On a recent afternoon, I received a flurry of calls from an attorney rating service claiming that my online profile was in need of an update. This was surprising, as I was unaware that I had an outdated profile listing at all. I hurriedly went to the site and looked up my rating as a lawyer. Wait a minute …why I am a six?! I am most absolutely a ten! What gives? The voice on the phone assured me that after a few tweaks my rating would rise to an acceptable level. It did, and I am now a ten in the attorney rating world. However, my relief was short-lived. That call opened me up to months of calls and emails soliciting advertising on the site, billed at a monthly fee. Our firm ultimately opted not to buy space on their site, but many lawyers do in fact gain clients through these types of sites.
Consider New York state's take on these practices. In August 2017, the New York Supreme Court allowed a limited partnership with a lawyer and a third-party service. However, the court came down squarely against the rating site AVVO (www.avvo.com), ruling that it is not in the same category as a third-party service. The New York court's main concern was that a high rating on AVVO could imply that its endorsement of a particular attorney is a result of an advertising and ratings trade, or that a lead-generation agreement is in place that unfairly spotlights any one lawyer's services. The court ruled that because AVVO financially gains from these agreements, it is not a third party but in fact the main party to benefit.
Another question under consideration by the New York Supreme Court was whether a lawyer could be considered as engaging in client solicitation that violates the Local Rules. The NYSC Ethics Opinion stated:
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 telephone that potential client if the party has invited a telephonic communication by the lawyer selected by the service.
New York is one the few jurisdictions that has grappled with the ethical consideration of such rating services. Florida, Ohio, Pennsylvania, and South Carolina have also issued opinions on these issues. North Carolina, however, seems to have ruled in favor of the AVVO model, citing First Amendment concerns. In July 2017, the North Carolina courts considered the following elements before proposing amendments under which AVVO should to operate.
The rating services company, as 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).
Savvy practitioners who wade into legal advertising and client referral services sphere would do well to check their practice jurisdiction rules before agreeing to any arrangement, specifically those rules regarding solicitation of potential clients.