ABA Formal Opinion 483: Lawyers’ Obligations After an Electronic Data Breach or Cyberattack

This week, the ABA released a formal opinion clarifying (somewhat) the obligations lawyers have when a data breach occurs involving (or having a substantial likelihood of involving) material client information.

Just in time for Cybersecurity Awareness month 2018.

You can find Formal Opinion 483 here.

ABA House of Delegates Amends Lawyer Advertising and Solicitation Rules (updated with information about MPRE testing)

From the ABA Journal:

The ABA House of Delegates on Monday voted in favor of amending Rule 7 of ABA Model Rules of Professional Conduct, which addresses lawyer advertising.

Lucian Pera, of Adams and Reese in Memphis, Tennessee, and chair of the Center for Professional Responsibility, told delegates that in the decades since the 1977 U.S. Supreme Court decision in Bates v. State Bar of Arizona allowed for lawyers to advertise their services, there’s been a “breathtaking variation in advertising rules” among states. He said the amendments were necessary to clarify and simplify these rules.

Resolution 101 amends Rules 7.1-7.5, and was informed 2015 and 2016 reports by the Association of Professional Responsibility Lawyers. The Standing Committee on Ethics and Professional Responsibility worked on the edits over the course of two years, holding at least two open hearings. A detailed article on their work is available here.

No one rose to oppose the amendment, and the majority of delegates voted in favor of the amendments.

For those of you teaching PR during 2018-2019, you may wish to advise your students regarding the appearance of revised rules on the MPRE. Here is the position of the NCBE as posted on its website:

Amendments to the ABA Model Rules of Professional Conduct or the ABA Model Code of Judicial Conduct will be reflected in the examination no earlier than one year after the approval of the amendments by the American Bar Association. Until that time, the examination may include questions that test on the rules before amendment.

AVVO Ethics Bar Stands: New Jersey Supreme Court

Supreme Court Won’t Take Up Avvo Ethics Case

An opinion by New Jersey legal ethics authorities that deemed Avvo off-limits to lawyers in the state will not be reviewed by the state Supreme Court.

In an order dated June 1 and obtained by the Law Journal on Monday, the court denied a petition for certification by Consumers for a Responsive Legal System, an organization that represents Avvo and other online companies providing lawyer referrals.

The organization, called Responsive Law for short, had asked the court to review the June 2017 opinion, jointly issued by the Advisory Committee on Professional Ethics, the Committee on Attorney Advertising and the Committee on the Unauthorized Practice of Law, which found that Avvo facilitates improper fee-splitting and may not be utilized by New Jersey lawyers.

Opposing the petition were the Attorney General’s Office, representing the committees, and the New Jersey State Bar Association.

Responsive Law executive director Tom Gordon said in a statement Monday that the court, “by summarily declining to review the decision … has abrogated its responsibility to engage in active supervision of the bar’s anti-competitive conduct.”

“According to the U.S. Supreme Court’s [North Carolina State Board of Dental Examiners v. Federal Trade Commision (2015)] decision, active supervision by a disinterested government agency is a prerequisite for antitrust immunity when policy decisions are made by market participants,” Gordon said. “The real losers here, though, are the people of New Jersey, who are being prevented from finding affordable lawyers online using the same tools they use to find doctors, babysitters, and mechanics.”

Now-former State Bar president Robert Hille, of McElroy, Deutsch, Mulvaney & Carpenter in Morristown, filed a brief on behalf of the bar urging the court to pass on the case. The NJSBA issued a statement Monday from current president John E. Keefe Jr. of the Keefe Law Firm in Red Bank.

“The court’s decision to let stand the joint opinion is an important one that provides clarity for New Jersey lawyers and protects consumers,” Keefe said.

“The association has increasingly grown concerned about the number of organizations that have sought to open the door to fee sharing, which could interfere with a lawyer’s independent professional judgement, and with the concept of organizations providing legal services when they are not bound by the same ethics rules that guide attorneys,” he said, adding that the court’s denial of certification “has ensured that a client’s interests are paramount and that they are represented fairly and impartially by lawyers adhering to our long-established rules governing professional conduct and ethics.”

Representing the state was Deputy Attorney General Steven N. Flanzman. An email to an Attorney General’s Office’s spokesman didn’t get an immediate response Monday.

The June 21, 2017, opinion was issued in response to an NJSBA inquiry asking whether lawyers may “participate in certain online, non-lawyer, corporately owned services.” The inquiry named Avvo, LegalZoom and Rocket Lawyer specifically.

