New York ethics opinion finds that fees paid to Avvo for legal services violate Bar rules
Hello everyone and welcome to this Ethics Alert which will discuss recent (August 8, 2017) New York Ethics Opinion 1132 which found that lawyers in New York are prohibited from participating in AVVO’s client referral services. This opinion found that the referral services violate the Bar rules sinc
NYSBA Ethics Opinion 1132NYSBA Ethics Opinion 1132 states that, since Avvo Legal Services provides ratings of lawyers using the service based on various qualifiers such as years in practice, information provided by the lawyers, volunteer bar work and other publicly available information, and offers to find a client "the right" lawyer with a money-back guarantee, there is an implied recommendation as to the lawyer's "credentials, abilities, competence, character, or other professional qualities"; therefore, the marketing fee is "an improper payment for a recommendation in violation the New York Bar Rules.
The opinion also states that since "the Avvo website also extols the benefits of being able to work with highly rated lawyers," it creates a reasonable impression that it is recommending its top-rated lawyers.
"Avvo is giving potential clients the impression that a lawyer with a rating of '10' is 'superb,' and is thus a better lawyer for the client's matter than a lawyer with a lower rating. Avvo is also giving potential clients the impression that Avvo's eligibility requirements for lawyers who participate in Avvo Legal Services assure that participating lawyers are 'highly qualified.'" The opinion sates that Avvo Legal Services' "satisfaction guarantee" also contributes to the impression that Avvo is recommending its lawyers' services "because it stands behind them to the extent of refunding payment if the client is not satisfied."
According to the opinion, Comment 1 of New York Rule 7.2 prohibits a lead generator not only from stating that it is recommending a lawyer, but also from implying or creating a reasonable impression that it is making such a recommendation.
NYSBA Ethics Opinion 1132 conclusion"This opinion does not preclude a lawyer from advertising bona fide professional ratings generated by third parties in advertisements, and we recognize that a lawyer may pay another party (such as a magazine or website) to include those bona fide ratings in the lawyer's advertisements. But Avvo Legal Services is different. It is not a third party, but rather the very party that will benefit financially if potential clients hire the lawyers rated by Avvo. Avvo markets the lawyers participating in the service offered under the Avvo brand, generates Avvo ratings that it uses in the advertising for the lawyers who participate in Avvo Legal Services, and effectively 'vouches for' each participating lawyer's credentials, abilities, and competence by offering a full refund if the client is not satisfied. As noted earlier, Avvo says: 'We stand behind our services and expect our clients to be 100% satisfied with their experience'" Accordingly, we conclude that lawyers who pay Avvo's marketing fee are paying for a recommendation, and are thus violating Rule 7.2(a)."
NYSBA Ethics Opinions 1131NYSBA Ethics Opinion 1131 sets forth the structures of various web-based services and attempts to explain how those services could potentially comply with the New York Bar Rules. That opinion concludes:
"A lawyer may pay a for-profit service for leads to potential clients obtained via a website on which potential clients provide contact information and agree to be contacted by a participating lawyer, as long as (i) the lawyer who contacts the potential client has been selected by transparent and mechanical methods that do not purport to be based on an analysis of the potential client's legal problem or the qualifications of the selected lawyer to handle that problem; (ii) the service does not explicitly or implicitly recommend any lawyer, and (iii) the website of the service complies with the requirements of Rule 7.1. A lawyer who purchases such a lead to a potential client may ethically telephone that potential client if the potential client has invited the lawyer selected by the service to make contact by telephone."
Bottom lineNew York has now joined the list of jurisdictions finding that Avvo's "marketing fee" taken from fees paid to lawyers using its client generation services violate ethics rules and are impermissible referral fees. This New York ethics opinion (like all ethics opinions) is advisory only; however, it is the most recent finding that the fee charges in AVVO's plan constitute improper referral fees and fee sharing. Other jurisdictions (such as a pending North Carolina opinion) may also publish ethics opinions in the future.