Since the turn of the century, the internet has increasingly become part of our day-to-day lives. Initially, this new reality presented a bit of a challenge for precedent-based, risk-averse lawyers. As a result, in most cases the legal profession as a whole has adapted to the online world more slowly than the general population. Internet marketing, however, was one of the exceptions, and lawyers recognized its potential fairly early on.
That being said, ethics rulings have been one of the primary roadblocks for lawyers seeking to obtain clients via the internet. Since the advent of online advertising, ethics committees across the country have approached it with suspicion and have typically interpreted ethics rules narrowly, issuing holdings that tend to limit the ability of lawyers to advertise and market their services online.
This is especially so when it comes to lawyer-client matching services and the sharing of online referral fees with non-lawyers. Historically, ethics committees have frowned on this practice, permitting fee-sharing arrangements for online referral services under very limited circumstances. The latest opinion from the New York State Bar Association’s Committee on Professional Ethics is no exception. At issue in Opinion 1213, which was decided in January, was whether a fee-sharing arrangement between a lawyer and an online attorney-client matching website was permissible where the match included a “recommendation” of the attorney.
Specifically, the inquiring attorney was seeking input as to whether it would be ethical to participate in an online attorney referral service where the referral fee would be collected by the site, and the matching service vouched “for the lawyer’s credentials, competence and effectiveness…(when recommending) the lawyer as the ‘best lawyer’ for the needs of the potential client.”
The specific service at issue connected individuals who had received a traffic violation with lawyers in their area who were “the best local traffic lawyer for the case.” Once a potential client was paired with a lawyer, they received a price quote that was set by the lawyer. After the client paid said legal fee, a portion of it was kept by the online matching site as a service charge and the remainder was transferred to the lawyer.
Other relevant facts regarding the service included the following: 1) it solicited customer feedback and, in its sole discretion, would offer a full or partial refund if there was an unfavorable outcome, 2) it represented that it was not a law firm, did not offer legal advice, and that none of the attorneys it connected with clients were its employees or agents, and 3) it was not owned by lawyers admitted in New York.
Based on those facts, the Committee then turned to the issue at hand and considered whether “the portion of the legal fee paid by the client but retained by the online lawyer matching service constitute(d) an impermissible referral fee?”
At the outset, the Committee noted that pursuant to Rule 7.2(a), New York lawyers are not usually permitted to pay fees for client referrals. However, the comments to the rule clarify that online lead generation services are an exception as long as the service does not imply or create “a reasonable impression that it is recommending the lawyer… or has analyzed a person’s legal problems when determining which lawyer should receive the referral.” The Committee explained that previously, in Opinion 1131, it had concluded that a lawyer could ethically pay a service fee to an online referral service where “neutral” and “mechanical” factors were applied when matching a potential client with a lawyers. Conversely, the Committee noted that in Opinion 1132, it concluded that a referral fee paid to Avvo Legal Services was impermissible since a number of different aspects of the service when considered together amounted to an attorney recommendation.
Next, the Committee turned to the factual scenario at hand and concluded that the online service setup was very similar to Avvo’s and thus constituted fee-sharing based on an impermissible recommendation. The Committee explained the attorney could not participate on the site since the matching service was “based on factors that include attorney success rate, response rate, and customer service rating…(and it) plainly strives to give potential clients the impression that it has selected the ‘best’ or ‘right’ lawyer for the potential client’s matter, and that the lawyer selected is preferred over other candidates in the service’s database.”
Accordingly, the lesson to be learned is that New York lawyers should participate in online referral services that provide lead generation for lawyers with care. If there is anything in the marketing language or website description of the service that gives the impression that the service will be vouching for the lawyer’s credentials and competence and/or will recommend that a particular lawyer is the “best lawyer” for a potential client’s needs, then walk the other way.
As I always say, if it’s unclear, err on the side of caution and just say no. You’ve got everything to lose from using a questionable service and very little to gain.
Nicole Black is a Rochester, New York attorney, author, journalist, and the Legal Technology Evangelist at MyCase law practice management software for small law firms. She is the author of the ABA book Cloud Computing for Lawyers, co-authors the ABA book Social Media for Lawyers: the Next Frontier, and co-authors Criminal Law in New York, a Thomson Reuters treatise. She writes legal technology columns for Above the Law and ABA Journal and speaks regularly at conferences regarding the intersection of law and technology. You can follow her on Twitter at @nikiblack or email her at firstname.lastname@example.org.