For Avvo, Rocket Lawyer, LegalZoom, Pa. Ethics Rules Uncertain
ALM Media
Updated
Despite years of discussion among Pennsylvania lawyers and several bar association opinions on the issue, the ethical implications of online legal service providers like Avvo, Rocket Lawyer and LegalZoom remain unclear in the state.
In a recent opinion by three New Jersey Supreme Court committees, guidance from the Pennsylvania Bar Association played a part in the decision to blacklist three legal services websites Avvo, Rocket Lawyer and LegalZoom. In the joint opinion, the Advisory Committee on Professional Ethics, the Committee on Attorney Advertising and the Committee on Unauthorized Practice of Law said Avvo facilitates improper fee-splitting, while Rocket Lawyer and LegalZoom lack registration as legal service plans in New Jersey.
While PBA committees have taken up the issue, their opinions lack the same judicial authority that New Jersey's recent decision has. The PBA legal ethics and professional responsibility committee's recent opinion, released in September, dealt with "fixed-fee, limited scope legal services referral programs," like Avvo. It was cited in the New Jersey opinion.
These sites allow lawyers to offer their flat-fee services to customers through the website, in exchange for a "marketing fee" for each service sold.
"The manner in which the payments are structured is not dispositive of whether the lawyer's payment to the business constitutes fee sharing," the PBA committee wrote. "Rather, the manner in which the amount of the 'marketing fee' is established, taken in conjunction with what the lawyer is supposedly paying for, leads to the conclusion that the lawyer's payment of such 'marketing fees' constitutes impermissible fee sharing with a nonlawyer."
The Pennsylvania opinion also identified several other potential problems with these sites, said Daniel Harrington, co-chair of the PBA legal ethics and professional responsibility committee, such as lawyers' professional independence.
Harrington said LegalZoom and Rocket Lawyer are still under review by his committee. These services give subscribers access to legal document preparation and discounted legal advice. The committee will consider factors such as accuracy of documents prepared through those services and professional independence of the lawyers involved, Harrington said.
William Hoffmeyer, co-chairman of the PBA's unauthorized practice of law committee, said his committee is also taking a fresh look at Rocket Lawyer, LegalZoom and Avvo in light of the New Jersey opinion. That committee published an opinion in 2010, specifically naming LegalZoom, that said websites that provide legal document preparation services were engaged in the unauthorized practice of law.
Still, the New Jersey Supreme Court committees and PBA committees don't have identical roles in their respective states. So the PBA committees' opinions may not have direct disciplinary implications.
"It's guidance," Harrington said. "It's not like not agreeing or doing something contrary to our opinion in and of itself is the basis for someone facing discipline."
Harrington said he hopes lawyers will take his committee's advice and consider the issues, but that's as far as the opinion goes.
Hoffmeyer said he did not see any changes in how LegalZoom and Rocket Lawyer operated after his committee published its 2010 opinion. But it does appear that they made changes after a 2015 settlement between LegalZoom and the North Carolina State Bar, he said, which may be why New Jersey did not find that they were engaging in unauthorized practice of law. As part of the North Carolina settlement, LegalZoom agreed to have its forms reviewed by a licensed attorney, and inform consumers that forms and templates are not a substitute for the advice or services of an attorney.
Hoffmeyer could not yet say whether his committee would come to the same conclusion as New Jersey's committee did.
But where Rocket Lawyer and LegalZoom were found to violate the rules in New Jersey, with the legal service plan registration, Pennsylvania does not have the same requirement, Hoffmeyer said.
Responding to Guidance
Jennifer Ellis of Lowenthal & Abrams, whose practice focuses on social media and legal ethics, said she agrees with the PBA opinion on Avvo. But when the opinions only serve as guidance, it's unlikely that online businesses will immediately conform, she said.
"Given the market, given how difficult it is to stand out, given how so many people are struggling to survive and given how difficult it is to find a lawyer, something that ethically connects lawyers and clients is a great thing," Ellis said. "These changes are coming whether we like them or not whether we consider them ethical or not."
Dan Safran, CEO of law firm technology consultancy LegalShift, said he's noticed a shift by non-law-firm professional services companies toward providing legal advice, particularly abroad. The growth of online providers would follow that trend, he said.
"Ultimately, it's the consumer that rules in the United States," Safran said. "Clients are looking for more and more options, they're looking for cheaper costs. ... That puts the pressure on these industries to relax their standards."
Hoffmeyer said it's unlikely that online legal service providers will simply change their business models in response to ethics opinions.
Instead, he said, it might require legal action in states where the ethics opinions on the topic have judicial authority. Ellis agreed. Lawsuits, like the one in North Carolina, are more likely than willing compliance, she said.
"They could negotiate changes, and they may be willing to do that," she said. "A lot of these organizations don't feel that they're doing anything wrong. I don't think they're just going to give in."
