Another jurisdiction finds participation in Avvo, LegalZoom, and Rocket Lawyer unethical

On June 21, 2017, the New Jersey Advisory Committee on Professional Ethics, Committee on Attorney Advertising, and Committee on the Unauthorized Practice of Law opined that New Jersey lawyers may not participate in the Avvo legal service programs “because the programs improperly require the lawyer to share a legal fee with a nonlawyer”. The Committees further found that New Jersey lawyers may not participate in the legal service plans operated by LegalZoom and Rocket Lawyer through their websites “because they are not registered with the Administrative Office of the Courts”.

The Advisory Committee on Professional Ethics received an inquiry from a bar association requesting a formal opinion on “whether it is ethical for lawyers to participate in certain online, non-lawyer, corporately owned services that offer legal services to the public.”

Inquirer stated that three companies (Avvo, LegalZoom, and Rocket Lawyer) are soliciting New Jersey lawyers to provide legal services to customers of the companies.

Inquirer asked four specific questions:

  1. Does a lawyer’s participation in these services constitute impermissible fee sharing with nonlawyers in violation of Rule of Professional Conduct 5.4(a)?
  2. Does participation in these services interfere with a lawyer’s independent professional judgment in violation of Rule of Professional Conduct 5.4(c)?
  3. Are Avvo, LegalZoom, and Rocket Lawyer impermissible attorney referral services in violation of Rule of Professional Conduct 7.2?
  4. Do the services violate Rule 1:28A-2, which requires lawyers to establish an IOLTA account in which to hold client funds until they are earned, by having a nonlawyer company hold such funds instead and/or by allowing a nonlawyer company to have direct access to a lawyer’s trust or bank accounts?

The NJ Opinion referred to two further opinions, which also found that this type of fee-sharing arrangement are in violation of the relevant RPC. In particular, South Carolina Ethics Advisory Opinion 16-06 found these arrangement to violate South Carolina Rule of Professional Conduct [SCRPC 5.4(a)], as well as the rule attaining improper referral fee [SCRPC 7.2(c)]. Pennsylvania Bar Association, Legal Ethics and Professional Responsibility Committee Formal Opinion 2016-200 also found impermissible fee-sharing.

 

New Jersey Rule of Professional Conduct: 5.4(a); 7.2(c) and 7.3(d); 7.3(e)(4)(vii).

 

More on NJ ACPE Joint Opinion 732, NJ CAA Joint Opinion 44, NJ UPL Joint Opinion 54 is available at wwww.technethics.com

 

For more information, Nathan M. Crystal

 

 

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