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LAWYER REFERRAL SERVICE RULE PROPOSED AMENDMENTS (RULE REG. FLA. BAR 4-7.22)

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LAWYER REFERRAL SERVICE RULE PROPOSED AMENDMENTS
(RULE REG. FLA. BAR 4-7.22)

On This Page

Overview
Assertions and FACTS: Proposed Amendments to Rule 4-7.22
Comparison Chart: Existing Rule and Proposed Rule
Q&A on Proposed Amendments to Rule 4-7.22
Procedural History/Timeline and Policy Considerations
Proposed Amendments (Legislative Format)
Bar News Stories


Overview

OVERVIEW LAWYER REFERRAL SERVICE RULE

The Florida Bar Board of Governors on July 29, 2016, overwhelmingly approved amendments to rules regulating lawyer referral services. Proposed amendments change terminology from “lawyer referral service” to “qualifying provider” throughout, as Florida’s definition of lawyer referral service is broad, and for-profit lawyer referral services are prohibited in many states. The definition is broadened, so that any referral or matching service as well as any group or pooled advertising program is subject to the rules. If this change is approved by the Florida Supreme Court, participating lawyers will no longer be required to carry malpractice insurance, as most Florida Bar members are not required to carry malpractice insurance. New requirements include a specific prohibition against requiring or pressuring participating lawyers to make cross referrals, providing participating lawyers with documentation of compliance with Florida Bar rules, and an express prohibition against stating or implying that the provider is a law firm, can practice law or can directly provide legal services. Providers continue to have to comply with lawyer advertising rules, continue to be subject to a prohibition against fee-sharing, continue to be required to refer or match consumers only to those authorized to provide services, continue to be required to respond to official Bar inquiries within 15 days, and continue to be subject to a prohibition against stating or implying Florida Bar endorsement. Regulation occurs through the participating lawyers. The amendments will be filed August 15.


PROPOSED AMENDMENTS (RULE REG. FLA. BAR 4-7.22)

Recommended by The Florida Bar Board Review Committee on Professional Ethics and Board Technology CommitteeHISTORY

  • Florida Supreme Court adopts rule permitting for-profit lawyer referral services in 1986
  • Rule remained largely unchanged, but with some modifications to date
  • Special Committee on Lawyer Referral Services report in 2013, setting forth concerns with for-profit lawyer referral services
  • Petition to amend Rule 4-7.22 filed with Florida Supreme Court in 2014
  • Florida Supreme Court ordered the bar to file new amendments, including that services be lawyer owned or operated

POLICY CONSIDERATIONS

  • Access to Justice – the gap between the need for legal services and their availability for low and middle income citizens
  • Economy – the struggle for lawyers to obtain employment and to connect with prospective clients, particularly young lawyers
  • Technology and the proliferation of nationwide on-line matching services
  • Increasing the ability of lawyers to participate in matching programs by omitting unnecessary restrictions while protecting the public by requiring lawyers to adhere to core values of the profession
  • Need to stay ahead of technological and other changes

OVERALL CHANGES TO RULE

  • Terminology
    • “Qualifying Provider” instead of “lawyer referral service”
      • Some states prohibit for-profit lawyer referral services
      • States that prohibit for-profit lawyer referral services define them differently than Florida – some on-line matching services are not considered referral services in some states
  • Broader definition of “qualifying provider” including:
  • Directories
  • On-line matching services
  • Group or pooled advertising programs
  • Tips or leads programs

REQUIREMENTS RETAINED

  • Ads for qualifying providers must comply with lawyer advertising rules
  • Lawyers may not divide fees with qualifying providers (except non-profit Florida Bar and voluntary bar lawyer referral services)
  • Qualifying providers must match consumers only to those authorized to provide the services in Florida
  • Qualifying providers must respond to official bar inquiries within 15 days
  • Qualifying providers may not state or imply bar endorsement (except non-profit Florida Bar and voluntary bar lawyer referral services)
  • Qualifying providers must use their actual names or a registered fictitious name

