On June 21, 2017, the New Jersey Supreme Court joined Ohio, South Carolina, and Pennsylvania and said “no” to Avvo Advisor, a pay-for-service lawyer referral plan that is available in Louisiana. See Notice to the Bar, Lawyer Participation in the Avvo Legal Service Program (Jun. 21, 2017).
How does it work? A prospective client visits the website https://www.avvo.com/advisor, selects the legal services needed, pays Avvo a fixed fee, and Avvo arranges for an “experienced Louisiana lawyer” to return the prospective client’s call within minutes.
From the lawyer’s standpoint, participating is easy. The lawyer simply clicks the “Join Today” button and agrees to provide certain legal services for a fixed fee. For example, the flat fee for a “15-minute Family advice session” is $39.00; filing for an “uncontested divorce” is $995.00; and creating a “last will and testament” is $295.00. Avvo boasts:
With more than 8 million visits to Avvo each month, we can connect you with clients who have already paid for limited-scope legal services. There’s no chasing leads.
You choose from dozens of legal services and control your availability. Clients only buy what you want to sell, when you want to sell it.
Avvo handles the billing up front, so you can focus on getting the client the help they need. No sending invoices.
After the lawyer provides the services, Avvo sends the lawyer “100% of the client’s payment.” The lawyer then “[a]s a completely separate transaction,” pays a “per-service marketing fee.” The amount of that marketing fee “depends on the service, and ranges from a $10 marketing fee for a $39 service, to $40 marketing fee for a $149 service, up to a $400 marketing fee for a $2995 service. See Attorney FAQ for Avvo Legal Services.
“Is it ethical?,” you ask. According to Avvo, “yes, it is.” Avvo says that it is not getting paid for lawyer referrals: “Avvo is not referring people to a particular lawyer. Potential client choose which attorney they would like to work with from all available, participating attorneys.” Furthermore, Avvo says that it is not sharing in legal fees: “Fee splits are not inherently unethical. They only become a problem if the split creates a situation that may compromise a lawyer’s professional independence of judgment. We believe that Avvo Legal Services fees, if deducted like credit card fees, would involve the sort of technical fee split that would not create such a potential for compromise.” See id.
The problem is that Avvo is wrong, at least according to this recent New Jersey advisory opinion. Said the New Jersey opinion:
the Avvo website offers an impermissible referral service, in violation of Rules of Professional Conduct 7.2(c) and 7.3(d), as well as improper fee sharing with a nonlawyer in violation of Rule of Professional Conduct 5.4(a).
See Notice to the Bar, Lawyer Participation in the Avvo Legal Service Program (Jun. 21, 2017).
Ohio and South Carolina have reached similar conclusions. On July 14, 2016, the South Carolina Bar advised lawyers not to participate in the service for two reasons. See South Carolina Bar Assoc., Ethics Advisory Op. 16-06 (Jul. 14, 2016). First, the participating lawyer’s “marketing fee” payment is impermissible fee sharing under Rule 5.4(a):
The fact that there is a separate transaction in which the service is paid does not mean that the arrangement is not fee splitting as described in the Rules of Professional Conduct. . . . A lawyer cannot do indirectly what would be prohibited if done directly. Allowing the service to indirectly take a portion of the attorney’s fee by disguising it in two separate transactions does not negate the fact that the service is claiming a certain portion of the fee earned by the lawyer as its “per service marketing fee.”
Id. Second, the participating lawyer’s “marketing fee” payment is the giving of something of value for recommending the lawyer’s services:
By basing the advertising charge to the lawyer on the fee collected for the work rather than having a fixed rate per referral or other reasonable cost for the advertisement, a lawyer utilizing this service cannot claim the [reasonable-advertising-cost] exception to the prohibition of paying for referrals . . . .
On June 3, 2016, the Ohio Supreme Court Board of Professional Conduct and legal-ethics commentators reached similar negative conclusions. See Sup. Ct. of Oh. Bd. of Prof’l Conduct, Op. No. 2016-3 (Jun. 3, 2016); Alberto Bernabe, South Carolina Ethics Advisory Opinion Finds That Participating in Programs Like Avvo Legal Services is Unethical, Professional Responsibility Blog (Aug. 12, 2016); Scott H. Greenfield, The Trouble with Avvo’s Ethics, Simple Justice (Aug. 12, 2016).
Avvo, of course, still thinks that everything is okay. See Josh King, Our Opinion on South Carolina Advisory Opinion 16-06, Lawyernomics by Avvo (Aug. 12, 2016).
Considering these three unfavorable ethics opinions, Louisiana lawyers should avoid participating in Avvo Advisor. Louisiana Rule 5.4(a) provides that a “lawyer or law firm shall not share legal fees with a nonlawyer,” except under unusual circumstances. Similarly, Louisiana Rule 7.2(c)(13) provides that a “lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may pay the reasonable cost of advertising or written or recorded communication permitted by these Rules, and may pay the usual charges of a lawyer referral service . . . .” Both rules are squarely implicated by Avvo’s business model.
- The South Carolina opinion cites Comment 7 to the rule in support of its conclusion. This comment “discusses reasonable advertising costs and lists such items as newspaper ads, on-line directory listings, radio/television advertisement, etc. The permitted type of advertising described in the comments typically is of a type that has a fixed cost per ad or per run of air time, and reasonableness can be assessed by the market rate for the type of advertising.” In contrast, Avvo “purports to charge the lawyer a fee based on the type of service the lawyer has performed rather than a fixed fee for the advertisement, or a fee per inquiry or ‘click.’ In essence, the service’ s charges amount to a contingency advertising fee arrangement rather than a cost that can be assessed for reasonableness by looking at market rate or comparable services.” ↩