Posted May 01, 2007 09:22 am CDT
Interest in online legal matching services among both consumers and lawyers is growing. According to the Pew Internet & American Life Project, an estimated 4 million people a month used the Internet to search for law related services in 2006. That number is projected to hit 7 million per month by the end of this year.
Online legal matching services are seeking to help lawyers capitalize on that demand. In addition to CasePost, other online legal matching services include San Francisco based LegalMatch, Attorney Match from LexisNexis Martindale-Hubbell, LegalConnection from FindLaw, and Chicago based LegalFish.
Online legal matching services generally require attorneys to pay an application fee as well as annual or monthly fees to participate. A typical service provides listings that highlight each lawyer’s practice areas and experience. Many sites also provide a Web page for each attorney. A prospective client fills out an online questionnaire explaining the legal problem, the amount of experience desired in a lawyer, the geographic area and the fee range. After attorneys post responses, the client chooses which one to hire. “Online is the wave of the future,” says Yee. “People don’t pick up the Yellow Pages and they don’t refer to the print media anymore. I think the future generation–our children–won’t use print for anything.”
Many observers, however, are somewhat more cautious in their assessments of the Internet’s role in bringing lawyers and clients together.
For at least some people, “the impulse is to go to the Web, which has become the repository of all universal information,” says Stephen Gillers, a law professor at New York University who chairs the Joint Committee on Lawyer Regulation in the ABA Center for Professional Responsibility. “The potential to solve a need is great, but it can also be abused.” The Internet, he says, “can have a lot of garbage. People could be steered wrong, which means the need for vetting by some informed service provider is also present.”
Another concern for lawyers is the ethical propriety of participating in online legal matching services.
The sticking point is whether online matching services amount to advertising, which is permitted under the professional conduct rules for lawyers, or referral services, which could run afoul of prohibitions against attorneys splitting fees with nonlawyers.
Advertising or Referral Service?
Before 2002, the ABA model rules of professional Conduct permitted a division of fees only with nonprofit referral services (usually operated by bar associations as a public service) or prepaid plans and other legal service programs. (The ABA Model Rules serve as the basis for most state ethics codes that directly govern lawyers.)
But in 2002, the ABA House of Delegates approved revisions to the Model Rules that opened the door, if only partway, for online legal match services, which generally are for profit ventures.
Revised Model Rule 7.2 allows a lawyer to pay “the usual charges” of a “qualified referral service” as well as nonprofit referral services and legal services plans. Commentary to the revised rule defines a qualified referral service as one “that has been approved by an appropriate regulatory authority.”
The qualified referral service condition allows state regulatory authorities to vet for profit legal matching services, says William E. Hornsby Jr. of Chicago, staff counsel to the ABA Standing Committee on Delivery of Legal Services. But Hornsby notes that he knows of no state other than California that has a procedure for qualifying lawyer referral services that are for profit.
A variation applies in Utah, where the state bar shut down its lawyer referral service in 2004 after operating at a deficit for years, says Toby Brown, the bar’s communications director. As an alternative member benefit, Brown says, the bar contracted with LegalMatch to offer online legal matching services.
Elsewhere, however, states have evaluated the ethical propriety of online legal matching services according to the “advertising or referral service” standard.
“What we’re finding,” Hornsby says, “is the states are going into the minutiae of the operations of the matching service to determine whether or not it is more closely akin to a referral service or an advertising vehicle. If it’s an advertisement, it’s acceptable, but if it’s considered a for profit or unapproved referral service, the lawyer may not participate.”
The conclusions are far from uniform.
Both Arizona and Washington have concluded that online legal match services constitute unethical fee splitting arrangements.
The Washington State Bar Association’s Rules of Professional Conduct Committee concluded last year (Informal Opinion 2106) that an online legal matching company was a referral service. The opinion notes that the company determined the legal needs of prospective clients and forwarded case descriptions to lawyers who practiced in the area. In addition, the company offered a satisfaction guarantee to prospective clients who hired attorneys “verified” by the company, which amounted to engaging in “subjective judgments” about the quality of the lawyers, the opinion states.
The Committee on the Rules of Professional Conduct of the State Bar of Arizona concluded in Ethics Opinion 06 06 (2006), “An online service that matches prospective clients with potential lawyers based on the appropriate geographic and practice areas, makes representations about the qualifications of its member lawyers, and provides a monetary satisfaction guarantee is a ‘lawyer referral service.’ ”
But the Ethics Advisory Panel to the Rhode Island Supreme Court concluded in Opinion No. 2005 01 (2005) that the annual membership fee for lawyers participating in an online matching service was equivalent to a flat advertising fee.
The service did not direct prospective clients to a specific attorney or group of attorneys; rather, all lawyers who registered for the site had access to requests for assistance. Requests for legal services were initiated by prospective clients, and attorney client relationships were formed offline and without the help of the service. Accordingly, the arrangement is permissible because it constitutes advertising rather than a referral service, the panel concluded.
Ethics panels in North Carolina, South Carolina and New York have reached similar conclusions.
The FTC Weighs In
With nudging from the federal trade commission, Texas has gone both ways on the issue. In August 2005, the Professional Ethics Committee for the State Bar of Texas concluded in its Opinion 561 that lawyers should not participate in online legal match services. Because services were using information about the legal needs of prospective clients and backgrounds of lawyers to create possible matches, the process violated Rule 7.03 of the Texas Disciplinary Rules of Professional Conduct. That rule prohibits attorneys from giving “anything of value to a person not licensed to practice law for soliciting … or referring prospective clients.”
After the Texas ruling, LegalMatch asked the FTC to weigh in on the issue. In a letter sent May 26, 2006, to the state bar’s ethics committee, the commission stated that online matching services are more informative than advertising for individuals seeking legal services.
“Online legal matching services are likely to allow consumers who use them to pay lower prices and/or obtain higher quality legal services than they would have had they used their next best alternative means for identifying a legal service provider,” stated the FTC’s letter. The commission saw no evidence that matching services might cause harm to consumers.
“We hope that the professional ethics committee will consider the likely impacts on competition and on Texas consumers of a rule barring Texas attorneys from participating in online matching services,” the FTC stated.
In the wake of the FTC’s comments, the Texas bar’s ethics committee decided in Opinion 573, issued last July, that an attorney may participate in an online legal matching service so long as the process for prospective clients to select lawyers was a “wholly automated process performed by computers, without exercise of any discretion.”
The service must inform prospective clients that only lawyers who paid a fee may be listed. Also, the service may not make any assertions about the quality of participating lawyers, communications from lawyers must be clearly marked as advertising, and lawyers may not contact prospective clients unless the clients ask that lawyers contact them.
Online matching companies are encouraged by their prospects for eventual acceptance by ethics regulators in the states. Anna Ostrovsky, LegalMatch– general counsel, says that, since the FTC commented, “LegalMatch and I expect the industry as a whole–has seen a tremendous boost in recognition and acceptance.”