DELETED REQUIREMENTS

  • Malpractice insurance
    • Lawyer referral services and other qualifying providers find it difficult if not impossible to obtain malpractice insurance that covers lawyers who are in different firms
    • Most lawyers are not required by bar rules to carry malpractice insurance (currently only lawyers participating in either for-profit or Florida Bar or voluntary bar lawyer referral services or Florida bar-approved group or pre-paid legal insurance plans are required to carry malpractice insurance)
  • Disclaimer in all ads that it is a lawyer referral service
  • Some states prohibit for-profit lawyer referral services
  • States that prohibit for-profit lawyer referral services define them differently than Florida – some on-line matching services are not considered referral services in some states
  • Requiring the disclaimer creates problems in states where lawyer referral services are prohibited
  • Fewer requirements allow Florida Bar members to participate with more qualifying providers without having to be concerned that they cannot meet bar requirements
  • Disclaimer in all ads that lawyers pay to participate
  • It is obvious to most consumers that they are for-profit
  • Some qualifying providers do not charge lawyers to participate, but make money by selling advertising space or by charging consumers to participate
  • Requirement that all services provide The Florida Bar quarterly with names of all those authorized to act on behalf of the service
  • Fewer requirements allow Florida Bar members to participate with more qualifying providers without having to be concerned that they cannot meet bar requirements
  • Qualifying providers are required to respond to official bar inquiries, so if the bar needs the information, the bar can request it at that time

CHANGED REQUIREMENT

  • Report to the bar of the names of all participating lawyers changed from quarterly to annual
    • Fewer requirements allow Florida Bar members to participate with more qualifying providers without having to be concerned that they cannot meet bar requirements
    • Qualifying providers are required to respond to official bar inquiries, so if the bar needs the information, the bar can request it at that time

NEW REQUIREMENTS

  • Qualifying providers:
    • may not require or pressure the lawyer to provide cross referrals
    • must give participating lawyers documentation of compliance with bar rules
    • must disclose participating lawyers’ location by city, town or county when the referral is made
    • may not use a name or otherwise imply to the public that the qualifying provider is a law firm, can practice law or directly provide legal services

REQUIREMENTS CONSIDERED BUT NOT RECOMMENDED

  • Florida Supreme Court requested amendment that requires that lawyer referral services be owned or operated by a Florida Bar member
  • The BRC and Technology Committees discussed extensively and voted not to include the proposal
    • The Court already has regulatory authority over participating lawyers
    • Lawyers will become scapegoats for unscrupulous services
    • Services who are in compliance should not be penalized
    • Rules should be no more restrictive than is necessary to protect the public and ensure lawyer’s adherence to professional requirements
    • Defining ownership and operation is difficult and no parameters have been provided by the Court

FILING

  • Amendments will be considered for final action by The Florida Bar Board of Governors at its July 29, 2016 meeting in Miami Beach
  • Comments may be sent to [email protected] – if filed with the bar by June 30, they will be provided to the board for its meeting
  • Petition to amend the rule will be filed with the Florida Supreme Court August 15, 2016
  • Comments may be filed directly with the Florida Supreme Court between August 15, 2016 and September 15, 2016

Assertions and FACTS: Proposed Amendments to Rule 4-7.22
Several of the proposed changes have been a source of debate as to their practical effects. Please see the below “Assertions and Facts” section that clarifies some of the proposed changes and their impacts.

Assertion: The proposed rule changes would harm or diminish voluntary bar lawyer referral services.
FACT: Not-for-profit lawyer referral services are governed under a different set of Rules Regulating The Florida Bar and would not be affected by the proposed rule changes.

Assertion: The proposed Rule would allow “fee splitting” between lawyers and non-lawyers.
FACT: The Rules Regulating The Florida Bar that prohibit lawyers sharing fees with non-lawyers are unaffected and unchanged by this proposed Rule.

Assertion: The proposed Rule allows out-of-state corporations to engage in the unlicensed practice of law.
FACT: The proposed Rule changes have no impact on whether or not any entity, qualified provider or not, can engage in the unlicensed practice of law. However, The Florida Bar will continue to monitor and discipline, when appropriate, any persons or entities that engage in the unlicensed practice of law.

Assertion: The changes will result in out-of-state corporations being better able to market and they will decrease the ability of The Florida Bar to regulate.
FACT: The proposed Rule changes do not affect the reality that The Florida Bar only has the authority to regulate Florida attorneys, and does not — and never has had — the ability to sanction other persons or entities, outside of unlicensed practice of law violations. The proposed changes also provide greater clarity for Bar members and on what they are and are not permitted to do.

Assertion: The proposed rule changes will allow for-profit lawyer referral services to saturate the lawyer advertisement market, and be unfair competition for Florida attorneys and voluntary bar associations.
FACT: The amendment has no effect on for-profit referral services competing or advertising in Florida. There are already advertising rules in effect that are not impacted by the proposed changes. In addition, proposed Rule changes cover more for-profit entities, not fewer.


