Avvo is Recruiting - Can You Join the Team. Stephen C Avvo is Recruiting - Can You Join the Team? Stephen C. Sieberson Creighton Law School

Topics Introduction For-Profit Referrals • Traditional referral services • The Avvo model • Rules 5.4 & 7.2 + opinions in other states • Avvo’s arguments • Other relevant Rules Wrap-Up – Other Online Services, Survey

Traditional Referral Services OBA Lawyer Referral Service • $125 annual fee • Staff matches client with lawyer • Client pays $0 – $40 for 30 min. consult NSBA Find a Lawyer • $100 annual fee • Client selects lawyer from online list • Client pays $0 – $50 for 30 min. consult Service takes no part of fee

Avvo Directory and Ratings - 2007

Avvo Referral Services - 2016

Avvo Referral System Lawyer joins (free, you but can buy ad space) Avvo sets fees by type of service Client does online search on Avvo website • Client gets lawyer list by geo and practice field • Client selects lawyer & gives Avvo credit card info • Avvo notifies lawyer 4. Lawyer calls client through Avvo phone link • Avvo tracks length of call • When call is completed, Avvo charges credit card • Most services are done quickly

Avvo Referral System (cont.) 5. Lawyer has earned fee after initial call 6. Avvo holds funds until 7th of following month • Deposits fee into lawyer’s bank account 7. Two days later, Avvo charges “marketing fee” • Avvo draws from lawyer’s operating bank account • Mkt fee is a percentage of fee charged to client • Fees range from 13 – 27% of lawyer’s fee

Nebraska Rules 5.4 & 7.2 Rule 5.4(a) – Lawyer may not share fees with nonlawyer – except nonprofit org Rule 7.2(b) – Lawyer may not give anything of value for recommending lawyer’s services, except: • Advertising costs (including online listing) • Fee to legal service plan • Fee to not-for-profit or qualified lawyer referral service

Other States Reject Avvo Model Ohio: “multiple, potential ethical issues for lawyers” SC, VA & NJ: “violates 5.4 fee sharing and 7.2 paying for referrals” PA: “violates 5.4 and other rules” NY: “violates 7.2” But see: NC is considering favorable opinion and change to Rule 5.4

Avvo Argues Its Case Not a referral service – client chooses • This strains the definition No fee splitting – “marketing fee is separate” • Despite timing, it’s still a percentage Marketing fee is advertising cost • It’s still a percentage, not a fixed cost

Avvo Argues Its Case (cont.) 4. Higher expenses on larger attorney fees • SC, NJ, PA – no rational basis for fee variations 5. Mkt fee similar to credit card fee • Cred card fees are minor and standard in biz 6. Mkt fee similar to Groupon “deal of the day” • NY – Groupon has no contact with client

Avvo Argues Its Case (cont.) 7. R 5.4 is about “professional independence” • Yes, that’s the title, but fee splits are prohibited • OH, PA – Avvo controls many aspects of A/C Rel 8. Lawyer advertising protected by First Amd • Marketing fee is not advertising fee 9. Avvo expands access to legal system • Yes, but the Rules protect the system

Concerns about Other Rules 1.2(c) – limiting scope of representation 1.6(a) – confidentiality 1.15 – handling of client funds 1.16(d) – duty to refund fees 2.1 & 5.4(c) – independent prof judgment 5.3(c) – conduct of nonlawyer assistants 8.4(a) – misconduct through acts of another

Which Way to Go? • NE Attorney Ethics Advisory Committee is studying Avvo model • Under the current Rules, only one answer • Amend Rule 5.4?

Other Online Services LegalZoom Rocket Lawyer Docracy --Generally accepted by ethics authorities

2016 Live Survey Should lawyers be allowed to pay referral fees to “for-profit” companies? ○ No, such fees should be limited to a bar association or nonprofit referral agency [49%] ○ Yes, but only if the fee has no relation to the no. of referred cases or size of legal fees [30%] ○ Yes, allow such a fee after the referral and based on size of legal fee [12%] ○ Yes, there should be no restrictions on referral fees to anyone [9%]