I am on record as expressing skepticism about the benefits of legal market deregulation. I also believe that attorney regulations pertaining to fee-splitting and unauthorized practice of law serve important purposes. But these rules, like all ethics rules, are "rules of reason." They should not be applied in a ham-handed manner and without consideration of their purposes, especially when such applications inhibit low and moderate income people from obtaining legal services. Unfortunately, a recent UPL decision by the Supreme Court of Minnesota and state ethics opinions concerning Avvo Legal Services are likely to serve as fodder for critics who charge that the legal profession is primarily concerned with protecting its economic interests at the expense of the public.
The Minnesota UPL decision can be found here. Read the Legal Profession Blog’s synopsis here. Briefly, a Colorado attorney was asked by his in-laws, who live in Minnesota, to represent them pro bono in connection with a $2,000 judgment against them. The attorney agreed and contacted the judgment creditor's counsel via email to negotiate a settlement. The Colorado attorney identified himself as an out-of-state attorney and indicated to creditor's counsel that he would retain local counsel if his in-laws needed to file suit. Creditor's counsel filed an ethics complaint when the two attorneys were unable to reach a settlement after numerous email exchanges. Perhaps not coincidentally, the in-laws claimed that creditor's counsel had been harassing them prior to their son-in-law's intervention.
Setting aside the merits of the decision - and I believe that the dissent is correct that the attorney was providing legal services temporarily in accordance with Minn. R. 5.5(c)(4) - I worry about the decision's ramifications. It is unrealistic to expect that every Minnesotan with a legal problem will retain a Minnesota attorney. People sometimes turn to lawyers (and non-lawyers) with whom they are acquainted and may be outside of the jurisdiction to provide them with some basic legal help. Rather than focusing their enforcement powers on such situations, UPL committees and regulators are better served by investigating lawyers and non-lawyers who regularly offer legal services within their jurisdictions without being authorized to do so (as contemplated by MR. 5.5(b)).
There are, of course, situations where an out-of-state attorney’s provision of temporary legal services represents an "unreasonable risk to the interests of  clients, the public, or the courts.” See Minn. R. 5.5 cmt. 5. This was not one of those situations. The Colorado attorney had experience in the area of law, indicated that he was not admitted in Minnesota, and did little more than negotiate with opposing counsel over email on his relatives’ behalf. Does Minnesota really wish to discourage out-of-state lawyers from providing some form of counsel to Minnesotans in a situation where it would be impractical to hire an in-state attorney? UPL enforcement should not be untethered from its public protection rationale, especially given the ubiquity of unmet legal needs.
Similarly mechanistic reasoning can be found in recent ethics opinions concerning Avvo Legal Services.* Avvo Legal Services operates as a marketplace that connects lawyers who have agreed to charge a particular price for a limited-scope legal service to individuals who seek that service. Avvo does not recommend any attorney. The consumer transmits the fee to Avvo and is then free to select among participating attorneys. If a representation ensues, Avvo transfers the entirety of the fee to the lawyer's client trust account.** In a separate transaction, the attorney pays Avvo a marketing fee from his or her operating account, the size of which depends on the type of matter. Avvo does not receive an additional fee even if the attorney and client choose to continue the engagement after the initial representation is concluded,
There are a number of important ethical issues that attorneys should consider before participating in Avvo Legal Services, as Professor Bernabe has noted [I commend his explanation of the MR 1.15 issues in particular]. However, the South Carolina and Ohio ethics opinions are too quick to conclude in my view that the payment scheme constitutes impermissible fee-splitting. In addition to the fact that Avvo is not paid out of the fixed fee, as MR. 5.4 cmt 1 makes clear, the purpose of fee-splitting rules is to protect the lawyer’s “professional independence of judgment.” From my understanding, Avvo does not employ the lawyer, does not recommend one lawyer over another, and has no involvement in how the legal services are delivered once the engagement is established. What precisely is the threat to the “professional independence of judgment” that justifies treating this arrangement differently from internet-based lead generation (which is permitted under MR 7.2)? And shouldn't the fact that Avvo Legal Services might help Americans more easily locate legal services and assess their potential cost - two central impediments to expanding access to justice- enter into the analysis?
I often tell my law students that if the legal profession does not make major strides in addressing lack of access to justice, others will do it for us. Unfortunately, the Minnesota UPL decision and potential curtailment of Avvo Legal Services are a step backward when we should be moving forward.
*The two most recent Avvo opinions were brought to my attention by Carolyn Elefant of My Shingle.
**This is the case for more time-consuming "start to finish services." Avvo Legal Services encompasses three different types of services, all of which operate slightly differently. For truly limited scope services such as providing thirty minutes of advice over the telephone or the reviewing a document, the attorney is paid upon completion of the service.
[ For purposes of full disclosure, I am acquainted with Avvo's Chief Legal Officer. He has never requested my opinion on Avvo Legal Services or any other legal matter. Nor have I discussed the state ethics opinions with him. ]