Dear Fellow Members:
Below you will find a link to an online copy of the Maryland Rules of Professional Conduct. We have provided this link in hopes of making your search for answers to your legal ethics questions easier. As always, if you need additional guidance, please do not hesitate to call the Legal Ethics Committee hotline at the number listed in the current issue of your bar newsletter.
MD Rules of Professional Conduct
Legal Ethics Hotline Volunteers ... December
Sam Shapiro ... 301-340-1333 ... email@example.com
Dan Shea ... 301-424-1060 ... firstname.lastname@example.org
Ethics: On-Line Matchmaking Services Revisited and the Latest from the MSBA Ethics Committee
Last February, this column featured an article about the recent crop of online, for-profit legal matchmaking services which offer to match those seeking legal services with a qualified attorney who can meet a client’s specific needs. The article highlighted two significant ethical obstacles facing Maryland attorneys who wish to accept referrals through on-line legal matchmaking sites: the prohibition against fee-sharing with non-lawyers under Rule 5.4(a) of the Maryland Lawyer’s Rules of Professional Conduct (“MLRPC”); and the prohibition against referral fees under MLRPC Rule 7.2(c).
Recently, the MSBA’s Committee on Ethics issued an opinion on the subject -- Ethics Docket No. 2016-14. This opinion is important, not only because it provides timely guidance in a rapidly evolving area in the legal profession, but also because it directly addresses the ethical propriety of an online matchmaking service model.
The company in question in Docket No. 2016-14 allows lawyers to advertise their availability to provide fixed-fee, limited-scope legal services, at prices set by the marketing company, through its website. The client uses the company's website to purchase legal services, chooses the lawyer the client wishes to hire, and pays the company a fixed-fee in advance for those services. Once the lawyer completes the service, the company pays the lawyer the full fixed-fee paid by the client. In a separate transaction, the lawyer pays the company a per-service "marketing" fee, which is set by the company and differs in amount depending upon the fixed-fee paid by the client. Although the Committee’s opinion does not specifically identify the marketing service in question, it appears to closely resemble the service offered on Avvo.com.
Under MLRPC Rule 7.2(c), lawyers generally cannot pay referral fees. But the company in question in Docket No. 2016-14 does not recommend or refer a client to a particular lawyer. Rather, the client chooses the lawyer from the company's online directory of lawyers in a particular geographic area. For this reason, the Committee concluded that the company is not operating a referral service.
Lawyers also cannot share legal fees with non-lawyers under MRPC Rule 5.4(a) (except in certain limited situations that do not apply to an online legal services program). An attorney may, however, pay the reasonable cost of advertising under MRPC 7.2(c). Thus, what the Committee regarded as the “key question” in the scenario presented was whether a per-service "marketing" fee charged by the online legal service was a fee for legal services impermissibly shared with a non-lawyer, or instead a reasonable cost paid for advertising.
In deciding whether the fee paid would constitute impermissible fee-sharing or a permissible advertising fee, the Committee reviewed several of its past opinions. In Docket No. 2012-07, it was concluded that the fee paid to a daily deal website was an advertising cost, even though the website collected fees from the client in advance, and the fee paid by the lawyer to the website was based on a percentage of the fee paid by the client. In doing so, the Committee determined that a daily deal website was merely a form of advertising and the fee paid by the lawyer was the cost of advertising.
In Docket No. 2007-01, the question was whether a lawyer could pay a fee to appear in an online directory. Because the fee paid by the lawyer was not tied to any payment by a client, the Committee determined that the fee paid by the lawyer was an advertising fee and, therefore, did not violate Rule 5.4(a).
In Docket No. 2004-21, the Committee focused on whether a lawyer could pay a fee to be listed in an online legal directory when the fee was paid only when the lawyer was retained by a client who learned of the lawyer through the directory. The company providing the online directory required lawyers to pay the fee to the company from the lawyer's operating or business account and to agree not to charge the fee to the client. The Committee determined that because the fee was contingent upon the client retaining the lawyer, the fee effectively came from the client even though the fee was paid from the lawyer's operating or business account. The Committee concluded that such an arrangement constituted an impermissible fee-sharing arrangement with a non-lawyer.
In its recent decision, after reviewing the above opinions, the Committee concluded that the fee charged for participation in an online fixed-fee legal program is most analogous to the fee charged to participate in the online legal directory discussed in Docket No. 2004-21. The lawyer would pay the fee only if the lawyer was retained by the client. Regardless of the fact that the fee arrangement would be structured as two separate transactions, the Committee found that the fee would effectively be paid by the client because the fee paid to the company is tied directly to the fee earned by the lawyer.
Other facts suggested to the Committee that the service model considered in Docket No. 2016-14 was an impermissible fee-sharing arrangement: The company, rather than participating attorneys, specified the types of legal services that may be provided, set the fees for each legal service, and changed the fee due from the lawyer depending upon the amount of the fee charged to the client.
The Committee concluded its opinion in Docket No. 2016-14 by noting that a lawyer's relationship with online, fixed-fee, legal services programs can present other potential ethical issues under the Maryland Lawyers’ Rules of Professional Conduct, some of which are discussed in Docket No. 2012-07. The Committee thus recommended that any lawyer considering an arrangement with an online fixed-fee legal services company review these potential ethical issues before entering into such an arrangement.
 See https://support.avvo.com/hc/en-us/articles/208458216-Services-FAQ-for-attorneys.
David Briglia, Committee Member
Daniel L. Shea, Committee Co-Chair
Samuel M. Shapiro, Committee Co-Chair
Allen J. Katz, Committee Co-Chair.
Allen J. Katz
Samuel M. Shapiro
Daniel L. Shea
December 15, 2016
January 19, 2017
February 16, 2017
March 16, 2017
April 20, 2017
Meetings will be held at 4:30 p.m. on the 3rd Thursday of the month (September - May) in the upstairs conference room of the Bar Association building, unless otherwise noted.