Opinion 732 – AVVO, Legal Zoom, Rocket Lawyer
NJ Supreme Court Committees: Advisory Committee on Professional Ethics, Attorney Advertising, Unauthorized Practice of Law
Responding to an inquiry by the New Jersey State Bar Association, the New Jersey Law Journal reports today that a binding joint Opinion of three New Jersey Supreme Court Committees has found that AVVO Legal Services fee plan violates the Court’s Rules of Professional Conduct. The business model runs afoul of RPC 5.4 (a) bar on division of fees with non-lawyers and constitutes an impermissible referral fee in violation of RPC 7.2 (c).
New Jersey lawyers are barred from participating in AVVO Legal Services.
The Opinion is binding subject to discretionary review by the Supreme Court itself.
Legal Zoom and Rocket Lawyer were found to be permissible legal services plans, but lawyers may not participate until the plan is properly registered with the Supreme Court.
AVVO asserted a First Amendment defense but the Committees responded:
AVVO asserted that its marketing scheme is commercial speech that must be tested against the intermediate scrutiny standard applied to First Amendment commercial speech. The Committees are not restricting Avvo’s marketing; the focus of this Joint Opinion is on the for-profit lawyer referral program and sharing of a legal fee with a nonlawyer. The First Amendment does not protect lawyers who seek to participate in prohibited attorney referral programs or engage in impermissible fee sharing.
NOTICE TO THE BARLAWYER PARTICIPATION IN THE AVVO LEGAL SERVICE PROGRAM AND IN LEGAL ZOOM AND ROCKET LAWYER LEGAL SERVICE PLANS
On June 21, 2017, the Advisory Committee on Professional Ethics, Committee on Attorney Advertising, and Committee on the Unauthorized Practice of Law issued a Joint Opinion (ACPE Opinion 732, CAA Opinion 44, UPL Opinion 54) stating that the legal service program operated by Avvo through its website is an impermissible lawyer referral service, in violation of Rules of Professional Conduct 7.2(c) and 7.3(d), and comprises improper fee sharing with a nonlawyer in violation of Rule of Professional Conduct 5.4(a). New Jersey lawyers may not participate in the Avvo legal service program. The Joint Opinion further states that LegalZoom and Rocket Lawyer appear to be offering legal service plans that have not been registered pursuant to Rule of Professional Conduct 7.3(e)(4)(vii). New Jersey lawyers may not participate in the LegalZoom or Rocket Lawyer legal service plans because they are not registered with the New Jersey Supreme Court (Administrative Office of the Courts).
Glenn A. Grant, J.A.D.,
Acting Administrative Director of the Courts
by Steve Lubet (Northwestern Law School)
This fascinating Illinois State Bar Ethics Opinion 17-01 (click through for link) presents this question under the state’s RPC 1.6(c)which mandates disclosure “to the extent the lawyer reasonably believes necessary to prevent death or substantial bodily harm”. :
The inquiring attorney has a client who is addicted to heroin and opioids, and also takes cocaine, marijuana and methadone. The client is arrested for possession of a controlled substance, and appears severely impaired during court hearings, but remains silent before the Judge, allowing the attorney to do the speaking. The client is unable to stop consuming heroin and continues to be in violation of bond conditions.
In essence the bar committee finds insufficient immediacy of harm but suggests that in appropriate circumstances RPC 1.14 Diminished Capacity may allow the lawyer the ability to take protective steps.
Jacoby & Myers, LLP was one of the first law firms to employ large scale consumer-oriented advertising. Their slogan “It’s about time” promised efficiencies and effectiveness. However the firm’s growth stagnated as the P.C. transformed the practice of law, making it much less labor-intensive.
In hope of raising capital the firm, according to the Second Circuit’s precis, “challenge(d) the constitutionality of a collection of New York regulations and laws that together prevent for‐profit law firms from accepting capital investment from non‐lawyers. The J&M Firms allege that, if they were allowed to accept outside investment, they would be able to—and would—improve their infrastructure and efficiency and as a result reduce their fees and serve more clients, including clients who might otherwise be unable to afford their services. By impeding them from reaching this goal, the J&M Firms contend, the state has unconstitutionally infringed their rights as lawyers to associate with clients and to access 18 the courts—rights that are grounded, they argue, in the First Amendment.
