SBM ethics panel tackles online lawyer matching services

By Lee Dryden
BridgeTower Media Newswires
 
DETROIT, MI — Time is running out to comment on a State Bar of Michigan proposed ethics advisory opinion on online services pairing lawyers and clients.

Opinion R-25 by the SBM Professional Ethics Committee concludes that “participation in a for-profit online matching service that matches prospective clients with lawyers for a fee is not ethically permissible if the attorney’s fee is paid to and controlled by a non-lawyer and the cost for the online matching service is based on a percentage of the attorney’s fee paid for the legal services provided by the lawyer.”

The proposal has won support from the majority of commenters on the SBM website. Comments are due by July 16 at www.michbar.org/opinions/membercomments, by email to r25ethics@ michbar.org, or regular mail to R-25 Ethics, State Bar of Michigan, 306 Towns­end St., Lansing, MI 48933.

The State Bar Board of Commissioners will decide after the comment period whether to approve or modify the opinion.

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Proposed opinion details

The proposal states the online matching service violates several of the Michigan Rules of Professional Conduct such as Rule 6.3(b), which prohibits a lawyer from participating in for-profit lawyer referral services; Rule 5.4, which prohibits a lawyer from sharing fees with a non-lawyer; and Rule 7.2(c), which prohibits a lawyer from giving anything of value to recommend a lawyer’s services unless it is a reasonable payment for advertising the lawyer’s services, the usual charges for a not-for-profit lawyer referral service, or payment for the sale of a law practice.

The practice also subverts compliance with Rule 1.15, which requires a lawyer to safeguard legal fees and expenses paid in advance by depositing them into a client trust account until the fee is earned and the expense is incurred; impedes compliance with Rule 1.16(d) and its requirement that any unearned prepaid fees and unexpended advances on costs must be refunded; and assists in the unauthorized practice of law in violation of Rule 5.5(a) to the extent the online service holds itself out as a provider of legal services and guarantees satisfaction, according to the proposal.

Such services also violate Rule 5.3 to the extent that the conduct of the matching service when performing administrative “back office” services traditionally done through the law firm does not comport with the professional obligations of the lawyer, the proposal stated.

“For Michigan lawyers to participate in a lawyer referral service, it must meet the criteria in MRPC 6.3,” the proposed opinion stated. “The referral service must be a not-for-profit referral service, maintain registration with the State Bar, and operate in the public interest under the Rule.”

The proposed opinion concludes that “Michigan lawyers must carefully review the business model structure of these innovative online matching services to determine whether they constitute a for-profit lawyer referral service under the MRPC despite how the matching service depicts its services. Michigan lawyers must further examine whether compliance with any terms for participation prohibit them from ethically meeting their professional duties.”

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Attorney comments

More than 20 comments on the proposal have already been posted on the SBM website.

Former State Bar President Lori Buiteweg expressed concern that “for-profit online matching services provided by non-lawyers would harm the public.”

“Without a legal education and experience practicing law, it seems like there would be many cases where the non-lawyer entity would make the match and get paid for the referral, but the quality of the referral is poor, perhaps based solely on the attorney’s self-identified practice areas and whether the attorney will pay the referral fee,” she wrote. “If a for-profit matching service controlled by a non-lawyer were determined to be ethically permissible, it would seem appropriate to me to statutorily or via licensing regulations apply all lawyer ethics rules to that service and regulate that service as if it were lawyer-controlled.”

In agreeing with the proposed opinion, Sam Morgan wrote that there is a “problem in our profession of ‘finders’ expecting to receive a kick-back of some portion of the fee earned by the attorney without disclosure and consent of the client — and not just from contingent fee plaintiff cases.”

Jacob Tighe wrote that he is “really torn on this issue.”

“On the one hand, I do not feel that it is appropriate for the Bar to be trying to regulate private businesses or controlling with whom a lawyer shares a fee. Ideally, the MRPCs involving those issues should be trimmed down or eliminated entirely,” he wrote. “On the other hand, there are a lot of scam-companies out there taking advantage of lawyers.”

Carolyn Madden mentioned the rules prohibiting lawyers from participating in for-profit lawyer referral services and sharing fees with a non-lawyer.

“I have a sense that these rules favor those who already have clients and/or are part of the legal community,” she wrote. “New lawyers with little or no connections would benefit from referral services.

“If one of the fears is that the lawyers would pass on the legal fee to their clients, I don’t see how this is different from larger firms and those firms with beautiful offices, passing on the fee to their clients. I would like to see an open discussion of these ethics changes and I would like the Bar to be open to the current lifestyle of young and struggling lawyers.”

If you would like to comment on this story, email Lee Dryden at ldryden@mi.lawyersweekly.com.

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