Can a non-law company sell legal services by matching paying customers with outside lawyers, and can a lawyer take that work?

Plain-English summary

Opinion 740, a joint opinion of the Committee on the Unauthorized Practice of Law (as UPL Opinion 58) and the Advisory Committee on Professional Ethics, arose from a grievance about a company that offered to resolve customers' traffic-ticket cases: the customer pays the company a flat fee, and the company matches the customer with a lawyer who appears in municipal court. The customer contracts for legal services with the company, not the lawyer.

The UPL Committee finds that the company engages in the unauthorized practice of law. Relying on UPL Opinion 25 and New Jersey Supreme Court decisions (Stack v. P.G. Garage and N.J. State Bar Ass'n v. Northern N.J. Mortgage Associates), the opinion explains that a company that is not a law firm cannot provide legal services to customers, either through staff lawyers or by furnishing outside lawyers. That a company calls itself a "matching service," or disclaims practicing law, does not change the result when the customer's contract is for the provision of legal services. The opinion analogizes the company to loan-modification companies (UPL Opinion 45) and property-tax-appeal companies (UPL Opinion 25), which similarly solicited clients and referred them to independent lawyers.

The Advisory Committee then addresses the lawyers. A lawyer who provides legal services to the company's customers is assisting the company in the unauthorized practice of law, in violation of RPC 5.5(a)(2). If the lawyer receives a fee from the company, the lawyer is impermissibly sharing fees with a non-lawyer in violation of RPC 5.4(a). And RPC 7.3(e) bars a lawyer from knowingly assisting an organization that furnishes or pays for legal services to promote the lawyer's services, except for the specific categories listed in RPC 7.3(e)(1) to (e)(4) (such as legal-aid offices, bar-association referral services, and bona fide organizations with qualifying legal-service plans). The opinion finds the company is not a bona fide legal-service-plan organization; it has no members or beneficiaries and instead operates a pay-for-service model.

In practice

The opinion holds that, in New Jersey, a company that is not a law firm may not provide legal services to its customers, whether through staff lawyers or by furnishing outside lawyers, and that doing so is the unauthorized practice of law. Per the opinion, a lawyer who provides legal services to such a company's customers violates RPC 5.5(a)(2) (assisting UPL); a lawyer who accepts a fee from the company violates RPC 5.4(a) (fee-sharing with a non-lawyer); and a lawyer recommended or paid by the company to serve its customers violates RPC 7.3(e). The opinion distinguishes bona fide organizations that furnish or pay for legal services to members or beneficiaries under a qualifying legal-service plan, which must satisfy the conditions in RPC 7.3(e), including filing a report on the plan with the Supreme Court.

Common questions

Q: A company will send me clients for a flat fee it collects from them. Can I take that work?

A: No. The opinion concludes such a company is engaged in the unauthorized practice of law, and a lawyer who serves its customers is assisting UPL in violation of RPC 5.5(a)(2).

Q: Does it matter that the company calls itself a 'matching service' and says it doesn't practice law?

A: No. The opinion states the result is the same when the customer contracts with the company for the provision of legal services; the label does not control.

Q: What's wrong with being paid by the company?

A: If the lawyer receives a fee from the company, the opinion concludes the lawyer is impermissibly sharing fees with a non-lawyer in violation of RPC 5.4(a).

Q: Are there any organizations a lawyer can accept this kind of arrangement from?

A: Yes, the limited categories in RPC 7.3(e)(1) to (e)(4), such as legal-aid and public-defender offices, accredited law schools, bona fide nonprofit community organizations, government agencies, bar associations, military legal-assistance offices, bar-association referral services, and bona fide organizations that furnish or pay for legal services to members or beneficiaries under a qualifying plan. The company here did not qualify.

Background and rules framework

The opinion interprets RPC 5.5 (unauthorized practice of law and assisting it), RPC 5.4 (professional independence; fee-sharing with non-lawyers), and RPC 7.3 (including RPC 7.3(e) on organizations that recommend, furnish, or pay for legal services), the New Jersey analogs to Model Rules 5.5, 5.4, and 7.3. It also relies on Court Rule 1:21-1 and 1:27-2 and on prior UPL and ACPE opinions defining when a non-law company's furnishing of lawyers is the practice of law.

