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Practice Forward with lawyer referral services

By Teresa J. Schmid, JD, MBA, LP.D, CAE, ABA Center for Professional Responsibility

The following contains purely informational, educational or technical material. The views expressed herein represent the opinions of the author and have not been approved by the ABA House of Delegates or the Board of Governors and, accordingly, should not be construed as representing the position of the association or any of its entities.

On Aug. 4, Patricia Lee Refo became the 144th president of the American Bar Association.  She did not come empty-handed. In May, responding to the COVID-19 crisis that arose during Refo’s fourth quarter as President-elect, the ABA announced the formation of the Practice Forward Coordinating Group, co-chaired by veteran bar leaders Laura Farber and William R. Bey. A significant part of its mission is to help lawyers be ethically productive and financially viable in the face of the unknown long-term effects of the pandemic. The coordinating group’s website, which is continuously updated, provides a rich source of new tools for law practice management, business growth and professional development. Practice Forward will play a key role in President Refo’s agenda for 2020-2021.

The Center for Professional Responsibility is stepping up to do its part to advance Practice Forward. Effective Sept. 1, the center added the Standing Committee on Lawyer Referral and Information Service (LRIS), chaired by David Keyko, to its family of 10 other ABA entities protecting the public through thought leadership in areas including legal ethics, professionalism, lawyer regulation and lawyer well-being. Lawyer referral services have long provided the public with access to reliable legal services, not only with referrals to carefully vetted lawyers, but also with information about legal aid and other pro bono service providers.

LRIS represents an expansive network of organizations for lawyers to build their practices in an ethically protected environment. To date, there are more than 150 active lawyer referral services in the United States. The American Bar Association’s LRIS also has a certification program for lawyer referral services (the LRIS website has a searchable directory of lawyer referral services and information about ABA certification). A lawyer referral program certified by LRIS is entitled to display the ABA “shield” of approval.

While Bates v. the State Bar of Arizona opened the door to lawyer advertising, in many jurisdictions regulatory barriers against lawyers paying individuals or organizations to recommend specific lawyers to prospective clients still exist. Not-for-profit and certified lawyer referral services are a common exception, providing a safe harbor for participating lawyers. For example, Model Rule 7.2(b)(2) permits payment to a not-for-profit or qualified lawyer referral service for recommending a lawyer’s services. Comment 6 defines a qualified referral service as one that is “approved by an appropriate regulatory authority as affording adequate protections for the public,” citing as an example the ABA Model Rules for lawyer referral services. Model Rule 5.4(a)(4) creates another exception, expressly allowing the sharing of legal fees with a nonprofit organization that employed, retained or recommended the lawyer for a client matter. Also available in some jurisdictions is recognition of lawyer-client confidentiality for communications between a lawyer referral service and its clients. In August 2016 the ABA House of Delegates passed a resolution calling for confidentiality of communications between lawyer referral services and their clients. To date, only a few jurisdictions have enacted such protection, including California, New York and Wisconsin. It may be time for others to revisit it.

Do online lead generators, such as lawyer matching services, compete with lawyer referral services?  No, they do not. On the contrary, lead generators typically go to great lengths to distance themselves from being categorized as lawyer referral services. The reason is they understand the regulatory environment, and they know that lawyers will not subscribe to their services if lawyers are exposed to disciplinary action for doing so. In addition, lead generators may have their own protective bubble. Model Rule 7.5, comment [5] expressly permits lawyers to pay others to generate leads, so long as the generator does not recommend the lawyer nor analyze a legal problem when determining which lawyer should receive the referral. An example of how hard a lawyer matching service will fight to avoid being identified as a lawyer referral service just happened in California.

In Jackson v. LegalMatch, 42 Cal.App.5th 760 (2019), lead generator LegalMatch originally sued a subscribing lawyer for failure to pay contractual fees. The lawyer countersued, claiming that LegalMatch was an uncertified lawyer referral program operating illegally under California Business and Professions Code section 6155, rendering the subscription contract illegal and unenforceable. The trial court agreed with LegalMatch, finding that it was not a lawyer referral service within the meaning of the statute. The Court of Appeals reversed, based on statutory construction: The court noted that referral activity is not defined in the statute, and the court declined to apply the ABA’s “litmus test” definition of lawyer referral services that appears in its Model Rules:

Lawyer referral programs offer two important services to the public. First, they help the client determine if the problem is truly of a legal nature by screening inquiries and referring the client to other service agencies when appropriate. The second, and perhaps more important, function of a lawyer referral service is to provide the client with an unbiased referral to an attorney who has experience in the area of law appropriate to the client’s needs. The public has come to equate the function of lawyer referral programs with consumer-oriented assistance and expects that the loyalty of the program will lie with the consumer, and only secondarily with the participating attorney.

On May 4, 2020, the State Bar of California filed an action for injunctive relief against LegalMatch, citing Jackson. The court denied the injunction on May 7, 2020.

But California is also taking a leadership role in rethinking the regulation of lawyer referral to give consumers more options and remove the chilling effect on lawyers’ use of technology to communicate the availability of legal services. On March 6, the State Bar of California’s Task Force on Access Through Innovation in Legal Services (ATILS) filed its final report and recommendations, including one calling for the Board of Trustees to consider authorizing a study of potential amendments to California’s Certified Lawyer Referral Service (LRS) rules and statutes in light of Jackson

In a COVID-19-impacted legal marketplace, with a pressured demand for legal services coupled with widespread displacement of lawyers from their practices, the stakes for maintaining a robust network of lawyer referral services has never been higher. For the general public, a lawyer referral service is a true access-to-justice portal, with information about a wide variety of solutions to law-related problems. For prospective clients who want to engage lawyers, and for lawyers who want to connect with them, a lawyer referral service is a concierge that pre-qualifies both to fit the client’s unique legal needs with specific lawyers within the relevant jurisdiction who have the expertise to address the needs. For many lawyers, learning to practice forward will begin with a deep dive into lawyer referral services. The Jackson court may have found that, for purposes of collecting a debt under California law, a lawyer matching service and a certified lawyer referral service represent a distinction without a difference. But here on the ground, in a COVID-19-impacted legal market, the distinction makes all the difference.

For more information about LRIS or lawyer referral, contact Briana Morris at [email protected].

Teresa J. Schmid is the director of the American Bar Association Center for Professional Responsibility. She is a past executive director for the Oregon State Bar and executive director for the State Bar of Arizona. She is also a past chair of the Los Angeles County Bar Association’s Professional Responsibility and Ethics Committee and a past member of the State Bar of California’s Standing Committee on Professional Responsibility and Conduct. 

The Center for Professional Responsibility provides national leadership in developing and interpreting standards and scholarly resources in legal and judicial ethics, professional regulation, professionalism and client protection.

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