NJ Supreme Court Declines to Reconsider Ethics Opinion Banning Lawyers from Online Legal Service Plans

The New Jersey Supreme Court recently declined to review a formal ethics opinion related to attorney participation in online legal services. Specifically, a group of three New Jersey State Bar committees said attorneys licensed in New Jersey may not be involved with “non-lawyer, corporately owned services that offer legal services to the public.” A group called Consumers for a Responsive Legal System asked the Supreme Court to reverse this opinion, but in a one-sentence order issued on June 1, the justices denied the petition without comment.

Avvo's “Marketing Fees” Deemed an Illegal Referral Scheme

The specific question posed to the Advisory Committee on Professional Ethics involved Avvo, an online marketplace for legal services. Avvo allows individual lawyers to post profiles, which may include client reviews, peer endorsements, and related information. But Avvo also provides legal services directly to customers. For example, users can purchase 15 minutes of legal advice for a fixed fee through a product called “AvvoAdvisor.”

The ethics committee, together with the State Bar's Committee on Attorney and Advertising and the Committee on the Unauthorized Practice of Law, determined these kinds of services “improperly require the lawyer to share a legal fee with a non-lawyer.” What Avvo describes as “marketing fees” paid by lawyers who participate in its program, the committees said actually constituted a “referral fee,” which is barred by the state's Rules of Professional Conduct.

There is nothing wrong with an attorney paying to advertise his or her services online. But as the committees noted, when a lawyer actually gives “anything of value to a person or organization to recommend or secure the lawyer's employment by a client,” that crosses the line from marketing into referral. And despite Avvo's assertion that the First Amendment protected its “commercial speech” rights to promote lawyers, the committees noted there was no constitutional protection for lawyers who “seek to participate in prohibited” referral or fee-sharing arrangements.

The committees pointed to other state bars that expressed similar ethical concerns about Avvo's services. In South Carolina, for example, that state bar pointed out Avvo effectively tries to skirt the ethics rules by splitting its plan into separate transactions: one where Avvo “collects the entire free” and pays it to the attorney, and the second where Avvo “receives a fee for its efforts.” But the South Carolina bar concluded that an attorney “cannot do indirectly what would be prohibited if done directly.”

Lawyers Beware When It Comes to Unregistered Legal Service Plans

The committees also objected to New Jersey lawyers participating in other online legal service plans such as LegalZoom and Rocket Lawyer. Although these services do not use the same “referral fee” model as Avvo, the committees nevertheless found they were not registered with New Jersey's Administrative Office of the Courts. Therefore, as a matter of law attorneys could not “provide legal services” to customers of these plans.

All New Jersey attorneys need to be aware of the committees' rulings and act accordingly. Indeed, lawyers should proceed with caution when dealing with any online legal plan that proposes to refer or split fees with non-lawyers. If you need assistance or advice from a qualified New Jersey legal malpractice attorney, contact Joseph Leone at jleone@hoaglandlongo.com or call (732) 545-4717 today.