The shortcomings of LegalZoom and Rocket Lawyer could be fixed simply by registering with the state, the committees held. But they found ethical trouble with the very structure of Avvo’s “pay-for-service” programs. The opinion decreed that “New Jersey lawyers may not participate in the Avvo legal service programs because the programs improperly require the lawyer to share a legal fee with a nonlawyer in violation of Rule of Professional Conduct 5.4(a), and pay an impermissible referral fee in violation of Rule of Professional Conduct 7.2(c) and 7.3(d).”

According to the opinion, Avvo offers “Avvo Advisor”—through which customers buy 15-minute phone conversations with a lawyer for a $40 flat rate, of which Avvo keeps a $10 marketing fee—and “Avvo Legal Services,” which allows customers to pay flat fees to Avvo for legal services provided by affiliated lawyers, after which Avvo pays the lawyer but keeps a marketing fee.

“The participating lawyer receives the set price for the legal service provided, then pays a portion of that amount to Avvo,” the committees said. “The label Avvo assigns to this payment (“marketing fee”) does not determine the purpose of the fee. … Here, lawyers pay a portion of the legal fee earned to a nonlawyer; this is impermissible fee sharing.”

The opinion also held that marketing fees lawyers pay to Avvo are not for advertising but amount to an “impermissible referral fee” by the definition contained in RPCs 7.2(c) and 7.3(d), and Avvo’s practice of holding the lawyer’s fee until the service is provided violates an attorney’s requirement to maintain a registered trust account per Rule 1:28(a)-2.

New UPL Complaint Against LegalZoom

A new complaint this week against LegalZoom for the unauthorized practice of law, this time from LegalForce RAPC, a patent and trademark filing firm.  The complaint alleges that non-lawyer “trademark document specialists” “provid[e] legal advice to the plaintiffs by selecting classification and modifying the goods and services description from the template thereby applying specific law to facts.”

More from the ABA Journal.

NC’s First 2017 FEO Permits Subscriber Based Texts that Invite Subscriber to Call Lawyer

Last month, NC adopted 2017 FEO 1, finding:

(1) that lawyers may use subscriber based text services to send texts with links to the lawyers website; and

(2) it is not a violation of 7.3(a) if the subscriber has the option to reply to the text message as follows:

  • Texting Service: Have you or someone you know been injured at work? If so, type YES.
  • Subscriber: YES
  • Texting Service: Lawyer can help. May we contact you at this number? If so, type YES.
  • Subscriber: YES
  • Texting: Service Thank you. A representative will contact you soon.
  • If the subscriber replies YES to both questions, ABC Texting provides the subscriber’s cell phone number to Lawyer. Lawyer will then contact subscriber directly.

The committee also confirmed that it is not a violation of 7.3(a) if the second text message from  includes the lawyer’s phone number and an invitation to call the lawyer.

 

ABA Opinion Suggests Lawyer Must Understand More of the “How” of Technology to Satisfy the Rules

Yesterday, the ABA issued a formal opinion on attorney email encryption, providing that while encryption is not required always, it may be – and to determine if it is, a lawyer must understand certain things, including how information is transmitted and where it is stored.

Model Rule 1.4 may require a lawyer to discuss security safeguards with clients. Under certain circumstances, the lawyer may need to obtain informed consent from the client regarding whether to the use enhanced security measures, the costs involved, and the impact of those costs on the expense of the representation where nonstandard and not easily available or affordable security methods may be required or requested by the client. Reasonable efforts, as it pertains to certain highly sensitive information, might
require avoiding the use of electronic methods or any technology to communicate with the client altogether.

Great summary of (and link to) the opinion here.

H/T to Jim Calloway @ Law Practice Tips.

Canadian Regulator Adopts a Cap on Referral Fees

On April 27, 2017, the Law Society of Upper Canada, which is the body that regulates lawyers in Canada’s largest province of Ontario, approved a set of recommendations that cap lawyer referral fees.   The action limits referral fees to 15% of the first $50,000 in legal fees and 5% thereafter, with an absolute cap of $25,000.  It adopted a standardized form for referral agreements that would be signed by everyone involved in a referral, including the referring lawyer, the lawyer getting the file and the client.

This action was based on a report issued by the Professional Regulation Committee’s Advertising & Referral Fee Arrangements Issues Working Group.   That Report is described in this new story and is available here (at Tab 4-2).

The U.S. counterpart to this issue is ABA Model Rule 1.5(e). Under Rule 1.5(e), a fee division among lawyers from different firms is proper if “the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing.”  That rule also requires that the feed division be in proportion to the work done or all lawyers assume “joint responsibility for the representation.”  Some states, such as Pennsylvania, have omitted the proportionality/joint responsibility clause, and other have omitted the “confirmed in a writing” requirement.