There is a massive gulf in legal service offerings. With few exceptions, the legal marketplace offers a single choice: full-scope legal representation or do-it-yourself solutions. If this were the fashion industry, consumers would be forced to choose between buying haute couture and sewing their own clothes.
No Nordstrom, no Gap, no Wal-Mart. Just bespoke or sew your own dresses. It’s ridiculous. And this gulf—this lack of reasonable products that look something more like “off the rack” than tailor made—is keeping way too many consumers and small businesses out of the legal marketplace (just google “access to justice”). And that’s bad for consumers and lawyers alike.
Launching Avvo Legal Services is our effort to fill this gulf by offering a variety of fixed-price legal services. Instead of waiting in dread to receive a bill of an unknown amount at the end of the month, consumers and small businesses can buy specific legal services for a set price.
One reason this gulf has persisted relates to the ways the practice of law is regulated. We’ve built Avvo Legal Services to comply with the Rules of Professional Conduct while also meeting the American Bar Association’s goal of expanding access to legal services. Here’s how:
How to think about the ethics rules
It’s important to start with this premise: the state rules of professional conduct relating to attorney advertising are consumer protection rules intended to safeguard consumers from deceit and harm. Since these rules also impact speech—both the right of attorneys to speak and the right of consumers to be informed about legal services—the advertising rules must be narrowly applied to practices that are actually harmful. The rules aren’t amenable to broad readings or mechanical application.
Limited-scope representation
Avvo Legal Services is a form of “limited-scope representation,” also referred to as “unbundled legal services.” Traditionally, legal services are purchased when a client hires a lawyer to handle the entirety of a legal matter from start to finish. Limited-scope representation, on the other hand, involves breaking the legal matter into component parts, some of which are handled by the client and some of which are handled by the lawyer. Given the division of labor in limited-scope representation, it’s essential to have a crystal-clear understanding of what’s in the package at the outset. That’s why consumers buying Avvo Legal Services are shown, up front and in plain English, what’s included—and not included—in the service they are considering buying.
Fee-splitting
Attorneys may not, under most circumstances, split legal fees with non-lawyers. Since Avvo collects the fee for Avvo Legal Services from the client, passes it on to the attorney, and then charges the attorney a marketing fee, some attorneys ask whether this constitutes impermissible fee-splitting.
There are 2 things to keep in mind here. First, there is no sharing of the fee, as the entire fee for legal services is passed through to the attorney, and the attorney pays a marketing fee to Avvo separately. Mechanically, that’s exactly how attorneys pay for advertising today.
The second and more important thing to keep in mind is the purpose of the prohibition against fee splitting, which protects clients by ensuring that a lawyer’s independent judgment remains uncompromised. Avvo Legal Services involves no such influence. In fact, the service is no different than programs many state bar associations have found acceptable, even in cases where actual fee-splits occur, such as in credit card processing and on deal-of-the-day websites.
Conflicts
An attorney’s first interaction with a potential client who has purchased a service through Avvo Legal Services is no different than the first interaction an attorney would have with a potential client who calls or visits his or her office. As with those initial inquiries, at the beginning of the call, the attorney must ensure that there are no conflicts. If any issue compromises an attorney’s ability to provide the services, the call can be concluded, and the consumer can choose another attorney or obtain a full refund from Avvo.
Trust accounts
Because Avvo does not transfer the fee paid by the client until after legal services have been provided and the fee earned, participating attorneys need not worry about trust account issues.
Avvo Legal Services represents a bold new step on the path to better meeting consumer legal needs. Although we’ve thought long and hard about all of these issues, we’re sure there will be plenty of ways we can improve what we’re doing. We welcome your feedback.
Note: Because many of our readers are lawyers, citations for everything I’ve referred to here are available upon request. Just email [email protected]
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4 comments
Paul
Great article, very informative! Thanks for the post, I love using Avvo!
