BAR ASSOCIATION OF NASSAU COUNTY
COMMITTEE ON PROFESSIONAL ETHICS

Opinion No. 2001-4

(Inquiry No. )

Topics:
Attorney’s affiliation with on-line legal services-related website.
Digest:
Subject to the operational structure and advertising content as described, an attorney may affiliate with an on-line legal services-related website.
Code Provisions:
DR 2-101, DR 2-103, DR 2-103(B), DR 2-103(D)(1) through (4), DR 2-103(F), DR 2-107, DR 3-101(A), DR 3-102, DR 3-102(A), DR 5-105(E), EC 3-3.
Facts Presented:
Inquiring counsel has been solicited to affiliate with an online legal services related website, and wishes to know if his affiliation would be proper.

According to inquiring counsel, on the home page of AmeriCounsel.com, Inc. (“AmeriCounsel”), a person seeking legal representation (the “User”) will be provided with a menu of legal categories to choose from. For each category of law, AmeriCounsel will provide (a) a brief summary of the scope of the representation to be provided, plus (b) information concerning both the price of the representation and the cost of any related filing fees (the “Legal Services Fee”), and (c) the cost of facilitating the representation using the Site’s available technology and related administrative services (the “Technology and Administrative Fee”). For example, if a User intends to seek representation for the purpose of drafting a will, he or she would visit the site’s Trust and Estates Section to browse basic information about a will and its use in managing the affairs of an estate, and to learn about the scope and price of each available type of representation on AmeriCounsel’s menu of legal services for the Trusts and Estates category.

Once the User has chosen a type of representation, the User will be presented with a list of attorneys in the network who are potentially available to represent the User. (Initially, the list will contain the names of attorneys in the User’s geographic area. If there are more than four attorneys in the User’s area, the list will initially show only the four attorneys whose offices are closest to the User’s home. The screen will also have a “More attorneys” button that the User can click to see the names of additional attorneys in AmeriCounsel’s network.) The User will be able to click on information supplied by each attorney about the attorney’s background, qualifications, and experience. AmeriCounsel will make clear that it is not recommending any particular attorney from their panel. The User will personally decide which attorney to choose from their panel based on the information provided at the website and the User’s own independent investigation of the attorney (which AmeriCounsel encourages).

Once the User has chosen the legal service and selected an attorney, he or she may click on the “purchase” button. At that point, the User is asked to provide credit card information (for payment purposes) and to identify any related parties to the matter. However, a User’s request to purchase a legal service is not processed until the User reviews and agrees with the terms of AmeriCounsel’s “User Agreement.” The User Agreement expressly informs Users that information provided to the site may not be within the attorney-client privilege until such time as the User communicates directly with the attorney or otherwise enters into a retention agreement.

If the User elects to proceed, he or she purchases two distinct services: (1) representation by an attorney in AmeriCounsel’s Attorney Network (the “Legal Service”) in accordance with a fee schedule that both the User and the Network Attorney agree upon prior to entering the engagement, and (2) use of the website to facilitate such representation (the “Technology and Administrative Service”). The charges for both services are clearly and separately identified, and the User is reminded that AmeriCounsel does not sell or otherwise provide legal services. The User is also reminded that the attorney-client relationship is strictly between the User and the Network Attorney, not between the User and AmeriCounsel.

Fees and costs for both Legal Services and the Technology and Administrative Services are charged to the User’s credit card. Fees and costs that AmeriCounsel receives via the User’s credit card are placed in the AmeriCounsel Trust Account, and are not released until the User indicates satisfaction with both the attorney’s legal services and AmeriCounsel’s Technology and Administrative Service. A User who is not satisfied with the legal services may request a refund. The User Agreement explains that any refund determination is entirely separate from, and unrelated to, any rights the User may have before an administrative or judicial tribunal concerning the fees or legal services.

After the User has committed to purchase legal services but before the attorney has started providing those services, AmeriCounsel facilitates the engagement of counsel by forwarding the following information to the attorney selected by the prospective client: (1) the User’s name; (2) a brief generic description of the matter (e.g., trust, divorce, etc); and (3) a list of related parties to the matter (e.g., buyer, seller, and broker). Before the attorney may accept the matter, the attorney must perform a “conflicts check,” which is consistent with New York’s DR 5-105(E). If the attorney notifies AmeriCounsel that there are no conflicts or other obstacles to accepting the matter, AmeriCounsel notifies the User that the attorney is available and is willing to accept the representation. From this point on, AmeriCounsel’s only involvement in the matter is to provide the technology interface and related administrative services that facilitate the attorney-client relationship. The attorney directly provides the User with a retention letter reciting the scope of the matter, setting forth the agreed-upon fee (i.e., the fee posted on AmeriCounsel’s website), and reminding the User that the attorney-client relationship is solely between the attorney and the User, not between the User and AmeriCounsel.