Comparison Chart: Existing Rule and Proposed Rule

RULE 4-7.22 – NEW AND PROPOSED COMPARISON CHART

Requirement Existing Rule Proposed Rule
Includes for-profit lawyer referral services
v
v
Includes group or pooled advertising program with common telephone number or URL
v
v
Includes on-line matching services
Depends on how they operate
v
Includes lawyer directories
see rule 4-7.23
v
Includes tips or leads programs Search for:
v
Must comply with lawyer ad rules
v
v
May not divide legal fees
v
v
Must match with persons authorized to provide the legal services
v
v
Must respond to Florida Bar inquiries within 15 days
v
v
May not state or imply Florida Bar endorsement
v
v
Must use actual name or registered fictitious name
v
v
Required to carry malpractice insurance
v
Search for:
Must use disclaimer “lawyer referral service”
v
Search for:
Must use disclaimer that lawyers pay to participate
v
Search for:
Must quarterly report to Florida Bar all participating lawyers
v
Search for:
Must annually report to Florida Bar all participating lawyers Search for:
v
May not require cross referrals Search for:
v
Must provide participating lawyers with documentation of compliance with Florida Bar rules Search for:
v
Must disclose participating lawyers’ location by city, town or county when the referral is made Search for:
v
May not use a name or otherwise imply to the public that the qualifying provider is a law firm, can practice law or directly provide legal services Search for:
v

April 29, 2016
The Florida Bar Division of Ethics and Consumer Protection


Q&A on Proposed Amendments to Rule 4-7.22

  1. Do existing bar rules allow me to accept client referrals from a for-profit entity?
  2. What is a “qualifying provider” under the proposed rule amendment?
  3. What if I am a member of The Florida Bar’s Lawyer Referral Service or the lawyer referral service that is affiliated with my local bar? Will they now be known as a qualifying provider?
  4. If I am referred pro bono cases from Legal Aid or a similar organization, what rules apply?
  5. If I am listed as a member of my local bar on their website, does that mean I am participating in a lawyer referral service or qualifying provider?
  6. What are the things about the current rule and proposed rule amendment that are the same?
  7. Would the proposed amendments remove any requirements from the current rule?
  8. Are there any new requirements under the proposed rule amendment?
  9. Does a qualifying provider under the proposed rule amendment have to comply with lawyer advertising rules?
  10. Can qualifying providers cold call prospective clients? Can they approach prospective clients in person?
  11. Aren’t lawyers prohibited from paying for referrals from nonlawyers?
  12. Does this mean that I can divide or split fees with a qualifying provider.
  13. Does my participation with a qualifying provider change any of my normal ethical duties to clients?
  14. What is Rule 4-7.23 and why is it being deleted?
  15. How will the proposed rule amendment be enforced?
  16. Should I be worried that the qualifying provider will have information about clients’ names and some information about their legal matters?
  17. Aren’t the qualifying providers engaged in the unlicensed practice of law or controlling the practice of law?
  18. Is this the same as a “feeder” operation, like ancillary businesses of lawyers?
  19. Is this the same as having some kind of joint venture with a nonlawyer?
  20. When will the proposed rule be final?
  21. What if I want to make comments about the proposed rule?

1. Do existing bar rules allow me to accept client referrals from a for-profit entity?
Yes, if the entity meets specific requirements in bar rules. Current rules also allow lawyers to participate in a for-profit lawyer referral service, which includes group or pooled advertising programs (see Rule 4-7.22). Current rules also allow a lawyer to participate in a lawyer directory (see Rule 4-7.23).

2. What is a “qualifying provider” under the proposed rule amendment?
Instead of having separate rules to address the different ways a lawyer may accept referrals or participate in different marketing programs, the proposed rule amendment combines them and renames them qualifying providers. A qualifying provider under the proposed rule amendment could take many forms: it could be a for-profit lawyer referral service, a group or pooled advertising program with a common telephone number or URL, a lawyer directory, an internet “matching” site, or a tips or leads service, among others.

3. What if I am a member of The Florida Bar’s Lawyer Referral Service or the lawyer referral service that is affiliated with my local bar? Will they now be known as a qualifying provider?
There are different rules that apply to those services because they are non-profit, although a few of the same rules apply. See Chapter 8, Rules Regulating The Florida Bar. Florida Bar and voluntary bar association lawyer referral services will not be known as qualifying providers.

4. If I am referred pro bono cases from Legal Aid or a similar organization, what rules apply?
If you are accepting only pro bono cases for which you will not be paid and you do not pay to belong, then neither existing nor proposed rules about lawyer referral services/qualifying providers apply.

5. If I am listed as a member of my local bar on their website, does that mean I am participating in a lawyer referral service or qualifying provider?
No. Merely being listed as a member of your local bar on its website does not make the local bar website a lawyer referral service or qualifying provider under current or proposed rules.