Citations and references

Rules of Professional Conduct:

• MR 5.5 / NJ RPC 5.5(a)(2) (unauthorized practice; assisting a non-lawyer in UPL)
• MR 5.4 / NJ RPC 5.4(a), (b) (fee-sharing with non-lawyers; professional independence)
• MR 7.3 / NJ RPC 7.3(e)(1)-(e)(4) (recommendation, employment, or payment by qualifying organizations)

Court rules:

• N.J. Court Rule 1:21-1, 1:21-1(c), 1:21-1(e), 1:27-2

Cases:

• Stack v. P.G. Garage, Inc., 7 N.J. 118 (1951)
• N.J. State Bar Ass'n v. Northern N.J. Mortgage Associates, 22 N.J. 184 (1956), modified 34 N.J. 301 (1961)
• In re Education Law Center, 86 N.J. 124 (1981)

Other opinions cited:

• UPL Opinion 25 (Jan. 1992); UPL Opinion 45 / ACPE Joint Opinion 716 (June 2009); ACPE Joint Opinion 730 / UPL Joint Opinion 52 (2015)

See also

• NJ ACPE Op. 741: Paying for Leads vs. Referrals
• NJ ACPE Op. 742: Out-of-State Lawyers Working Remotely From New Jersey
• ABA Formal Op. 465: Daily-Deal Marketing

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2021/acp740-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics and Committee on the Unauthorized Practice of Law, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. Minor spacing artifacts from the source extraction may remain; the linked official source controls.

Appointed by the Supreme Court of New Jersey

JOINT OPINION

Committee on the Unauthorized Practice of Law Opinion 58

Advisory Committee on Professional Ethics Opinion 740

Non-Legal Companies That Offer Legal Services to Customers Engage in the Unauthorized Practice of Law; Lawyers Who Provide Legal Services to the Company's Customers Violate the Rules of Professional Conduct

The Committee on the Unauthorized Practice of Law (UPL Committee) considered a grievance about a company that offers legal services to customers to resolve their traffic ticket cases. Customers pay the company a flat fee and the company matches the user with a lawyer who will represent the customer in municipal court. The customer contracts for legal services with the company. Companies that are not law firms cannot provide legal services to customers of the companies, either through staff lawyers or by furnishing outside lawyers. UPL Opinion 25 (January 1992); Stack v. P.G. Garage, Inc., 7 N.J. 118 (1951); N.J. State Bar Ass'n v. Northern N.J. Mortgage Associates, 22 N.J. 184 (1956), modified 34 N.J. 301 (1961). The UPL Committee finds that the company is engaging in the unauthorized practice of law.

The Advisory Committee on Professional Ethics finds that lawyers who provide legal services to customers of such companies are assisting the company in the unauthorized practice of law, in violation of Rule of Professional Conduct 5.5(a)(2). If the lawyer receives the fee from the company, the lawyer is impermissibly fee-sharing in violation of Rule of Professional Conduct 5.4(a). Further, a lawyer who is recommended or paid by the company to furnish legal services to the company's customers violates Rule of Professional Conduct 7.3(e).

Committee on the Unauthorized Practice of Law Opinion 25 states that a company that offers legal representation for certain legal matters and refers the customer to a lawyer is engaging in the unauthorized practice of law. This is so even when the company expressly states that it does not engage in the practice of law but merely forwards the case to a lawyer, because the contract between the customer and the company is for the provision of legal services. With few exceptions not relevant here,1 New Jersey companies that are not law firms are not permitted to engage in the practice of law. R. 1:21-1(c); In re Education Law Center, 86 N.J. 124, 129 (1981).

The Committee stated in Opinion 25

The New Jersey Supreme Court has explicitly held that where an individual, who is not an attorney, contracts to procure reduction in real estate taxes which necessitates appeal to a county tax board, that individual is illegally engaging in the unauthorized practice of law. Stack v. P.G. Garage, Inc., 7 N.J. at 121. Specifically, the Court articulated that [I]n agreeing to prosecute [an] appeal for the defendant, [the licensed realtor] was contracting to furnish legal services without being licensed to do so. Ibid. In N.J. State Bar Ass'n v. Northern N.J. Mortgage Associates, 22 N.J. 184 (1956), modified 34 N.J. 301 (1961), the Supreme Court reiterated this proposition, specifying exactly what relationship between a corporation and its own attorneys constitutes the unauthorized practice of law. "Corporations may act for themselves through their own attorney-employees, but they cannot perform acts for others in this capacity which amounts to the practice of law." Id. An organization that solicits homeowners to initiate tax appeals and engages an attorney in conjunction with such appeals, is impermissibly practicing law.