Nothing in the Agreement prohibits User and Network Attorney from communicating outside the internet interface. Once representation commences, both the User and the attorney have access to the “My AmeriCounsel” page. This page allows both the attorney and the User to review the progress of the matter, facilitate communication, and track the attorney’s time and expenses.

Once the matter has been concluded, both the User and the attorney (with the User’s consent) notify AmeriCounsel. Upon such notification, AmeriCounsel requests that the User complete a “customer satisfaction form.” Unless the client objects to paying the lawyer by expressing dissatisfaction with the legal services, AmeriCounsel directs the AmeriCounsel Escrow Trust to release the funds to the attorney.

AmeriCounsel does not provide legal services, and makes clear to its Users that it is not engaged in the practice of law. The Technology and Administrative Service that AmeriCounsel provides its Users is a support service, not a legal service. However, it can only be purchased by those who purchase legal services from an attorney in AmeriCounsel’s network.

AmeriCounsel represents that it delivers the Technology and Administrative Service only through attorneys who meet certain standards, including (1) a willingness to interact with their clients through use of AmeriCounsel’s technology; (2) an agreement to perform legal services described on the website for fixed and/or low fees; and (3) at least five years of practice, good standing in the bar, an office in the jurisdiction where legal services will be performed, minimum malpractice insurance, and peer references. It is the intention of AmeriCounsel to provide Users with multiple choices of attorneys in each geographic area. Attorneys participating in the AmeriCounsel Attorney Network will pay no fee or other consideration to AmeriCounsel or any other third party for the right to provide legal services through use of the website.
Inquiry:
Is it ethical for an attorney to affiliate with the described on-line legal services-related website, and to accept referrals from it?
Determination:
Subject to stated qualifications, an attorney may affiliate with the described on-line legal services-related website.
Analysis:
The two main provisions of the New York Code of Professional Responsibility which impact upon the proposed relationship are DR 2-103(B) and (D) (concerning referral services). Other provisions of the New York Code of Professional Responsibility of potential impact on the proposed relationship include DR 2-101, DR 2-107, DR 3-101(A) and DR 3-102(A). The Committee addresses each of those rules separately.

DR 2-103: Lawyer Referral Services

DR 2-103 governs attorney advertising and referral services. Specifically, DR 2-103 (B), as amended effective June 30, 1999, provides as follows:

A lawyer shall not compensate or give anything of value to a person or organization to recommend or obtain employment by a client, or as a reward for having made a recommendation resulting in employment by a client, except that a lawyer may pay the usual and reasonable fees or dues charged by a qualified legal assistance organization or referral fees to another lawyer as permitted by DR 2-107.

Since attorneys do not “compensate or give anything of value” to AmeriCounsel for participating in the Attorney Network, their participation is not prohibited by DR 2-103(B). The mere participation by the attorney in the AmeriCounsel program, which enables AmeriCounsel to operate its business, in and of itself does not constitute compensation or giving of value to AmeriCounsel. A preferential rate to AmeriCounsel users is likewise, in the opinion of this Committee, not the giving of value by the attorney. In addition, AmeriCounsel does not “recommend” lawyers or “obtain employment” for them within the meaning of DR 2-103. Rather, AmeriCounsel functions as an advertising service or directory for attorneys who meet certain criteria (e.g., agree to charge low flat fees or $100 per hour for work that does not fit a flat fee; maintain specified minimum amounts of legal malpractice insurance; and agree to use AmeriCounsel’s administrative and technology services to facilitate more efficient representation and communication between the Network Attorney and the client). The AmeriCounsel User chooses the attorney from among those who advertise on AmeriCounsel’s website. AmeriCounsel does not influence or control that choice.

Nor do attorneys violate DR 2-103(D) by participating in AmeriCounsel’s Attorney Network. DR 2-103(D) is best understood by reference to the old version of DR 2-103(C), which has been repealed. DR 2-103(C) used to provide as follows:

A lawyer shall not request a person or organization to recommend or promote the use of the lawyer’s services . . . as a private practitioner, other than by advertising or publicity not proscribed by DR 2-101, except that:

1. The lawyer may request referrals from a lawyer referral service operated, sponsored or approved by a bar association and may pay its fees incident thereto;

2. The lawyer may cooperate with the legal service activities of any of the offices or organizations enumerated in DR 2-103(D)(1) through (4) . . . .;

