Can a Washington lawyer join an online attorney-client 'matching' service that charges a flat fee and ranks 'verified' lawyers higher?

Plain-English summary

A lawyer asked whether he could participate in a legal-marketing plan run by an internet company that called itself an "attorney/client matching service and is not a referral service." Consumers filled out a questionnaire; the company reviewed and categorized each case and forwarded the description (without the consumer's contact information) to a small group of lawyers in the relevant field and area, sometimes as few as six. Lawyers paid an application fee and a flat yearly fee, not a percentage of legal fees. The company also offered paid "Priority" services and a "Verified" status under which a lawyer's responses appeared above those of "Standard" members with a "Verified" logo and claims of a "superior professional background."

The committee concluded that the service apparently is a referral service prohibited by RPC 7.2(c), which bars a lawyer from giving anything of value for recommending the lawyer's services except the reasonable cost of permitted advertising or the charges of a not-for-profit lawyer referral service. Surveying opinions from Arizona, South Carolina, Ohio, and Rhode Island, the committee reasoned that the company ascertains consumers' legal needs, forwards cases to a small set of lawyers, and, through "Verified" ranking and logos, makes "subjective judgments" and provides more than "ministerial services," so it appears to be a referral service rather than mere advertising. The committee separately concluded that the "Verified" designation may violate RPC 7.4: telling consumers that a lawyer has "taken several extra steps to prove their superior professional background" implicates the rule's standards on implying specialist status, and if the disclaimer required by RPC 7.4(b)(3) does not appear with the listing the participating lawyer would violate the rule, while "verified" and "superior professional background" may be misleading under RPC 7.1.

In practice

Under this opinion, and under the Washington advertising rules as they stood in 2006, a lawyer's participation in an online service that does more than passively post the lawyer's information, by screening and categorizing cases, forwarding them to a limited group, and ranking some lawyers above others, was treated as participation in a for-profit referral service barred by RPC 7.2(c). The opinion also holds that a service feature labeling a lawyer "Verified" with a "superior professional background" implicates RPC 7.4 and RPC 7.1 and requires the RPC 7.4(b)(3) disclaimer. Washington's lawyer-advertising rules (RPC 7.1 through 7.5) were revised after this opinion, so the specific rule text it applied should be checked against the current rules.

Common questions

Q: Why did the committee treat the "matching service" as a referral service despite its label?

A: The committee looked past the label. It concluded that because the company ascertains consumers' legal needs, forwards cases to a small set of lawyers, and ranks "Verified" lawyers above others, it makes subjective judgments and provides more than ministerial services, so it apparently is a referral service under RPC 7.2(c).

Q: Does paying a flat fee instead of a percentage make it permissible?

A: Not by itself, in the committee's analysis. Although the lawyers paid a flat fee rather than a share of legal fees, the committee still found the arrangement apparently fell within RPC 7.2(c)'s bar on giving value for recommending a lawyer's services, except for permitted advertising or a not-for-profit referral service.

Q: What was the problem with the "Verified" designation?

A: The committee said it may violate RPC 7.4. Telling consumers a lawyer has proven a "superior professional background" implicates the rule on implying specialist status; without the RPC 7.4(b)(3) disclaimer the participating lawyer would violate the rule, and the claims may be misleading under RPC 7.1.

Background and rules framework

The opinion applied RPC 7.2(c) (Model Rule 7.2, paying for recommendations and referral services), RPC 7.4 (the Washington rule then governing communication of fields of practice and specialist claims, with no direct current Model Rule counterpart), and RPC 7.1 (Model Rule 7.1, false or misleading communications), as those Washington rules stood in 2006. The committee drew on out-of-state opinions because, it noted, there were apparently no Washington opinions defining a "referral service" at the time.

Citations and references

Rules of Professional Conduct:

• Model Rule 7.2 / Washington RPC 7.2(c) (paying for recommendations; referral services)
• Washington RPC 7.4, 7.4(b)(3) (fields of practice; specialist claims and required disclaimer)
• Model Rule 7.1 / Washington RPC 7.1 (false or misleading communications)

Other opinions cited:

• Arizona Bar Op. 99-06 and Op. 05-08: defining and applying "referral service"
• Ohio Supreme Court Op. 2001-02: ministerial-function test
• South Carolina and Rhode Island opinions reaching contrary results on similar services

See also

• WSBA Ethics Op. 1071: Paid Personal Referral Service
• WSBA Ethics Op. 2085: Referrals From a Direct Lender
• ABA Formal Op. 465: Deal-of-the-Day Marketing Programs

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1549

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Advisory Opinion: 2106
Year Issued: 2006
RPC(s): RPC 7.2(c), 7.4
Subject: a lawyer`s participation in an online for-profit referral service

I. NATURE OF INQUIRY

The inquiring attorney asked whether there were ethical implications involved in participating in a legal marketing plan operated by an Internet company (the “Company”). The inquiring attorney explained that he would be one of no more than six attorneys practicing in his field who would potentially bid for work from potential clients who have contacted the Company. Subsequently, we were contacted by the General Counsel for the Company. This response is based on information from (i) the inquiring attorney, (ii) the Company’s General Counsel, and (iii) the Company’s website.

