethics rules. We'd love to hear your thoughts about this on Twitter @YoungLawyersNJL.
March 23, 2018 at 03:02 PM
5 minute read
This past summer, three New Jersey Supreme Court committees issued a joint decision on Avvo, LegalZoom and Rocket Lawyer. The opinion addressed how these online-based services conflicted with traditional ethics rules. The opinion will undoubtedly affect how young attorneys generate business in the years to come. Our board had a spirited debate over the report, and decided to do a pro-and-con piece here. We'd like to hear your thoughts on this topic on Twitter. The Young Lawyer's Advisory Board's handle is @YoungLawyersNJL.
In Defense of Avvo
- Take Advantage of New Technology
The committees' joint ruling barring legal referral systems is a reactionary attempt to cling to an idealized past. The world is changing, and our profession must change with it if we want to effectively serve the public.
Gone are the days when people knew one or two lawyers in town, or asked an acquaintance for a referral if they didn't. Today, people in need of legal help do an online search. The court system and the bar should be working to make sure attorneys can take advantage of this new reality, not ineffectively attempting to stamp it out.
- Advertising and the First Amendment
Attorney advertising rules have always lagged behind technological innovations, and this ruling is just the latest example of that. Unfortunately, it often takes a lawsuit brought by an attorney that understands their First Amendment rights are being violated for the courts to right their own regulators' wrongs.
This is disturbing. The court system is supposed to be the vanguard against rights-trampling, not a willing participant. Attorneys should be upset that they are being silenced and told with whom they can do business, instead of glad that protectionist tactics can give them a perceived edge over a competitor.
- Fee Splitting
The specter of fee splitting looms in the background of the committees' ruling. In fact, it was the reason the New Jersey State Bar Association asked for a ruling on the referral services in the first place.
There is a fear that fee sharing will corrupt the legal profession by shifting incentives. This is a reasonable assumption. Lawyers are human and are not immune from the pressures applied by outside forces, even when an injustice is an unintended consequence.
However, referral fees are much more akin to advertising than they are to what is traditionally thought of as fee splitting. An attorney pays a flat fee for client generation; a fee which is paid out of firm revenue. If the committees' logic is carried further, attorneys are going to have trouble paying for any service. Don't utility bills, phone systems and website hosts get paid from the same pot as Avvo?
We also question the logic of the committees, considering that many of the legal referral services operated by county bar associations operate nearly identically to the for-profit referral programs attacked by the committees. Is the real reason the bar is wary of for-profit referral programs the fact that they would prefer the money go to local bar associations?
We as young lawyers must demand better.
It is time for the legal profession to embrace new technologies. Especially ones that attempt to fix two of the biggest problems facing us: access to justice, and employment for new lawyers or those in transition.
In Support of the Avvo Ban
- First Amendment Rights
The right to free speech is not absolute. The prohibition against Avvo does not interfere with Avvo or attorneys' First Amendment rights. As stated in the joint decision: The First Amendment does not protect lawyers who seek to participate in prohibited activities. The applicable RPCs outline numerous lawful methods of advertising.
- Fee Splitting
Generally, consumers purchase legal services for fixed fees from Avvo, lawyers perform the requested legal services and, upon completion, Avvo deposits the fees into the lawyer's bank account and withdraws a “marketing fee.” RPC 5.4(a) states that: “[a] lawyer or law firm shall not share legal fees with a nonlawyer, except that: […].” On its face, Avvo runs afoul of RPC 5.4(a) because lawyers are strictly prohibited from sharing legal fees with nonlawyers.
Avvo argued that the “marketing fee” is not a referral fee but rather a “marketing fee.” As such, the fee is a separate transaction and therefore is not improper fee sharing. Lawyers have a proven record of accomplishment to move past semantics and determine the true meaning of actions and intent. In this case, it is clear that the committees, like many lawyers, are not convinced that labeling something makes it true.
- Young Lawyers
Young lawyers have and will continue to leave their mark on the legal profession in the form of paperless offices, increased mobility and novel legal arguments. Despite this, it is imperative that lawyers maintain autonomy to exercise independent professional judgment. If nonlawyers are allowed to share in attorneys' profits, these same lay individuals would be able to compromise a lawyer's judgments. Requiring licensed professions to exercise autonomy over their craft is not a new idea. For example, doctors' offices are not permitted to be owned by lay individuals, in part, for similar reasons. Although young lawyers should approach the law with a new, fresh perspective it is imperative to maintain traditional rules that seek to protect lawyers' autonomy.
The NJLJ Young Lawyers Advisory Board is a diverse group of young attorneys from around the state. Follow them on Twitter, @YoungLawyersNJL.
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