3. The lawyer may request such a recommendation from another lawyer or organization performing legal services.

All of the language just quoted has been repealed from the New York Code of Professional Responsibility, except that a phrase permitting a lawyer to “request one of the following offices or organizations to recommend or promote the use of the lawyer’s services . . . as a private practitioner” (provided certain conditions are met) has been added to DR 2-103(D). Thus, DR 2-103(C)’s flat prohibition against asking any “person or organization to recommend or promote the use of the lawyer’s services” is gone. What remains is DR 2-103(D), which provides in pertinent part as follows:

A lawyer or the lawyer’s partner or associate or any other affiliated lawyer may be recommended, employed or paid by, or may cooperate with one of the following offices or organizations which promote the use of the lawyer’s services or those of a partner or associate or any other affiliated lawyer, or request one of the following offices or organizations to recommend or promote the use of the lawyer’s services or those of the lawyer’s partner or associate, or any other affiliated lawyer as a private practitioner, if there is no interference with the exercise of independent professional judgment on behalf of the client:

1. A legal aid office or public defender office …;

2. A military legal assistance office;

3. A lawyer referral service operated, sponsored or approved by a bar association or authorized by law or court rule; 4. Any bona fide organization which recommends, furnishes or pays for legal services to its members or beneficiaries provided the following conditions are satisfied …. [Conditions omitted.]

Again, attorneys in AmeriCounsel’s Attorney Network are not “recommended, employed or paid by,” AmeriCounsel. The User selects the attorney. Thus, DR 2-103(D) is not triggered.

Accordingly, we believe DR 2-103(D) should not be read as prohibiting all recommendations except recommendations by one of the listed entities. Instead, we believe it is merely one “safe harbor” that expressly provides that a recommendation from one of the listed entities, even if it is paid for by the attorney, is not prohibited. However, nothing in this rule prohibits a recommendation for which an attorney does not give compensation or anything of value to the recommending entity, even if that entity is not the type listed in DR 2-103(D). We have found no opinion construing the new rule DR 2-103(D) as prohibiting uncompensated recommendations from entities not listed in DR 2-103(D). The only opinions disapproving referral services under the new rule deal with compensated referrals from groups not within the protective list in DR 2-103(D). See e.g., BANC Op. 99-3 (1999) (listing lawyer’s name on an Internet advertising service that promotes certain attorneys as “lead counsel” in exchange for a fee violates DR 2-103(D).

DR 2-103(D) has been found to apply only when lawyers pay a fee or other consideration to the organization in question, which is not the fact upon which this opinion is based. See BANC Op. 99-3 (1999) (listing lawyer’s name on an Internet advertising service that promotes certain attorneys as “lead counsel” in exchange for a fee violates DR 2-103(D)); N.Y. City Bar Op. 1994-3 (1994) (participating in for-profit private corporation where attorney pays fee in exchange for advertisement and solicitation considered “referral service” in violation former version of DR 2-103(C)). The Committee has not located any cases or ethics opinions from New York where a violation of DR 2-103(D) was found if a lawyer did not pay any fee or other consideration to the organization in question. To the contrary, in N.Y. State Bar Op. 659 (1994), the committee approved a plan in which an attorney would include advertising material in an “information package” that a car dealer would give to car buyers. The State Bar explained:

Because the attorney will not pay a fee to the car dealer, the attorney will not violate DR 2-103(B) and (C) of the Code, which “prohibit a lawyer from compensating, giving anything of value to, or requesting that, any third party recommend or promote the use of the lawyer’s services except as permitted by DR 2-101 or under the specific arrangements set forth in DR 2-103(C) and (D),” N.Y. State 566 (1984) (advertisement improper if payment made to a real estate brokerage firm to endorse or recommend attorney’s services). . . . If any form of consideration is paid to a third party to disseminate a lawyer’s advertisements, it must be clear from the circumstances that the third party is neither endorsing nor recommending the use of the lawyer’s services. [Emphasis added.]

Here, lawyers do not pay AmeriCounsel.

In short, since AmeriCounsel does not charge attorneys any fee and since AmeriCounsel does not “recommend” or “promote” the use of any particular lawyer’s services, it does not fall within the purview of DR 2-103(B) or (D). Rather, AmeriCounsel is a form of group advertising permitted by the Code of Professional Responsibility and by ethics opinions interpreting the Code.

