New Jersey joint ethics opinion finds that fees paid to Avvo for client referrals violate Bar rules.
This guide discuss the recent New Jersey joint ethics opinion which found that lawyers in New Jersey are prohibited from participating in client referral services provided by AVVO because the services involve improper lawyer referral fees and fee sharing with a non-lawyer.
The Joint Ethics OpinionThe joint ethics opinion found that none of the legal service plans interfered with the independent professional judgment of participating lawyers, and Avvo's procedure of holding fees until the legal services are performed does not violate lawyer trust account rules.
The Joint Ethics Opinion addresses AVVO referral servicesThe joint opinion also describes the services offered by three companies' websites. Avvo offers two legal services products through its website: "Avvo Advisor" and "Avvo Legal Services". Individuals who use "Avvo Advisor" pay a flat fee for a 15-minute phone conversation with a lawyer, while consumers who use "Avvo Legal Services" purchase specific services, such as an uncontested divorce, for a flat fee. Avvo then deposits the flat fee into the lawyer's bank account and withdraws a "marketing fee."
The ethics opinion found the "marketing fee" is an impermissible referral fee, and not a permitted fee for the cost of advertising, as well as an impermissible shared fee between a lawyer and the non-lawyer. The ethics opinion referred to ethics opinions in Ohio, South Carolina, and Pennsylvania that found marketing fees charged by "Avvo-type companies" were improper referral fees or constituted impermissible fee sharing.
The Joint Ethics Opinion addresses LegalZoom and Rocket LawyerThe opinion found that services provided by LegalZoom and Rocket Lawyer appear to comply with the ethics rules if they were registered with the courts' administrative office, as required by New Jersey's rules. LegalZoom's "Business Advantage Pro" and "Legal Advantage Plus" charge a flat monthly fee for legal advice and consumers can purchase additional services from participating lawyers at a discounted rate. LegalZoom keeps the monthly subscription fees. Rocket Lawyer's legal services plan charges a flat fee for limited legal advice on document-related matters and a free 30-minute lawyer consultation. Rocket Lawyer keeps the subscription fees and participating lawyers can offer legal services at discounted rates.
Bottom LineThis ethics opinion is the most recent which has reviewed the recent legal services plans of AVVO (and other entities) and found that the fee charges in AVVO's plan constitute improper referral fees and fee sharing. Other jurisdictions may weigh in with their own ethics opinions in the future (or the rules may be changed).