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Legal Ethics

'Marketing fees' paid to Avvo violate New Jersey lawyer conduct rules, ethics opinion says

Lawyers in New Jersey can’t participate in client-linking services offered by Avvo because of ethics issues stemming from the company's "marketing fee," according to a joint ethics opinion by three New Jersey Supreme Court committees.



The fee paid to the company violates the ban on lawyer-referral payments and the ban on sharing fees with nonlawyers, the June 21 opinion said. The New Jersey Law Journal (sub. req.) has a story.

Two other services linking clients to lawyers, LegalZoom and Rocket Lawyer, appear to be offering legal services plans that would pass muster under those ethics rules—if they were registered with the courts’ administrative office, as required by such rules, the opinion said.

The ethics opinion found that none of the companies interfered with the independent professional judgment of participating lawyers, and no violation of lawyer trust account regulations by Avvo’s practice of holding fees until legal services are performed.

The opinion was issued by the Advisory Committee on Professional Ethics, the Committee on Attorney Advertising and the Committee on the Unauthorized Practice of Law. The New Jersey Bar Association had sought the ethics opinion, according to a press release.

The opinion describes the services offered by three companies’ websites.

Avvo offers two legal services products through its website: Avvo Advisor and Avvo Legal Services. Consumers who use Avvo Advisor pay a flat fee for a 15-minute phone conversation with a lawyer, while consumers who use Avvo Legal Services purchase specific services, such as an uncontested divorce, for a flat fee.

Avvo places the flat fee into the lawyer’s bank account, then withdraws a “marketing fee.” The ethics opinion said the marketing fee is an impermissible referral fee, rather than a fee for the cost of advertising, as well as an impermissible shared fee.

The opinion cited ethics opinions in Ohio, South Carolina and Pennsylvania that found marketing fees charged by “Avvo-type companies” were improper referral fees or constituted impermissible fee sharing.

Consumers who use LegalZoom’s Business Advantage Pro and Legal Advantage Plus pay a flat monthly fee for legal advice. Users can then purchase additional services from participating lawyers at a discounted rate. LegalZoom retains the monthly subscription fees.

Consumers who use Rocket Lawyer’s legal services plan pay a flat fee for limited legal advice on document-related matters and a free 30-minute lawyer consultation. Rocket Lawyer keeps the subscription fees, and participating lawyers offer legal services at discounted rates.

Avvo’s chief legal officer, Josh King, told the New Jersey Law Journal that Avvo is happy the legal opinion found the company doesn’t interfere with lawyers’ professional judgment. But Avvo is “disappointed that the committees focused solely on mechanistic application of the rules rather than what the law requires: consumer protection and respect for the First Amendment,” he said.

“Avvo is attempting to address the pressing need for greater consumer access to justice, and we will continue to do so despite this advisory opinion” he said.