DR 2-103(F) states: “Advertising not proscribed under DR 2-101 shall not be deemed in violation of any provision of this Disciplinary Rule.” AmeriCounsel’s website is best described as an advertising program that also offers non-legal technology and administrative services to facilitate representation by attorneys who advertise on the site. Group advertising was expressly approved in N.Y. State Bar Op. 597 (1989), which condemned a television advertisement for an “800″ number because:

We believe that a program in which an advertising agent runs generic ads for legal services and distributes prospective clients to participating lawyers who have been assigned the exclusive right to cases arising in particular geographical areas is more in the nature of a lawyer referral service than advertising by an individual lawyer. When a prospective client answers the advertisement, the purpose is to be given the name of a lawyer, rather than to contract a particular lawyer. …

The State Bar ethics committee summed up the problem as follows: “As long as the client is not choosing the particular lawyer, but only a geographical location, the referral is prohibited.” Also in N.Y. State Bar Op. 597, however, the committee provided guidance for permissible programs, stating:

Our conclusion is different if the advertisement presents in a meaningful fashion the names of the lawyers or law firm participating in the group advertisement, along with their addresses and the geographical areas assigned to them, so that the potential client knows the identity of the lawyer to whom his call will be referred and there is no discretion in referrals on the part of the advertising agent. … In addition, engaging in joint advertising with other lawyers does not necessarily violate the Code. Indeed, such joint advertising may be the only way it is economically feasible for a practitioner with a small practice to afford certain forms of advertising. We believe, however, that the advertisement should disclose that the participating lawyers are not related, so that the public will not be confused as to the size of each participant’s law practice or the nature of the relationship among the lawyers participating in the joint advertisement. . . .

The AmeriCounsel website fits the permissible model, but gives clients even more choice. Unlike the group television advertisement that was discussed in N.Y. State Op. 597, AmeriCounsel does not assign exclusive geographical areas to any one attorney — AmeriCounsel is always willing to advertise multiple attorneys in the same region. Moreover, AmeriCounsel’s website gives clients far more information than joint advertising on television, and gives potential clients as much time as they want to think over the information, conduct an independent investigation of the Network Attorneys if they wish, and freely choose a particular attorney without influence by AmeriCounsel. If group advertising on television is permitted despite DR 2-103, then group advertising on AmeriCounsel’s website should also be permitted despite DR 2-103. Note is also made of the fact that various directories of attorneys also select attorneys for inclusion based upon restrictive criteria.

DR 3-101: Unauthorized Practice of Law

AmeriCounsel is not engaged in the unauthorized practice of law, so lawyers who provide services using AmeriCounsel’s Technology and Administrative Service are not violating DR 3-101(A), which provides that “a lawyer shall not aid a non-lawyer in the unauthorized practice of law.” AmeriCounsel does not hold itself out as a law firm, nor is it performing any services that non-lawyers are forbidden to perform.

One aspect of AmeriCounsel’s Technology and Administrative Service is similar to “self-help” legal software programs marketed by non-lawyer corporations (such as Quicken Family Lawyer) that ask clients a series of questions and produce legal documents. Like those software programs, AmeriCounsel’s Technology and Administrative Service results in a document that is “prepopulated” (i.e., filled in) with the information provided by the User. The crucial difference is that the document produced at AmeriCounsel’s website is provided not to the client, who has little basis to evaluate its quality or appropriateness, but rather to the lawyer, who uses the form as a tool. If the form initially chosen by the client is not the right one for the client’s particular circumstances, or if the client has not filled it out correctly, the lawyer selected by the client from the AmeriCounsel Attorney Network can explain that to the client and offer appropriate legal advice.

Another aspect of AmeriCounsel’s technology is the “My AmeriCounsel” page, where both the attorney and the client (using a secure password) can store and access information about the matter. This technology service resembles a wide array of technology currently available online and off-line to facilitate attorney-client relationships.

DR 3-102: Fee Sharing with Non-Lawyers

AmeriCounsel’s Network Attorneys are not sharing legal fees with non-lawyers, and thus are not violating DR 3-102, which provides that “[a] lawyer shall not share legal fees with a non-lawyer” except under certain circumstances not applicable here. Rather, lawyers in AmeriCounsel’s Attorney Network keep their entire legal fee, and clients pay a completely separate fee to AmeriCounsel to provide a valuable non-legal Technology and Administrative Service. This is consistent with the letter and spirit of DR 3-102 (For the same reason, there does not appear to be any violation of DR 2-107, which concerns fee sharing between lawyers in different firms). Nor in the opinion of the Committee, do the advance fees held by AmeriCounsel fall within the category of escrow money of the attorney which is subject to IOLA account rules, although this is a matter of law on which this Committee’s opinion is not dispositive.