II. DISCUSSION AND ANALYSIS

A. The Company’s Services

The Company’s website says that it is an “attorney/client matching service and is not a referral service.” From information available on their website, it appears that “matching” is accomplished as follows: 1. Basic Services The Company’s basic services consist of three steps: (a) A consumer seeking an attorney visits the website and fills out a questionnaire describing the legal services being sought. This questionnaire, says the website, presents questions “that are designed by attorneys to guide you through the process, just as a lawyer would during an initial consultation.”

(b) The Company reviews the case description, determines what type of legal services are being sought and whether the case is “urgent.” The Company then provides the case description to attorneys who practice in the proper field and are located in the correct geographical area -- without revealing the potential client’s name or contact information.

(c) Interested attorneys may thereafter respond in writing describing relevant experiences and fee structures. From among those attorneys who respond, potential clients may review the attorneys’ on-line profiles and contact attorneys with whom they are interested in working.

The Company’s website also reveals the following:

• With respect to basic services, prospective clients pay no fees to the Company. • Reportedly, attorneys do not pay any percentage of fees earned to the Company. Instead, the attorneys who become affiliated with the Company pay an application fee and a flat yearly fee. The Company guarantees attorneys that, at the end of a Membership Term, their revenues will exceed the paid membership fee. If not, for “Verified” attorneys (see below) membership will be extended without charge for up to half of the original membership term. • The Company employs an “Allocation Model” that “balances” the number of Member Attorneys with the number of cases being posted by consumers. With respect to the Bar Inquiry at issue, the attorney reports that he was solicited to join the “trademark category” where the allocation is “limited to 6 attorneys who would bid on Federal trademark cases in the Western U.S.” The Company’s General Counsel represented that the company does not limit membership in a given area “except to the extent we may briefly put a potential member on the waitlist while we increase traffic in the area,” and that attorneys “are never rejected due to low volume or to protect the bottom line of other members.”

2. “Real-time Priority Service” and “Priority Service” Although standard services are free to consumers, the Company advertises that “the fastest way to find the right lawyer” is to pay the Company a fee for either Priority Service or Real-time Priority Service.

a. Real-time Priority Service

For a fee, after a consumer fills out the on-line questionnaire, a Company “Staff Lawyer” contacts the consumer by telephone within one business day, and the consumer can discuss the case for up to 30 minutes. The Staff Lawyer “will listen carefully, and identify the precise legal issues relevant to your case” (emphasis added). Then, the Staff Lawyer will draft a “written summary of your case to make it appeal strongly to lawyers.” Thereafter, the summary will be circulated to affiliated lawyers via a “Priority broadcast,” alerting lawyers that a “high-value case” has been presented. The Company’s website cautions consumers that Staff Lawyers “are here to help you talk through the case and understand the legal issues behind it, but cannot offer legal advice.” b. Priority Service For a fee, after a consumer fills out the on-line questionnaire, a Company “Staff Lawyer” independently reviews the consumer’s case description within one business day. The Company markets this service in part by asserting that the “correct legal category” of a consumer’s case “isn’t always obvious” and cautioning that if consumers, acting on their own, “mis-categorize” their case, “lawyers in the wrong legal discipline may view your case and you may not get any response” from such lawyers. Thus, the Company suggests that consumers pay the Priority Service fee to “guarantee” that the case summary contains a well-written and “legally accurate” description before it is circulated. The Company also reminds consumers that Company Staff Lawyers are “prohibited from offering you any legal advice.”

3. Verified Status Attorneys may become affiliated with the Company pursuant to a Standard Membership, or they may take “a few extra steps” to attain the Company’s “Verified” attorney status. Verified Membership “costs nothing” and requires the attorney to submit three professional references and “improve and finalize” the attorney’s on-line Profile. The benefits of Verified status are described as follows: • Clients see a “Verified” logo attached to the lawyer’s on-line Profile; • Clients presenting cases will obtain a Satisfaction Guarantee only when they hire a Verified attorney; and • Verified attorneys obtain an “Active Priority Listing.” This means that the attorneys’ responses to clients will be “presented above those Responses from Standard Members” and above Verified attorneys with less tenure. Consumers are told that Verified lawyers “have taken several extra steps to prove their superior professional background and firm commitment to serving [the Company’s] clients.” Consumers who end up “matching” with Verified attorneys thereby obtain the Company’s “Satisfaction Guarantee.” B. Discussion of Rules Implicated.

