Can a New York lawyer pay Avvo Legal Services' marketing fee to participate in the program?

Plain-English summary

Avvo Legal Services let clients buy fixed-fee legal services from participating lawyers. Avvo pays the lawyer the full legal fee and separately charges a "marketing fee" per completed service. Avvo also assigns every lawyer an "Avvo Rating" (1 to 10) and offers a satisfaction guarantee refunding the full payment if a client is dissatisfied. The committee decides only one question, finding it dispositive: whether the marketing fee is an improper payment for a recommendation under Rule 7.2(a). It expressly does not decide the other issues the model raises, such as fee-sharing with a nonlawyer under Rule 5.4(a), whether the ratings are "bona fide," limited-scope concerns, or confidentiality under the satisfaction guarantee.

A marketing fee is not barred per se; a lawyer may pay nonlawyers for advertising. Drawing on N.Y. State 897 (2011) (a deal-of-the-day service), the committee notes it lacked enough information to decide whether Avvo's fee is a reasonable payment for advertising, so it does not decide that. The decisive point is "recommendation." Comment [1] to Rule 7.2 says a communication recommends a lawyer if it endorses or vouches for the lawyer's credentials, abilities, competence, or character, and bars paying a lead generator that recommends, or creates a reasonable impression of recommending, lawyers. Although Avvo does not pick a particular lawyer for a client's specific problem, the committee concludes that Avvo's advertising of its ratings (describing them as helping find "the right" attorney and labeling a 10 as "Superb"), combined with statements that it works only with "highly qualified" lawyers and its satisfaction-guarantee refund, expressly states or at least implies that Avvo is recommending the participating lawyers. A bona fide rating standing alone is not a recommendation, but Avvo is not a neutral third party; it is the very party that profits when clients hire the lawyers it rates and markets.

In practice

Under this opinion, a New York lawyer may not pay Avvo Legal Services' marketing fee as the program was structured, because the payment is for a recommendation barred by Rule 7.2(a). The committee distinguishes a permissible flat advertising fee (as in N.Y. State 1131) from Avvo's arrangement: Avvo advertises its own ratings on behalf of the lawyers it markets, touts participants as highly qualified, and stands behind them with a full refund, which together vouch for the lawyers. The committee left open the separate questions of fee-sharing, whether the ratings are bona fide, and whether the fee is otherwise a reasonable advertising charge, and noted that changes to Avvo's structure or to the Rules could change the result.

Common questions

Q: Is paying a nonlawyer marketing company always improper?

A: No. A lawyer may pay for advertising and marketing. The violation here is that Avvo's marketing fee also pays for a recommendation, which Rule 7.2(a) prohibits (Opinion 1132 ¶¶ 19, 35-37).

Q: What made Avvo a "recommendation" rather than a directory?

A: Avvo advertised its ratings as identifying "the right" lawyer, called participants "highly qualified," and offered a satisfaction-guarantee refund, which together vouch for the lawyers it markets (¶¶ 27-35).

Q: Did the committee decide the fee-sharing question under Rule 5.4(a)?

A: No. It found the Rule 7.2(a) recommendation issue dispositive and expressly declined to reach fee-sharing, the bona fides of the ratings, and the other issues (¶¶ 15-16).

Background and rules framework

The opinion applies Rule 7.2(a) (Model Rule 7.2) on paying for recommendations, read with Comment [1]'s definition of "recommendation" and its lead-generator rules, and Rule 7.1 (Model Rule 7.1) on advertising and, in passing, Rule 7.1(b)(1) on bona fide professional ratings. It references but does not decide Rule 5.4(a) (Model Rule 5.4) on fee-sharing with nonlawyers.

Citations and references

Rules of Professional Conduct:

• New York Rule 7.2(a) and Comment [1] (Model Rule 7.2): paying for a recommendation; "recommendation" defined
• New York Rule 7.1(a), (b)(1), (f), (h) (Model Rule 7.1): advertising; bona fide ratings
• New York Rule 5.4(a) (Model Rule 5.4): fee-sharing with nonlawyers (raised, not decided)

Other opinions cited:

• N.Y. State 1131 (2017): flat fee for leads is advertising, not fee-sharing
• N.Y. State 897 (2011): deal-of-the-day service; advertising vs. referral payment
• N.Y. State 799 (2006): the line between a directory and a recommendation
• NJ ACPE 732 (2017); Pennsylvania 2016-200; Ohio 2016-3: other states on Avvo-like programs

See also

• NY State Bar Op. 1131: Paying a for-profit lead-generation service
• NY State Bar Op. 1150: Referrals with a real-estate broker spouse
• NY State Bar Op. 1136: Law firm sponsorship of events and raffles

Source

• Landing page: https://nysba.org/ethics-opinion-1132/