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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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<img style="max-width: 100%;height: auto;max-width: 100%;height: auto" loading="lazy" class="alignright size-medium wp-image-3315" src="https://www.thelawforlawyerstoday.com/wp-content/uploads/sites/754/2017/05/Selecting-lawyer-240x300.jpg" alt="Stand out from the crowd concept female" width="240" height="300">Avvo Legal Services has been meeting with North Carolina bar regulators, resulting in a draft proposal that would amend several legal ethics rules and make it easier for Avvo to operate in the Tar Heel State, according to Prof. <a href="http://mobile.jmls.edu/directory/faculty/profile-full.php?lastfirstname=Bernabe_Alberto">Alberto Bernabe</a>, a Chicago&nbsp;law professor who has seen some of the relevant documents, and <a href="http://bernabepr.blogspot.com/2017/05/north-carolina-is-considering-amending.html">blogged&nbsp;about them last week</a>.
Ethical problems?
Several state legal ethics opinions have recently found client-referral services using an Avvo-like model to be ethically problematic, including opinions from regulators in <a href="https://www.pabar.org/members/catalogs/Ethics%20Opinions/formal/F2016-200.pdf">Pennsylvania</a>, <a href="https://www.scbar.org/lawyers/legal-resources-info/ethics-advisory-opinions/eao/ethics-advisory-opinion-16-06/">South Carolina</a>, and my home state, <a href="https://www.ohioadvop.org/wp-content/uploads/2017/04/Op_16-003.pdf" target="_blank" rel="noopener">Ohio</a>.&nbsp; Rule revisions in <a href="https://www.floridabar.org/news/tfb-news/?durl=/DIVCOM/JN/jnnews01.nsf/8c9f13012b96736985256aa900624829/4678a7922285e66d852580060062735c!OpenDocument">Florida </a>now pending for approval by the state supreme court there&nbsp;likewise call aspects of the model&nbsp;into some question.
Some of the identified ethical&nbsp;issues raised by Avvo-like referral services, as identified by various ethics opinions are:
<ul>
<li>the company &mdash;&nbsp;and non-lawyers &mdash;&nbsp;control significant aspects of the attorney-client relationship,&nbsp;including functions that can constitute the practice of law (see <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_5_unauthorized_practice_of_law_multijurisdictional_practice_of_law.html">Model Rule 5.5(a)</a>);</li>
<li>the structure can&nbsp;interfere with the lawyer&rsquo;s exercise of independent legal judgment on behalf of the client (see <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_4_professional_independence_of_a_lawyer.html">Model Rule 5.4(c)</a>);</li>
<li>the way the fees are managed&nbsp;could constitute or invite commingling of clients&rsquo; funds and lawyers&rsquo; funds (see <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_15_safekeeping_property.html">Model Rule 1.15(a)</a>);</li>
<li>the fee structure makes it difficult to comply with the duty to refund unearned fees at the end of the representation (see <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_16_declining_or_terminating_representation.html">Model Rule 1.16(d)</a>);</li>
<li>a model where the lawyer is paid only after the representation is concluded makes the fees&nbsp;contingent on the outcome, which&nbsp;can violate the prohibition on contingent fees&nbsp;for certain kinds of cases (see <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_5_fees.html">Model Rule 1.5(d)</a>);</li>
<li>receiving and holding client funds paid in advance may violate the lawyer&rsquo;s duty to hold those funds in a trust account (see <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_15_safekeeping_property.html">Model Rule 1.15(c)</a>);</li>
<li>although&nbsp;part of the fee paid&nbsp;by the client&nbsp;and kept by the company may be designated as a&nbsp;&ldquo;marketing fee,&rdquo; the fact that such fees are calculated as a percentage of the full fee makes the arrangement likely to be impermissible fee-splitting with a non-lawyer (see <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_4_professional_independence_of_a_lawyer.html">Model Rule 5.4(a)</a>);</li>
<li>the business&nbsp;model can threaten the confidentiality of the lawyer-client relationship (see <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_6_confidentiality_of_information.html">Model Rule 1.6</a>).</li>
</ul>
North Carolina considers amendments
In light of these issues, Avvo has tried to allay concerns, including by&nbsp;saying that&nbsp;its model actually comports with ethics rules, and that it is providing advertising that is protected by the First Amendment.&nbsp; (A recent&nbsp;<a href="https://georgetownlawjournal.org/articles/195/avvo-joins-legal-market/pdf">Georgetown Law Journal article </a>by Prof. Bernabe details Avvo&rsquo;s arguments.)
According to Prof. Bernabe, North Carolina may now be considering a different regulatory approach:&nbsp;&nbsp;amending its lawyer conduct rules to &ldquo;make it acceptable for lawyers to participate in services like Avvo.&rdquo;
Documents he has seen include a proposal to amend the fee-splitting rule to permit payment of a portion of the lawyer&rsquo;s fee to an on-line platform if the amount is a reasonable charge for administrative or marketing services and there is no interference with the lawyer&rsquo;s independent professional judgment.
Another proposed comment&nbsp;amendment would allow lawyers to participate in Avvo-like rating services without fear of being held in violation of the prohibition&nbsp;against giving something of value in exchange for a recommendation of employment.&nbsp; (See <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_7_2_advertising.html">Model Rule 7.2(b)</a>.)
Yet another amendment would allow the company to keep the client&rsquo;s payment until the end of the representation, imposing on the lawyer the obligation of ensuring that such &ldquo;intermediaries&rdquo; &ldquo;adequately protect client funds&rdquo; &mdash; instead of placing such advance payments in the lawyer&rsquo;s trust account.
Brave New World
Although nothing is certain yet, and the documents that Prof. Bernabe describes are certainly preliminary and might be incomplete, the path that North Carolina appears to be&nbsp;contemplating significantly departs from the&nbsp;road that bar regulators in other jurisdictions have so far&nbsp;taken.&nbsp; Whether acquiescing&nbsp;to market trends &mdash; even ones that seem to be&nbsp;irresistible &mdash;&nbsp;is&nbsp;in the&nbsp;true best interest of legal consumers&nbsp;and the legal profession remains to be seen.

core/freeform

Ethics

Legal Ethics, Professional Responsibility and the Business of Law

Join ‘em if you can’t beat ‘em?  NC considers ethics rule changes to aid Avvo-like services