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Ethical Marketing In Today’s Technological Marketplace

January 30, 2018

This article is originally a publication of the NCADA. Legal opinions may vary when based on subtle factual differences. All rights reserved.

As young lawyers progress in their legal career, the emphasis on marketing begins to manifest itself. How to go about this task is not something they teach you in law school. It is never too early to begin thinking about how to best position yourself to attract clients. With today’s technology, it is easier than ever to reach potential clients, but easy is not always ethical.

Online Legal Service Providers

One innovative way to reach clients that is being hotly debated across the United States is the use of online legal service providers, specifically Avvo Legal Services (“ALS”) by Avvo, Inc. Avvo is an online legal services corporation founded in Seattle, Washington in 2006. Avvo uses publicly available information from the internet and state bar associations in order to create a listing of lawyer profiles, which are then given a rating based upon a proprietary system combined with reviews from clients and peers.

ALS is an online legal service introduced by Avvo to provide unbundled legal services to customers. Lawyers who agree to the ALS terms of service and participate in ALS are charged a percentage of the legal fee obtained from the potential client. The portion of the legal fee charged by ALS is called a “marketing fee.”

To use ALS, first the potential client selects a legal service such as advice session, document review, or document drafting, among others. The legal fee for the selected service is displayed on the website together with a description of the service. The potential client then provides a zip code. Nearby participating lawyer profiles are displayed and the potential client selects a lawyer. The potential client pays via credit card, and the selected lawyer is notified by Avvo. The lawyer calls the client over a designated line that is tracked by Avvo to confirm that the call was completed and the length of the call. Avvo deposits the participating lawyer’s ALS legal fees into a designated trust or operating account once a month. Avvo also collects its marketing fee by debiting the designated trust or operating account monthly.

Ethical Concerns

The North Carolina State Bar issued proposed 2017 Formal Ethics Opinion 6 (“FEO”) to address ALS and other online legal service providers used for the marketing of legal services. While the proposed FEO references ALS directly, it applies to all online legal service providers. The proposed FEO states that “a lawyer may participate in an online platform for finding and employing lawyers subject to certain conditions,” which is a rather succinct conclusion, although the ethical considerations are anything but.

N.C. Gen. Stat. § 84-5 prohibits the unlawful practice of law by a corporation, and lawyers are not allowed to assist a corporation or other person in the unauthorized practice of law pursuant to Rule 5.5(f) of the North Carolina Rules of Professional Conduct. The onus is on the participating lawyer to determine that Avvo is straight- forward in its advertising that it is not providing the legal services and is only marketing those services for properly licensed lawyers.

Rule 7.2(d) addresses Lawyer Referral Services. Lawyers participating in ALS must also be mindful that ALS provides an impartial list of the participating lawyers in the zip code selected by the potential client. If ALS or another online legal service recommends a particular lawyer, or restricts the list of lawyers, it would violate Rule 7.2(d). Moreover, the participating lawyer has to ensure complete independence of professional judgment and non-interference by the online legal service pursuant to Rule 1.8(f) and Rule 5.4(c). Because ALS is involved as a third-party, the participating lawyer cannot allow Avvo to compromise the lawyer’s professional relationship with the client.

From time to time, a fee dispute will arise between a lawyer and a client. Rule 1.5(a) restricts a lawyer from collecting a fee that is illegal or “clearly excessive.” Even though Avvo dictates the fee charged through ALS, the participating lawyer is tasked with certifying that the fee charged is not “clearly excessive” for services rendered. If a fee dispute does arise between the lawyer and the client using ALS, Avvo cannot be involved in the dispute.

One particularly troubling aspect of ALS is the potential issue of sharing a legal fee with a non-lawyer entity. Rule 5.4(a) states that the aim of the limitations on sharing legal fees with non-lawyers is “to protect the lawyer’s professional independence of judgment.” As long as Avvo’s “marketing fee” does not violate the restrictions on lawyer advertising under Rule 7.2(b)(1), and the lawyer can maintain “professional independence of judgment,” Rule 5.4(a) is not violated. However, as with many aspects of ALS, the burden is on the participating lawyer to comply with the Rules.

Lawyer Marketing efforts naturally consist of communicating available legal services to potential clients in an effort to attract legal employment. In doing so, a lawyer can run into trouble when marketing and advertising efforts become misleading and thereby violate Rule 7.1 regarding communications concerning a lawyer’s services. Using ALS or another online legal service is no different. When a participating lawyer creates a profile on ALS, the lawyer is responsible for monitoring the information on the website to confirm that the information presented is truthful and does not mislead potential clients.

Status of Proposed 2017 Formal Ethics Opinion 6

As of this writing, the North Carolina State Bar has not yet adopted proposed 2017 Formal Ethics Opinion 6. The proposal was sent back to subcommittee for further study. Several other state bars, including New Jersey, New York, Ohio, Pennsylvania, and South Carolina, have found that the ALS “marketing fee” constitutes fee sharing with a non-lawyer or an improper referral in violation of the Rules of Professional Conduct (ABA Journal, August 9, 2017). Those states would agree, when it comes to marketing, easy is not always ethical.