The business model of the company that is the subject of this joint opinion is similar to that of loan modification companies (UPL Opinion 45) and property tax appeal companies (UPL Opinion 25). Those companies also solicited clients and then referred the clients to independent lawyers who provided the clients legal services. This company is holding itself out as an entity that will furnish a lawyer for the company's client. While it calls the service a matching service, in reality the customers contract with the company for legal services and are referred to participating lawyers who provide those services. The company thereby engages in the unauthorized practice of law.

Lawyers may practice law only as part of a law firm or as in-house counsel. In-house counsel in a non-legal company may provide legal services only to their employer; they may not provide legal advice or legal services to customers of their employer. R. 1:27-2; R. 1:21-1; RPC 5.4(a) and (b); ACPE Joint Opinion 730/UPL Committee Joint Opinion 52 (2015); ACPE Joint Opinion 716/UPL Committee Joint Opinion 45 (2009).

The Advisory Committee on Professional Ethics joins this opinion to address the ethics issues that arise when lawyers offer their services to such companies. As noted above, the companies are engaging in the unauthorized practice of law. Lawyers may not assist a company or person in the unauthorized practice of law. RPC 5.5(a)(2).

Lawyers may not share legal fees with non-lawyers. RPC 5.4(a). In the matter before the UPL Committee, customers pay the company a flat fee and the company matches the customer with a lawyer. Presumably, the company pays the lawyer a portion of the fee it received from the customer. If a New Jersey lawyer accepts a fee for legal services from the company, the lawyer is impermissibly sharing fees with a layperson in violation of Rule of Professional Conduct 5.4(a). See Joint Opinion ACPE 716 / UPL 45 (June 2009) (lawyers who receive fees from loan modification companies for legal services provided to homeowners violate RPC 5.4(a)).

Further, lawyers shall not knowingly assist a person or organization that furnishes or pays for legal services to others to promote the use of the lawyer's services . . . . RPC 7.3(e). Lawyers may only be recommended, employed or paid by or cooperat[e] with certain types of companies, including a legal aid office or public defender office; an accredited law school; a bona fide nonprofit community organization; a governmental agency; a bar association; a military legal assistance office; a lawyer referral service operated or sponsored by a bar association; or any bona fide organization that recommends, furnishes or pays for legal services to its members or beneficiaries. RPC 7.3(e)(1) to (e)(4).

A bona fide organization that furnishes or pays for legal services to its members or beneficiaries must satisfy several other conditions, including the requirement that the organization file with the Supreme Court a report with respect to its legal service plan. 2 The company that was the subject of the UPL Committee grievance does not meet the definition for a bona fide organization offering a legal service plan; it operates on a pay-for-service business model. The company has no members or beneficiaries to whom legal services are furnished and paid for through a legal service plan. Rather, customers contract with the company and pay for specific legal services. Lawyers may not be recommended or paid by this type of company to furnish legal services to the company's customers.

Accordingly, companies that are not law firms cannot provide legal services, either through staff lawyers or by furnishing outside lawyers, to customers of the companies. Such companies engage in the unauthorized practice of law. A lawyer who provides legal services to customers of the company is assisting the company in the unauthorized practice of law, in violation of Rule of Professional Conduct 5.5(a)(2). If the lawyer receives a fee from the company, the lawyer is impermissibly fee-sharing in violation of Rule of Professional Conduct 5.4(a). Further, a lawyer who is recommended or paid by the company to furnish legal services to the company's customers violates Rule of Professional Conduct 7.3(e).

1 For example, non-profit corporations that provide legal assistance to the poor, function as a public interest law firm, or provide legal assistance to persons of low and low-moderate means may practice law through staff attorneys, with restrictions. R. 1:21-1(e).

2 Examples of such bona fide organizations are unions and professional organizations that offer their members a legal service plan. Employers may also contract with a bona fide organization to administer a legal service plan as a workplace benefit for their employees.