4. The Company Apparently Constitutes an Impermissible For-Profit Referral Service in Violation of RPC 7.2(c).

RPC 7.2(c) provides as follows: A lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may pay the reasonable cost of advertising or written communication permitted by this rule and may pay the charges of a not-for-profit lawyer referral service or other legal service organization. The website states that the Company is an “attorney/client matching service and is not a referral service.” There are apparently no Washington State Bar opinions defining a referral service. In a 1999 opinion prohibiting lawyers from participating in Internet referral plans, the Arizona State Bar defined “referral service” as follows: The Committee has previously found the defining characteristic of a lawyer referral service to be ‘[t]he process of ascertaining the caller’s legal needs and then matching them to a member having the appropriate area of expertise.’ Arizona Bar Op. 99-06. Later, the Arizona Bar, in Opinion No. 05-08 (July 2005), reviewing the same or a similar service at issue in this response, concluded that it was a for-profit referral service, and therefore violated Arizona’s ER 7.2. That opinion relied on Comment 6 to Arizona ER 7.2, which defines referral service as “any organization in which a person or entity receives requests for lawyer services, and allocates such requests to a particular lawyer or lawyers . . . .” The Company says that it is not a referral service: [The Company] does not allocate or transfer requests to a particular lawyer or lawyers or recommend any lawyer’s services. Member attorneys review the posts and decide whether they wish to advertise their services to any of the posters. Oct. 5, 2005, email from the Company. Despite the Company’s characterizations, it ascertains consumers’ legal needs and forwards case descriptions to lawyers who practice in that particular specialty, a subset of who are “Verified” as capable of providing superior services. Furthermore, the pool of lawyers who may choose to “advertise” in response to the case descriptions forwarded to them may be quite small. The attorney making the Bar inquiry apparently was told he would be one of six trademark lawyers in the “Western U.S.” to whom trademark cases were circulated. Thus, while consumers are not referred to a particular lawyer, their cases are sent for review by only a small group of lawyers. Other state bars have examined this issue with regard to the same or similar Internet services. The South Carolina Bar opined that the service was not a referral service. Among other things, it noted that “the service provider plays no role in the decision-making process of the recipient of the information provided” (i.e., the potential client). It noted, however, that “a different answer would be reached if the Internet site provider was in anyway active in directing the user to a particular attorney.” It concluded that “so long as the Internet site provider does not make specific recommendations to a particular attorney and there are no subjective judgments made by a third party in directing the user to one attorney over another . . . it would not be a referral service.” The Ohio Supreme Court, Op. 2001-02, indicated that one of the identifying characteristics of a referral service is if the company provides “services that go beyond the ministerial function of placing the attorney’s or law firm’s information into the public view.” Rhode Island concluded that the Company was not a referral service. Rhode Island concluded that the fee was a flat fee which purchased advertising and access to requests for legal services posted by consumers. The fee was not a percentage of, or otherwise linked to, the participating attorney’s legal fees. Moreover, Rhode Island concluded that the Company does not recommend, refer or electronically direct consumers to a specific attorney. Attorney-client relationships are established off line and without the Company’s participation. Under the above authorities, it appears that the Company’s system is a referral service. In particular, the “verified” attorneys are recommended above others, a logo appears next to their profile, and their responses are presented above those from “standard” attorneys. Thus, the Company makes “subjective judgments,” and provides more than “ministerial services.”

2. The Company’s “Verified” Attorney Designation May Violate RPC 7.4.

Rule 7.4 contains detailed standards regarding attorneys implying that they are “specialists.”

COMMUNICATION OF FIELDS OF PRACTICE

A lawyer shall not state or imply that the lawyer is a specialist except as follows:

(b) Upon issuance of an identifying certificate, award, or recognition by a group, organization, or association, a lawyer may use the terms ‘certified,’ ‘specialist,’ ‘expert,’ or any other similar term to describe his or her qualifications as a lawyer or his or her qualifications in any subspecialty of the law. If the terms are used to identify any certificate, award, or recognition by any group, organization, or association, the reference must meet the following requirements: (1) the reference must be truthful and verifiable and may not be misleading in violation of rule 7.1; (2) the reference must identify the certifying group, organization, or association; and (3) the reference must state that the Supreme Court of Washington does not recognize certification of specialties in the practice of law and that the certificate, award, or recognition is not a requirement to practice law in the state of Washington. Consumers are told that Verified lawyers “have taken several extra steps to prove their superior professional background.” The “Verified” logo is displayed on such an affiliated lawyer’s profile. Thus, it appears that participating lawyers are holding themselves out as “verified” with a “superior professional background.” This implicates the requirements of RPC 7.4. It is unclear whether the disclaimer required by RPC 7.4(b)(3) appears with the attorney’s listing. If it does not, the participating attorney would be in violation of the rule. The representations, “verified” and “superior professional background” may be misleading under both RPC 7.1(a), (b) and (c) and 7.4(b).