The Southern District of New York’s Judge Lewis A. Kaplan dismissed the complaint, concluding that the plaintiffs failed to state a claim for violation of any constitutional right. The Second Circuit panel agreed in Jacoby& Myers v. The Presiding Justices. It is a decision that is a major blow to those who hoped to put a chink in the wall that bars U.S. firms from – like British and Australian firms – bringing on non-lawyer equity shareholders.
The panel (Lynch, Carney and Hellerstein) declared that “even if such rights as they claim were to be recognized, the challenged regulations withstand scrutiny because they are rationally related to a legitimate state interest. We agree that under prevailing law the J&M Firms do not enjoy a First Amendment right to association or petition as representatives of their clients’ interests; and that, even if they do allege some plausible entitlement, the challenged regulations do not impermissibly infringe upon any such rights.“
The issues are thoughtfully explored by Prof. Alberto Bernabe on his Professional Responsibility Blog – below. – gwc
Professional Responsibility Blog: Court of Appeals for the Second Circuit rejects argument that rules that ban lawyers from raising capital from non lawyers are unconstitutional
by VINCENT CALARCO
Closing the doors on a law firm includes much more than just locking the door behind you. “Dissolution” means the process of terminating the law firm’s existence as a legal entity. The District of Columbia Bar recently issued an opinion that discusses the multiple rules of professional conduct come into play when considering the ethics involved in dissolving a law firm.
After the members of the firm decide to dissolve the firm, the next step is to promptly notify the firm’s clients. Timing is important because, after dissolution, the law firm no longer represents its clients. Notice of the dissolution should also be sent to opposing counsel and the tribunal.
During the dissolution period, lawyers must continue to diligently represent and communicate with clients while facilitating the client’s choice of counsel going forward and where appropriate, properly disposing of client files, funds, and any property.
Under Rule 1.16(d), if a particular lawyer and his client will be terminating their relationship then the lawyer is required to “take timely steps to the extent reasonably practicable to protect the client’s interests” which include surrendering property and papers to the client, allowing time for the client to find other counsel and other considerations.
To read the full opinion, click here.
Fox News contributor Andrew Napolitano, a former New Jersey Superior Court judge, recently claimed on television that former President Barack Obama enlisted the British intelligence services to wiretap Donald Trump when Trump was running for president.
Attorneys say this unverified assertion could cause Napolitano to face ethics charges, though the burden of proof to show he violated ethics rules would likely be steep and the potential punishments relatively minor.
Lawyers who focus on attorney ethics say anyone wanting to pursue an ethics complaint against Napolitano would have to prove the former judge lied on purpose and would have to overcome his First Amendment free speech protections.
Napolitano quit the bench in 1995 after a dispute with the New Jersey Supreme Court over his right to earn outside income, but is still licensed to practice in New Jersey and New York.
Fox News, according to media reports, removed Napolitano on March 16, after he claimed, citing unnamed sources, that the U.K.’s Government Communications Headquarters, at Obama’s request, bugged Trump’s communications.
Napolitano’s allegations were cited by the Trump administration as evidence that Obama was behind a wiretapping scheme. In a rare public statement, GCHQ flatly denied Napolitano’s claim, stating: “Recent allegations made by media commentator Judge Andrew Napolitano about GCHQ being asked to conduct ‘wiretapping’ against the then President Elect are nonsense. They are utterly ridiculous and should be ignored.”
Fox News later issued a statement saying it could not confirm Napolitano’s assertions, and took him off the air.
To explain how Napolitano could face trouble, attorney ethics mavens on both sides of the Hudson River cited Rule 8.4(c) of the New York and New Jersey Rules of Professional Conduct, both of which state that lawyers and firms “shall not engage in conduct involving dishonesty, fraud, deceit or misrepresentation.”******