6. What are the things about the current rule and proposed rule amendment that are the same?
These requirements remain the same:

  • ads for qualifying providers must comply with lawyer advertising rules;
  • lawyers may not divide fees with qualifying providers (except non-profit Florida Bar and voluntary bar lawyer referral services);
  • qualifying providers must match consumers only to those authorized to provide the services in Florida;
  • qualifying providers must respond to official Bar inquiries within 15 days;
  • qualifying providers may not state or imply Bar endorsement (except non-profit Florida Bar and voluntary bar lawyer referral services);
  • qualifying providers must use their actual names or a registered fictitious name;
  • qualifying providers must report the names of all participating lawyers to The Florida Bar (under the proposed rule amendment, they will report annually instead of quarterly); and
  • qualifying providers may not practice law or give legal advice.

7. Would the proposed amendments remove any requirements from the current rule?
Yes, the following requirements are recommended to be deleted:

  • that either the qualifying provider or the participating lawyers must carry a minimum amount of malpractice insurance;
  • a disclaimer in all ads that the advertising entity is a lawyer referral service;
  • a disclaimer in all ads that lawyers pay to participate; and
  • that all qualifying providers provide The Florida Bar quarterly with names of all those authorized to act on behalf of the qualifying provider (but qualifying providers would be required to provide this information if The Florida Bar requested it).

8. Are there any new requirements under the proposed rule amendment?
Yes, the following are new requirements that the qualifying provider must meet for lawyers to participate. Qualifying providers:

  • may not require or pressure the lawyer to provide make referrals to other businesses (although this prohibition is already contained in conflict of interest rules);
  • must give participating lawyers documentation of compliance with bar rules;
  • must disclose participating lawyers’ location by city, town or county when the referral is made; and
  • may not use a name or otherwise imply to the public that the qualifying provider is a law firm, can practice law or directly provide legal services.

9. Does a qualifying provider under the proposed rule amendment have to comply with lawyer advertising rules?
Yes, lawyers cannot participate with a qualifying provider under existing or proposed rules if the lawyer referral service or qualifying provider does not comply with lawyer advertising rules.

10. Can qualifying providers cold call prospective clients? Can they approach prospective clients in person?
No, just as a lawyer cannot cold call or approach prospective clients in person, a qualifying provider cannot.

11. Aren’t lawyers prohibited from paying for referrals from nonlawyers?
Yes, generally, but there is an exception in the existing rules for lawyer referral services and directories (see Rule 4-7.17(b)), and in the proposed rule amendment for the usual charges of a qualifying provider.

12. Does this mean that I can divide or split fees with a qualifying provider.
No, under existing and proposed rules, a lawyer cannot divide legal fees with a nonlawyer. For example, a fee calculated as a percentage of the fee received by a lawyer, or based on the success or perceived value of the case, would be an improper division of fees.

13. Does my participation with a qualifying provider change any of my normal ethical duties to clients?
No. Under both the current and proposed rule, all existing professional responsibilities under the Rules Regulating The Florida Bar continue. Thus, lawyers still:

  • Must maintain a direct relationship with each client. The lawyer and client maintain that relationship, not the provider.
  • Must not permit the qualifying provider to direct the lawyer’s conduct or interfere with the lawyer’s professional judgment.
  • Maintain confidentiality of client information.
  • Must not divide fees with a qualifying provider, maintaining the lawyer-client relationship.

14. What is Rule 4-7.23 and why is it being deleted?
Rule 4-7.23 covers lawyer directories, and it is being deleted because lawyer directories will fall under qualifying providers under the proposed rule amendment.

15. How will the proposed rule amendment be enforced?
Complaints about the conduct of qualifying providers and their participating lawyers may be made to The Florida Bar. If the referral service or qualifying provider are not in compliance with requirements, the participating lawyers are responsible and can be prosecuted.

16. Should I be worried that the qualifying provider will have information about clients’ names and some information about their legal matters?
Client identity in most circumstances is not privileged, although it is confidential. Lawyers often use third parties, such as courier services, independent paralegals, copying services and others to facilitate representation of clients and often must provide the client’s name and some information about their legal matters to those providers. Lawyers are responsible for ensuring confidentiality of client information and should address the issue with the qualifying provider.

17. Aren’t the qualifying providers engaged in the unlicensed practice of law or controlling the practice of law?
No, the qualifying provider is not in the business of providing legal services. The qualifying provider is in the business of providing referrals.

