AVVO’s “Fixed Fee Limited Scope” Platform Presents Ethical Violations
AVVO, a for-profit website which connects clients with attorneys, has been under scrutiny by state bar associations’ ethics boards for a service they provide – “Fixed Fee Limited Scope (FFLS)” – that allows clients to obtain “limited scope” legal representation at a fixed-fee set by AVVO. The Pennsylvania Bar Association’s Legal Ethics and Professional Responsibility Committee’s (“Committee”) September 2016 opinion is the seventh opinion issued by such committees across the country identifying the ethical violations present in AVVO’s fee sharing platform. (Pa. Bar Ass/n Comm. On Legal Ethics & Prof’l Responsibility, Formal Op. 2016-200, 9/16). While no opinion has addressed AVVO by name, rather opting to generalize for-profit businesses providing the same or similar services, it is clear that it’s AVVO’s business model, new to the legal profession, at the heart of the debate.
The primary ethical concern surrounds fee-sharing with non-lawyers. The prohibition against such agreements has been a constant in the legal world, but in an ever-changing web-based society, are websites like AVVO the future? Their model of connecting clients with attorneys is nothing new. There is an abundance of similar sites geared towards connecting clients with service providers (Angie’s List, Open Table, and Expedia) and it is no surprise that someone attempted to apply this model to the legal profession. However, this platform raises some serious concerns that may prevent programs like this from ever being ethically sound, such as: confidentiality, delegation of lawyer’s independent professional judgment, and assessment of a client’s true needs.
AVVO argues that the fee it charges attorneys who utilize their FFLS program is nothing more than a “marketing fee” falling under RPC 7.2(c)(1) which allows for the “reasonable cost of advertisements or written communications …”. However, AVVO’s marketing fee varies directly with the amount of the flat fee for the legal services – that variable being 20%-30% of the legal fee. The amount of the marketing fee is based on the amount of fees earned by the lawyers and “establishes that the non-lawyer business is participating in, and sharing in, the fee income derived by the lawyer… and is fee sharing under RPC 5.4(a).”
The Ethics Committee suggests that the cost of advertising does not, and should not, change based on success or revenue. The Committee comments further on the deviation of the AVVO “marketing fee” from any traditional model of advertising, pointing out that marketing fees are generally based on before-the-fact assessments of likely effectiveness and not after-the-fact calculations of revenue. This model effectively makes “the provider of advertising services a joint venture with its customer”, and while this relationship between advertiser and customer is acceptable in other businesses, it is prohibited under RPC 5.4(a) for Pennsylvania lawyers.
Rules against fee-sharing with non-lawyers were established to protect the clients. As ethics committees, like the Pennsylvania Committee, consistently rule against AVVO’s model for accepting “marketing fees” from attorneys, it is clear that the law will not change and therefore AVVO must rethink its business model. Further, while AVVO is accepting the referral, or “marketing fee” for facilitating the relationship between attorney and client, is AVVO really referring the attorney to the client? The clients browse the website independently and base their decision on a number of factors including area of expertise and ratings and reviews awarded by past clients – not by AVVO itself.
AVVO and its business model can potentially be a great resource for attorneys and clients alike. For clients, it is an easy way to streamline the process of finding an attorney who specializes in the work needed while relying on ratings and reviews written by past clients. The fixed fee is attractive to clients who worry that legal representation is unattainable because of cost. For attorneys, especially solo and small practices, it provides a way to expedite retention of, and build relationships with, new clients, while also securing a steady influx of work. However, attorneys participating in these programs are putting themselves at risk of being brought up on ethical violations by their jurisdiction’s ethics committees resulting in sanctions and/or loss of their license. Until AVVO works with the bar associations to establish a program that is ethically sound and attorneys are protected, is it really worth it to participate?
Read more about AVVO’s FFLS program and the ethical issues being identified with the fee-sharing program by ethics committees.
Hoagland Longo attorneys are available to assist attorneys navigating these emerging issues in the areas of ethical compliance and legal malpractice. For more information about these issues or any questions relative to legal malpractice, please contact Joseph V. Leone, Esq. at firstname.lastname@example.org.