#njsupremecourt

Governing the practice of law in New Jersey is a set of Rules of Professional Conduct. In June, three committees of the New Jersey Supreme Court joined in issuing an opinion that a legal service called Avvo has been violating these ethical rules. Avvo Legal Services is an online client-matching service that pairs clients seeking legal assistance with lawyers in their geographical region and desired area of practice. Lawyers are rated on Avvo on a scale of 1-10 based on client and peer reviews. If the client is matched with an attorney, the client pays $39 for a 15 minute consultation. The attorney gets that $39 in their account and $10 is subtracted from that amount by Avvo for marketing services.

Under the Rules, lawyers are permitted to pay for advertising and marketing services so long as the advertisements are not false, misleading or deceptive. They are not, however, allowed to pay non-lawyers for “recommendations.” The New Jersey opinion asserts that Avvo creates implicit recommendations of the lawyers through their rating system and “satisfaction guarantee” for their service. By matching clients to the “right” lawyer based on the substance of their issue and the lawyer’s own experience, Avvo implies an endorsement of the lawyer’s qualifications. For these reasons, the New Jersey ethics committees believe that the “marketing fee” Avvo charges its lawyers is an impermissible referral fee.

Many other states have already issued similar opinions deeming Avvo’s practice to be unethical, including Ohio, South Carolina, and Pennsylvania. Quick to follow New Jersey’s lead was New York, with the State Bar Association issuing an opinion in agreement that Avvo’s practice violated the Rules, though their reasoning was somewhat different. However, North Carolina Bar was more favorable to Avvo’s practices and has proposed an amendment to their rules to accommodate the Avvo program.

The New York State Bar Association made a point of describing how legal services such as Avvo could operate within the boundaries of ethical rules. They state that as long as the service selects lawyers in a transparent and unbiased method, does not explicitly or implicitly recommend any lawyer, and complies with advertising restrictions, they may operate without legal or ethical issue. It seems legal services such as Avvo may need to reform as states crack down on enforcing ethical rules.

Comments: Avvo reacted to the opinions of the New York and New Jersey committees by claiming that the committees focused too heavily on the “marketing fees”, rather than ensuring that lawyers and the public are given the protection they are due under the First Amendment. The chief legal officer of Avvo, Josh King, believes that the ethics committees applied the standards too “narrowly.” The Bar associations that are finding Avvo’s practice unethical are focusing on misleading consumers, whereas Avvo is relying on First Amendment rights.

The North Carolina amendment that is referenced above would address Rule 5.4 regarding the Professional Independence of a Lawyer. The amendment would create an exception to the fee-splitting prohibition in the Rule and states the following: 6) a lawyer or law firm may pay a portion of the legal fee to a credit card processor, group advertising provider or online platform for identifying and hiring a lawyer if the amount paid is a reasonable charge for the payment processing or for administrative or marketing services, and there is no interference with the lawyer’s independence of professional judgement or with the client-lawyer relationship.

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