August 26, 2020 Feature

LegalMatch Must Be Regulated as a Lawyer Referral Service

Just forwarding potential clients to lawyers warrants regulatory oversight

By Benjamin E. Long

An online service provider that merely forwards potential clients to lawyers without analyzing their cases must be regulated under state law as a lawyer referral service. The decision in Jackson v. LegalMatch.com elevated the need to protect the public from unethical solicitation over making it easier for people to locate an attorney to take their case. ABA Section of Litigation leaders warn that this broad interpretation could have far-reaching effects that might apply to internet search engines and lawyers who use these online referral services.

LegalMatch matched consumers with multiple local lawyers, and the consumers then choose who to hire

LegalMatch matched consumers with multiple local lawyers, and the consumers then choose who to hire

Credit: UnitoneVector | Getty Images Plus

Should a Forwarding Service Be Regulated?

LegalMatch sued a former member attorney in a California state court for not paying his subscription fees. LegalMatch operates a website that allows consumers to locate lawyers. The service is free for the public, but lawyers pay a subscription fee to become members and to be connected to potential clients in their geographic region and registered area of practice. Consumers provide their location and the legal category that applies to their issue. That information is then forwarded to lawyers who are subscribers to LegalMatch.

Multiple lawyers may respond to a consumer referral, and the consumer then chooses which lawyer to hire. LegalMatch does not convey any information about the qualifications of its member lawyers beyond the fact that they were licensed in at least one state when registering with LegalMatch. LegalMatch’s terms and conditions include a disclaimer that “LegalMatch makes no representations concerning an attorney’s qualifications.”

In this case, the attorney filed a counterclaim alleging that LegalMatch is an uncertified lawyer referral service and should be regulated as such under California law. The trial court ruled that LegalMatch does not operate a referral service because it merely forwards consumers to attorneys without exercising judgment on any of the consumers’ legal issues. The attorney appealed to the First District Court of Appeals of the State of California.

On appeal, the court focused on the meaning of the term “referring.” Under California Business and Professions Code section 6155, entities “shall not operate for the direct or indirect purpose, in whole or in part, of referring potential clients to attorneys . . . unless the [entity] is registered with the State Bar of California.” The court then explored what behaviors the California legislature intended “referring potential clients” to apply to and whether LegalMatch’s procedure for forwarding consumers rose to that level.

The purpose of the statute is to protect the public from improper solicitation, while assisting people with locating an attorney.

Plain Meaning of “Referring” a Consumer to a Lawyer

The court reviewed the statutory interpretation of section 6155 under a de novo standard. The goal of the court was to determine the intent of the legislature that enacted the statute. Because the statute does not specifically define what a referral is, the court cited authority that directed it to give a “plain and commonsense” meaning to the term.

Looking to the statute itself, the court recognized the terms “refer” and “referral” as focusing on the act that an entity commits in sending potential clients to an attorney. The court cited Black’s Law Dictionary to define the plain meaning of the terms. There, “referral” means the “act or an instance of sending or directing to another for information, service, consideration, or decision.” The court examined other commonly used dictionaries that defined the term similarly.

The court declined to construe the term “referring” to include the screening or the exercise of judgment before sending a potential client to a lawyer, as LegalMatch suggested. Rather, the court interpreted the statute to apply to any entity that merely directs a potential client to an attorney. The court concluded that LegalMatch’s practice of forwarding clients to attorneys met the plain meaning of “referring” and therefore was subject to regulation under section 6155.

Weighing the Public Interest

The court also examined the likely legislative intent behind section 6155. Though not controlling, the court explained, it supported the same conclusion reached through statutory interpretation. The legislature enacted the statute to curb unlawful solicitation, according to the court. It was meant to prevent the solicitation of cases from consumers in unsavory circumstances such as at homes and hospitals when people were in poor circumstances to consider hiring a lawyer.

The court acknowledged that the legislature wanted to promote consumer protection and attorney professionalism. The “state has a compelling interest . . . to reduce the likelihood of overreaching and undue influence . . . and to avoid situations where the lawyer’s exercise of judgment on behalf of the client will be clouded by his own pecuniary self-interest,” the court observed. However, the court pointed out that the legislature also recognized the importance of lawyer referral services. By enacting section 6155, the legislature decided to allow lawyer referral services, but require them to be regulated. The purpose of the statute is to protect the public from improper solicitation, while assisting people with locating an attorney, the court acknowledged.

“Oversight of lawyer referral services is important to protect the public,” says Rita M. Aquilio, Watchung, NJ, cochair of the Section of Litigation’s Family Law Litigation Committee. There is certain information that referral services should be required to track and report to achieve this goal. “Information that would be helpful for the public to be aware of includes whether a particular attorney is keeping up with required continuing legal education, is registered with a particular state bar, is in good standing with their state bar regarding their license, or if they have any disciplinary actions or ethical violations against them,” Aquilio adds. The court did not have evidence that LegalMatch provides any of this information to the public.

The ABA has established a committee to provide support and assistance regarding lawyer referral programs. “The ABA Standing Committee on Lawyer Referral and Information Service is very interested in protecting the public regarding attorney referral services,” notes Aquilio. “LegalMatch’s model, as it stands in this case, is not a good fit with the ABA standing committee’s views, which specifically state that the ‘overriding concern is consumer protection,’” she says.

Attorneys Should Pay Attention to the Implications

ABA leaders have been quick to point out the possible repercussions of this opinion. “There was no indication that LegalMatch posed any kind of threat to the public as contemplated by the statute,” says Michael S. LeBoff, Newport Beach, CA, cochair of the Section’s Professional Liability Litigation Committee. “In this ruling, the court was trying to apply archaic statutes to modern technology. Under this reasoning, almost any search engine could be construed as a referral service,” he warns.

The ruling may be cause for significant concern among lawyers, particularly those who market through online platforms. “This opinion opens the door for disciplining attorneys who take cases through LegalMatch or similar services, even though those attorneys may not actually be endangering the public,” cautions LeBoff.

 

Benjamin E. Long is an associate editor for Litigation News.

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Copyright © 2020, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).

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