18. Is this the same as a “feeder” operation, like ancillary businesses of lawyers?
No. Ancillary businesses are separate businesses owned by lawyers that provide nonlegal services; the prohibition against a “feeder” under those circumstances is to stop a nonlegal business owned by the lawyer from direct in-person solicitation of the clients of that nonlegal business to obtain legal services by the lawyer.

19. Is this the same as having some kind of joint venture with a nonlawyer?
No. Having a working business arrangement with a nonlawyer is not the same as accepting referrals from a qualifying provider. That kind of working arrangement or joint venture raises concerns regarding solicitation, fee-splitting, and assisting in the unlicensed practice of law. By contrast, qualifying providers do not offer legal services, are not permitted to solicit prospective clients for the lawyer, and are prohibited from engaging in fee-splitting.

20. When will the proposed rule be final?
The proposed rule has to first go before the Board of Governors for approval (July 29, 2016 in Miami Beach), then if approved, must be filed with the Florida Supreme Court. Only if and when the Florida Supreme Court approves changes will the rule be final.

21. What if I want to make comments about the proposed rule?
Before the Board of Governors meeting, comments may be sent to [email protected] and if received by the bar by June 30, they will be provided to the Board of Governors for its July 29, 2016 meeting. The Florida Supreme Court has ordered The Florida Bar to file any proposal with the Court by August 15, 2016. If the Board of Governors approves any rules amendments, the Board of Governors will file a petition with the Court on August 15, 2016, and comments may be filed directly with the Court for 30 days after the filing.

For any other questions, please e-mail [email protected].

April 29, 2016
The Florida Bar Division of Ethics and Consumer Protection


Procedural History/Timeline and Policy Considerations

PROCEDURAL HISTORY/TIMELINE

1986: Florida Supreme Court adopts rule permitting for-profit lawyer referral services; rule remained largely unchanged, but with some modifications to date.

2013: Special Committee on Lawyer Referral Services report setting forth concerns with for-profit lawyer referral services.

2014: Petition to amend Rule 4-7.22 filed with Florida Supreme Court; the Florida Supreme Court ordered the Bar to file new amendments, including that services be lawyer-owned or operated.

2015: Issue referred to Joint Board Committee on Professional Ethics and Technology; the joint committee began meeting in October, 2015, and met a total of 11 times in person or by video conference call.

March 11, 2016: Committee presented amendments to The Florida Bar Board of Governors for first reading and requested an extension of time from the Supreme Court of Florida so that the amendments could be fully studied and circulated for comment.

June 30, 2016: Comments may be provided to the Bar so they may be provided to the Board of Governors.

July 29, 2016: Amendments scheduled to be heard by board on second reading; if approved by the board, amendments will be filed with the Court by August 15, 2016 per the Court’s order.

August 15 – September 15, 2016: Once the amendments are filed, comments may be filed with the Supreme Court

POLICY CONSIDERATIONS

Access to Justice – the gap between the need for legal services and their availability for low and middle income citizens.

Economy – the struggle for lawyers to obtain employment and to connect with prospective clients, particularly young lawyers.

Technology and the proliferation of nationwide on-line matching services.

Increasing the ability of lawyers to participate in matching programs by removing unnecessary restrictions while protecting the public by requiring lawyers to adhere to core values of the profession.

Need to stay ahead of technological and other changes.

Need to provide clarification to members of The Florida Bar to avoid confusion on when a lawyer may accept a referral.

April 29, 2016
The Florida Bar Division of Ethics and Consumer Protection


Proposed Amendments (Legislative Format)

Proposed Amendments to RRTFB Ch. 4 Regarding Lawyer Referral Services (legislative format)

Court Filing Appendix D – Background Materials including comments

 


Bar News Stories

8/15/16
Matching services rules go to the court
7/15/16
Lawyer Referral Service Rules filing
Board to take up referral services at July meeting
7/1/16
Vote on matching services rules set
4/15/16
Changes would link lawyers with clients
3/15/16
Panels look at ‘matching’ services
2/15/16
Board to receive wide-ranging referral service report in March
1/15/16
Two panels dealing with for-profit referral services

11/15/2015
Bar seeks to ‘juice up’ its LRS
10/15/15
Courts orders private LRS overhaul
6/1/15
Court reviews LRS rules
3/1/15
Board to take up referral services and internship rules

8/15/14
Biennial Bar rules proposals
4/15/14

3/1/14
Proposed board actions
2/15/14
Bar panel completes rewrite of rules governing for-profit referral services

9/1/13
Lawyer referral service rules on hold
5/15/13
Panel continues work on referral services rewrite