David
Avvo can keep telling anyone who will listen that their business model boils down to a choice between "off-the-rack" and "tailor made" services. What Mr. King forgets, however, and what he should be very much aware of given his own legal background, is that there is no such thing as a "typical", one-size-fits-all, legal matter. Each legal issue--each client--brings to the table a very unique set of facts and circumstances that it is a lawyer's duty to work through. No two cases are identical. No two legal matters (even a "simple" will or dissolution) are the same. This, then, is the reason why Avvo (and groups like them) are not in any kind of position to make legal decisions for a client. Like everything, you get what you pay for. If Avvo wants to be the Walmart of the legal services industry, then they're only setting up their customers for additional expense down the road, when a lawyer needs to be hired to untangle any messes Avvo creates.
Shane
I'm extremely concerned that this is indeed fee sharing despite the comments above, and would like additional clarification.
I've never heard of an advertiser sending a 1099 form before, that seems far more like a fee sharing arrangement than a standard advertising agreement. And I'm not aware of any advertiser that guarantees a guaranteed and predictable return on dollars paid vs clients received.
As far as what "the purpose" of the prohibition on fee sharing is, that really is a bit irrelevant. The rule is exactly what the rule is, no fee sharing. It ultimately doesn't matter "why" we have the rule, or if the rule should be changed, all that matters for not violating the rule is the black letter of the rule and any judicial interpretation of it. The purpose of the rule is a question for the drafting committee, not for the attorney's responsible for following it.
Ken
I think Mr. King's article is spot on and I'm coming at it from the client side and not the attorney. I would also like to respond to David's comment on this article and say that I think he's missing the picture on Avvo's business model. I do not think they're trying to be the Wal-Mart of the legal industry but offer the consumer some alternatives to the traditional client-attorney relationship. I would even use your logic,"that there is no such thing as a "typical", one-size-fits-all, legal matter. Each legal issue--each client--brings to the table a very unique set of facts and circumstances that it is a lawyer's duty to work through", to make my point. For example, there are many situations that exist where a "limited-scope" attorney makes sense over the traditional retainer based model. Not everything requires a "Johnny Cochran" and consumers should not be paying a premium for legal services if it's not necessary. Avvo's Legal Services concept around limited scope representation……“some of which are handled by the client, some of which are handled by the lawyer”, can be right for certain situations. Having hired a number of attorney's in my time, I can tell you that I have YET to find one who has all the answers, since many things can be and should be given as input from the client. Absolutely the attorney should make the call where it's a legal issue, but I can't tell you how many times that I've offered up suggestions to my case that my $500/hour attorney's never even considered. Clients need to be able to participate in the process and offer up their ideas, data points, and even rough drafts of documents that their attorney might be able to use. Therefore, I see the limited scope engagements being one way in which a client can save thoughts of dollars in some situations, while still having the assurance of getting it right.
But I think the bigger part that you're missing David is purely from a marketing standpoint. If you're an attorney that's part of the Avvo network, you've got the opportunity to upsell the clients to a larger representation if their needs warrant. Think of the lost cost entry points as "loss-leaders". The value that Avvo also brings to consumers like me is a network of reputable attorney's where at least some vetting has been done. Their open system on attorney reviews alone is extremely helpful considered that I have been burned by attorney's even when they came highly recommended.
I would close by saying that the legal profession is ripe for digital transformation and the traditional model can quite possibly get turned on its head over time. I think the strongest attorney's will survive but your industry is full of dinosaurs and the grievance issues alone are a major problem. I think Avvo can be an agent of change in some ways but there are many others. I love what Uber has done but would appeal to the positive, creating new markets, and not just the negative of stealing market share from the taxi cab industry. People use Uber for things they would have never used a taxi cab for not to mention its creating a source of part-time income for many average families to help ends meet. Maybe not an exact parallel to your industry, but don't over look the power of the Customer Experience since at the end of the day it's what fuels digital transformation.