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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-3402" src="https://www.thelawforlawyerstoday.com/wp-content/uploads/sites/754/2017/07/On-line-lawyering-300x209.jpg" alt="" width="300" height="209">Just last month, we wrote about a <a href="https://www.thelawforlawyerstoday.com/2017/05/3303/">North Carolina draft&nbsp;proposal</a> that would ease the way via its ethics rules for Avvo and other on-line legal services&nbsp;to operate there.&nbsp; Now,&nbsp;after a <a href="http://c.ymcdn.com/sites/www.mcbalaw.com/resource/resmgr/files/ACPE_Opinion_732.pdf">joint opinion</a> from three New Jersey Supreme Court committees, the Garden State has turned thumbs down on such law platforms, citing&nbsp;issues&nbsp;including improper fee-sharing and referral fees.
Nix on Avvo, LegalZoom, Rocket Lawyer
The joint opinion&nbsp;bans participation&nbsp;in Avvo&rsquo;s programs because of&nbsp;the&nbsp;&ldquo;marketing fees&rdquo; it collect from lawyers in exchange for participating in&nbsp;two of its offerings:&nbsp; &ldquo;Avvo Advisor,&rdquo; in which clients talk to lawyers for 15 minutes for $40, with Avvo keeping $10; and &ldquo;Avvo Legal Services,&rdquo; where clients pay a flat fee to Avvo for access to affiliated lawyers, and then Avvo pays the lawyer net of its own fee.
The&nbsp;committees found that this arrangement violates New Jersey&rsquo;s version of <a href="https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_4_professional_independence_of_a_lawyer.html">Model&nbsp;Rule 5.4(a)</a>, barring fee-splitting with non-lawyers, and it mattered not that Avvo called its cut a &ldquo;marketing fee&rdquo;:&nbsp; irrespective of its label,&nbsp;said the committees, &ldquo;lawyers pay a portion of the legal fee earned to a nonlawyer; this is impermissible fee sharing.&rdquo;&nbsp; In addition, said the committees, these payments signal a &ldquo;lawyer referral service,&rdquo; and payment of an &ldquo;impermissible referral fee&rdquo; under New Jersey&rsquo;s <a href="https://www.judiciary.state.nj.us/attorneys/assets/rules/rpc.pdf">Rules&nbsp;7.2(c)</a> and <a href="https://www.judiciary.state.nj.us/attorneys/assets/rules/rpc.pdf">7.3(d)</a>.
Icing the cake, the committees also raised a trust account issue, saying that Avvo&rsquo;s practice of holding the lawyer&rsquo;s fee until the conclusion of the matter violates the attorney&rsquo;s duty to maintain a registered trust account and&nbsp;to hold&nbsp;client funds in it until the work is completed.
Avvo wasn&rsquo;t the only on-line platform tagged &mdash;&nbsp;Rocket Lawyer and LegalZoom also were placed off-limits to New Jersey lawyers, but for a different reason.&nbsp; While&nbsp;they do&nbsp;not require payment from lawyers to participate, and do not share the clients&rsquo; monthly&nbsp;subscription fees with lawyers, Rocket Lawyer and LegalZoom are &ldquo;legal service plans&rdquo; that have not been registered with or approved by the New Jersey Supreme Court, said the committees.&nbsp; That places them outside the pale, even while not violating the fee-sharing prohibition.
A <a href="http://www.judiciary.state.nj.us/notices/2017/n170621i.pdf">notice to the bar</a> from the supreme court&rsquo;s administrative office accompanied the joint opinion, listing the 46 state-approved legal service plans, including those offered through unions and government agencies.
What next?
As we&rsquo;ve <a href="https://www.thelawforlawyerstoday.com/2017/04/3253/">noted</a>, the ABA&rsquo;s Futures Commission&nbsp;sees the continuing onslaught of on-line platforms as something that is here to stay.&nbsp;&nbsp;Nonetheless, this New Jersey ethics&nbsp;opinion joins other cautionary or negative ones&nbsp;issued by regulators in <a href="https://www.ohioadvop.org/wp-content/uploads/2017/04/Op_16-003.pdf" target="_blank" rel="noopener">Ohio</a>, <a href="https://www.pabar.org/members/catalogs/Ethics%20Opinions/formal/F2016-200.pdf">Pennsylvania</a> and <a href="https://www.scbar.org/lawyers/legal-resources-info/ethics-advisory-opinions/eao/ethics-advisory-opinion-16-06/">South Carolina</a>.&nbsp; Against that backdrop, North Carolina&rsquo;s recent consideration of rule changes may appear to be the outlier (although&nbsp;an Oregon state bar association task force&nbsp;also recently <a href="http://faughnanonethics.com/more-of-me-weighing-in-on-oregon-weighing-in-on-the-future/">recommended</a>&nbsp;ethics rule&nbsp;amendments that would be friendly to on-line service legal platforms).
Avvo responded to the New Jersey opinion,&nbsp;<a href="http://www.njlawjournal.com/id=1202790850219/Avvo-LegalZoom-Rocket-Lawyer-Declared-OffLimits?mcode=0&amp;curindex=0&amp;curpage=ALL">telling the New Jersey Law Journal</a> that it is &ldquo;attempting to address the pressing need for greater consumer access to justice, and we will continue to do so despite this advisory opinion.&rdquo;
Will&nbsp;market&nbsp;pressure become a tsunami that will eventually sweep legal ethics considerations away?&nbsp; It may take awhile to tell, but until then, look for more ethics opinions to come out with differing views, potentially creating a patchwork of inconsistent state approaches.&nbsp; We&rsquo;ll be watching with great interest.

core/freeform

Ethics

Legal Ethics, Professional Responsibility and the Business of Law

New Jersey says “no” to Avvo, other on-line legal service platforms