As interpreted by the New York Bar Association’s Committee on Professional Ethics, DR 3-102 is intended to “prevent non-lawyers, who are not subject to the same ethical and judicial constraint as lawyers, from having an incentive to influence the lawyer’s professional judgment.” N.Y. State Bar Op. 679 (1996). Accordingly, arrangements in which non-lawyers share a portion of a fee that is tied to the outcome of the case have been deemed to violate such rule. On the other hand, where a particular fee sharing arrangement does not create a “ risk of or incentive for lay interference,” ethics committees in New York have approved such arrangements.

Clients frequently pay for a wide range of non-legal services, such as Lexis and Westlaw research, patent and trademark searches, couriers, printing and expert consulting services. Attorneys often bill for these non-legal services under the heading of “disbursements”, but clients also pay some of these non-legal services that are “outsourced” by the attorney directly to the provider. Here, the User is paying AmeriCounsel for a non-legal service designed to facilitate the delivery of legal services, not for the actual legal services.

AmeriCounsel therefore does not appear to pose a “risk of or incentive for lay interference”—the litmus test adopted by the New York State Bar. See also New York’s EC 3-3 (“The Disciplinary Rules protect the public in that they prohibit a lawyer from . . . submitting to the control of others in the exercise of judgment.”).

DR 2-101 (A) – Advertising Claims

AmeriCounsel advertises that “AmeriCounsel’s prestigious Legal Advisory Counsel is comprised of a team of prominent and experienced attorneys that will be responsible for establishing and overseeing the Company’s legal policies…,” and that the nationwide Attorney Network of AmeriCounsel possesses “unparalleled capabilities, professionalism and quality of service.”

The former DR 2-101(B), repealed effective June 30,1999, prohibited claims that could not be “measured or verified.” The current DR 2-101(a) prohibits solely “statements or claims that are false or misleading.” Simon’s New York Code of Professional Responsibility [2000 ed.], p.69, observes: [A]lthough DR 2-101(B) was repealed in 1999, disciplinary authorities are still likely to look askance at exaggerated “puffery” and at “claims that cannot be measured or verified.” For example, in my view a lawyer cannot claim to be the “leading” or “most successful” lawyer in a given practice area, or to have the “best record,” or to have achieved “outstanding settlements” or “impressive victories.” Lawyers should also continue to be cautious when making “claims regarding the quality of the lawyer’s legal services,” which were also flatly prohibited under DR 2-101(B). For example, a lawyer may not promise “the best service” or “the fastest service in the area.”

However, bar authorities are likely to be more lenient regarding moderate claims that attempt to describe the quality of a lawyer’s legal services without comparing the lawyer to other lawyers and without using extreme adjectives. New language in EC 2-10 states: “Although communications involving puffery and claims that cannot be measured or verified are not specifically referred to in DR 2-101, such communications would be prohibited to the extent that they are false, deceptive or misleading.” Thus, I think a lawyer may properly advertise “fast service” or “insightful advice” or a “friendly atmosphere.” We live in a word saturated with advertising, and I doubt that prospective clients will be misled by such modest claims. On the other hand, I do not think lawyers may ethically advertise “instant responses to all legal questions” or “brilliant legal minds” or “fantastic trial lawyers.” The line between what is proper and what is not may be fuzzy, but comparisons with other lawyers and extreme claims about a lawyer’s services or legal abilities are likely to fall on the wrong side of the line.

In the instant case, the description of the Legal Advisory Council’s members and their exact function would formerly have been required to comply with DR 2-101(B) and should now comply with EC-2-10. This Committee has problems in the given context, with the use of the words “prestigious” when referring to the Legal Advisory Council and the use of the word “prominent” when referring to attorneys. Moreover, the description of the Attorney network as “unparalled” is clearly prohibited. The implication that the Legal Advisory Council “oversees the Company’s legal policies” suggests that the Legal Advisory Council is giving legal advice or services, and such a claim is prohibited.

The attorney also must ensure that the website complies with 22 NYCRR Part 1400, Procedure for Attorneys in Domestic Relations Matters. It is, for instance, an attorney’s ethical obligation in domestic relations matters to inform the client of the right to arbitrate a fee dispute. (See Moraitis v. Moraitis, 181 Misc.2d 510 [Sup. Ct., Nassau Co. 1999]; Paikin v. Tsirelman, 266 A.D.2d 126 [1st Dep’t 1999]). By way of further example, a Statement of Client’s Rights and Responsibilities must be provided to a domestic relations client at the initial conference and prior to the signing of a written retainer. If the website’s ombudsman procedure contravenes or limits the client’s right to arbitration, or is in any other way contrary to these or any other rules governing the attorney’s conduct, the attorney would be responsible.

[Approved by the Executive Committee on 02/06/01; approved by the Full Committee, subject to Executive Committee editing, on 01/31/01]