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<b><i>Online Extra:</b></i> Avvo GC Denies That Fixed-Fee Legal Service Violates Ethical Rules
Avvo Inc.'s online fixed-fee legal service violates ethics rules related to advertising and splitting fees, a recent South Carolina bar advisory opinion found. Not surprisingly, Avvo general counsel Josh King disagrees.
In February of this year, Avvo launched Avvo Legal Services, which offers consumers access to a network of attorneys who provide certain legal services for a fixed fee. Once a month, Avvo deposits client payments into the attorney's account. In a separate transaction, the Seattle-based company withdraws from the account a per-service marketing fee, which varies based on the services provided. To date, the service meant to provide better access to legal services to consumers is offered in 25 states.
But according to a July 14 opinion from the South Carolina Bar Ethics Advisory Committee, this arrangement violates the prohibition on sharing fees with non-lawyers. “The fact that there is a separate transaction in which the service is paid does not mean that the arrangement is not fee-splitting as described in the Rules of Professional Conduct,” the opinion held. The ethics panel further found that charging a fee based on the type of service performed violates the prohibition of giving anything of value for recommending legal services. “In essence, the service's charges amount to a contingency advertising fee arrangement,” the opinion held.
Though the opinion is non-binding and purely advisory, King said misguided opinions can have a major impact. “It's a shame because when the rules get rigidly applied like this, it has two really bad effects. One is really good lawyers pull back. And the second impact it has is it makes it harder for consumers to get access to legal services,” he said. Lawyers did, in fact, pull back after the South Carolina opinion, King said. “We had enough attorneys back out in South Carolina as a result of the opinion that we pulled the service,” King said.
This marks the second ethics opinion to take issue with Avvo Legal Services. On June 3, the Board of Professional Conduct of the Supreme Court of Ohio issued a similar advisory opinion, finding that this fee arrangement presents a number of ethical issues for attorneys.
While neither of these opinions directly mentions Avvo, King said it's obvious they are referring to the company's fixed-cost service. “They are specific enough about the service they are referring to that it really couldn't be anything but Avvo,” he said.
Avvo isn't planning to change the service, however, because of these advisory opinions, King said. “The idea of changing it to comply with mechanical interpretations of rules with no benefit to the consumers, that's not something we're going to do.”
King said the opinions are interpreting ethics rules too rigidly. “The fee-splitting rules are designed to protect the professional independence of lawyers,” he said. But say a lawyer accepts a credit card payment and the credit card processor keeps a processing fee, he said, citing an example. “If you look at that credit card transaction and were to mechanically apply the rule, then that is a violation of it. But no state bar would prohibit that kind of fee-split because that doesn't impact professional independence.”
Jennifer Williams-Alvarez writes for'Corporate Counsel, an ALM sibling of Internet Law & Strategy. She can be reached at'[email protected].
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