New Jersey joins a number of States in banning attorneys’ participation in Avvo’s programs which require attorneys to pay “marketing fees.” The New Jersey Supreme Court’s Advisory Committee on Professional Ethics (ACPE), Committee on Attorney Advertising (CAA) and Committee on the Unauthorized Practice of Law (UPL) issued a Joint Opinion prohibiting New Jersey attorneys from participating in the Avvo client-linking legal service because the service is in violation of Rule of Professional Conduct 5.4(a), by improperly requiring lawyers to share a legal fee with a nonlawayer, and Rule of Professional Conduct 7.2(c) and 7.3(d) by requiring the lawyer to pay an impermissible referral fee.
This Joint Opinion is similar to the Pennsylvania Bar Association’s Legal Ethics and Professional Responsibility Committee’s September 2016 opinion and signals a possible trend. The Joint Opinion in New Jersey answered the following four questions of ethics surrounding Avvo’s services:
1. Whether lawyers who participate in these programs and engaged in impermissible fee sharing in violation of Rule of Professional Conduct 5.4(a) (“a lawyer shall not share legal fees with a non-lawyer”): The Committees determined that Avvo’s practice how paying a lawyer a set price for the legal services provided and the lawyer then paying a portion of that amount to Avvo is fee sharing. Regardless of the title that Avvo puts on this practice, it is impermissible fee sharing and prohibited under the Rules of Ethics.
2. Whether these services unduly interfere with the lawyer’s professional judgment in violation of Rule of Professional Conduct 5.4(c): The Committees determined that while Avvo “defines the scope of services offered… and pays lawyers only when tasks are completed” that “Avvo does not insert itself into the legal consultation in a manner that would interfere with the lawyer’s professional judgment.”
3. Whether the companies offer impermissible attorney referral services under Rules of Professional Conduct 7.2(c) and 7.3(d): The Committee determined that the “marketing fee” required by Avvo “bears no relationship to advertising.” The fee varies with the cost of the legal service provided is paid to Avvo only after legal services have already been completed, and is therefore not for the “reasonable cost of advertising,” but instead is an impermissible referral fee.
4. Whether payment of the fee by the user to Avvo violated Rule 1:28-A-2, which requires lawyers to maintain a trust account registered with the IOLTA program: The Committees determined that Avvo’s practices are not in violation of Rule 1:28-A-2 because New Jersey lawyers are “not required to hold advance payment of fees in their trust account absent an agreement with the client… they may deposit such monies in their operating account.”
The operations of LegalZoom and Rocket Lawyer were also examined to determine whether it is ethical for New Jersey attorneys to participate in their services. The Committees found that LegalZoom and Rocket Lawyer appear to operate “legal service plans,” opposed to Avvo’s “pay-for-service plans.” However, NJ Lawyers are still prohibited from participate in LegalZoom and Rocket Lawyer plans because they are not registered with the Administrative Office of the Courts, a requirement under Rule of Professional Conduct 7.3(e)(4)(vii).
Link to full NJ Opinion: ACPE Joint Opinion 732; CAA Joint Opinion 44; UPL Joint Opinion 54
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 or Samantha Catanese, Esq. email@example.com.