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New Jersey joint ethics opinion finds that fees paid to Avvo for client referrals violate New Jersey Bar rules

Hello everyone and welcome to this Ethics Alert which will discuss the recent New Jersey joint ethics opinion which found that lawyers in New Jersey are prohibited from participating in client referral services provided by AVVO because the services involve improper lawyer referral fees and fee sharing with a non-lawyer.  The joint ethics opinion is here: https://www.dropbox.com/s/5plgfqgi26zuym1/ACPE%20732%20Avvo%2C%20LegalZoom%2C%20Rocket%20Lawyer%206.21.17.pdf?dl=017  and the New Jersey Supreme Court Notice to The Bar of the joint ethics opinion is here: https://www.judiciary.state.nj.us/notices/2017/n170621i.pdf

The joint ethics opinion found that none of the legal service plans interfered with the independent professional judgment of participating lawyers, and Avvo’s procedure of holding fees until the legal services are performed does not violate lawyer trust account rules.

The joint opinion also describes the services offered by three companies’ websites.  Avvo offers two legal services products through its website: “Avvo Advisor” and “Avvo Legal Services”.  Individuals who use “Avvo Advisor” pay a flat fee for a 15-minute phone conversation with a lawyer, while consumers who use “Avvo Legal Services” purchase specific services, such as an uncontested divorce, for a flat fee.  Avvo then deposits the flat fee into the lawyer’s bank account and withdraws a “marketing fee.”

The ethics opinion found the “marketing fee” is an impermissible referral fee, and not a permitted fee for the cost of advertising, as well as an impermissible shared fee between a lawyer and the non-lawyer.  The ethics opinion referred to ethics opinions in Ohio, South Carolina, and Pennsylvania that found marketing fees charged by “Avvo-type companies” were improper referral fees or constituted impermissible fee sharing.

The opinion found that services provided by LegalZoom and Rocket Lawyer appear to comply with the ethics rules if they were registered with the courts’ administrative office, as required by New Jersey’s rules.  LegalZoom’s “Business Advantage Pro” and “Legal Advantage Plus” charge a flat monthly fee for legal advice and consumers can purchase additional services from participating lawyers at a discounted rate.  LegalZoom keeps the monthly subscription fees.  Rocket Lawyer’s legal services plan charges a flat fee for limited legal advice on document-related matters and a free 30-minute lawyer consultation.  Rocket Lawyer keeps the subscription fees and participating lawyers can offer legal services at discounted rates.

Bottom line:  This ethics opinion is the most recent which has reviewed the recent legal services plans of AVVO (and other entities) and found that the fee charges in AVVO’s plan constitute improper referral fees and fee sharing.  Other jurisdictions may weigh in with their own ethics opinions in the future (or the rules may be changed).  Stay tuned…

…and be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19, N., Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

[email protected]

www.jac-law.com

 

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    Palm Harbor, Florida 34683
    Phone: 727-799-1688
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