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New Jersey Committees answer Ethical Questions in regards to Avvo's Services

According to the U.S. Department of Justice and the Federal Trade Commission, services such as Avvo, LegalZoom and Rocket Lawyer benefit consumers by expanding consumer access to legal services and keeping prices for legal services at reasonably low rates. In a recent inquisition however, three committees in New Jersey (the Advisory Committee on Professional Ethics, Committee on Attorney Advising and Committee on the Unauthorized Practice of Law) separated Avvo from the others by deeming it as an impermissible lawyer referral service, whereas LegalZoom and Rocket Lawyer are legal services.

As a referral service, Avvo acts as an intermediary in the client-attorney relationship, without being an either an attorney or client. The client pays Avvo in full for a set service at a set price. The attorney then performs the service and is paid in full by Avvo upon successful completion. Afterwards, Avvo bills the attorney a “marketing fee” that is proportional to the amount charged for the service.

The primary concern of this process is the “marketing fee”. In their legal services program, Avvo is not only responsible for collecting payment, but places itself in charge of determining whether or not an attorney has rendered a service in an acceptable manner. The company then collects the “marketing fee”, in essence receiving payment for its involvement in the attorney-client relationship.

Rule 5.4 of the Model Rules of Professional Conduct bans fee sharing in the legal profession in order to prevent any interference with an attorney’s independent professional judgment. The New Jersey committees have concluded that Avvo’s marketing fee is a thinly veiled attempt to circumvent these fee sharing provisions. While the opinion concedes that Avvo’s services do not affect an attorney’s professional judgment, it prioritizes prohibiting the practice of fee sharing in order to take a strong stance on future instances that may put a lawyer’s independence at risk.

We have written in the past about another concern about this Avvo program: Avvo’s ability to interfere in the client-attorney relationship. To be fair to Avvo, as above, none of the New Jersey groups expressed concern in this regard. But, under the terms of the Avvo program, Avvo, and not the attorney, retains the power to control the payment of funds to the attorney. Imagine a scenario in which a client refuses to consent to payment unless the attorney takes certain (perhaps even unethical) steps or agrees to perform work beyond the scope of the engagement. Rather than to set this up as a dispute between lawyer and client, Avvo becomes the arbiter and we believe becomes impermissibly in control of the client-attorney relationship in violation of Rule 5.4 of the Model Rules of Professional Conduct.

Add to this the concept that Avvo, as a non-lawyer entity, is completely exempt from all of the other ethical rules that govern the practice of law.

In the end, there are lots of ways to increase access to legal services, a stated Avvo goal, without eroding some of the fundamental principles the govern the legal profession.

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