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July 1, 2016
Vote on matching services rules set

“We have done away with the words ‘lawyer referral service’”

By Gary Blankenship
Senior Editor

New proposed rules addressing for-profit companies that link lawyers with consumers needing legal work will prevent fee splitting between those companies and lawyers and protect the public from any deceptive, misleading, or false advertising by those companies.

Carl Schwait The Board of Governors at its May 20 meeting received an updated report from board member Carl Schwait, chair of the Board Review Committee on Professional Ethics, on proposed amendments to replace current rules on private lawyer referral services and legal directories.

The BRCPE has been working with the board’s Technology Committee, chaired by board member John Stewart, on the issue since last year when the Supreme Court rejected Bar rule amendments on private referral services and lawyers’ relationship with them.

The board is scheduled to vote on the amendments at its July 29 meeting and the amendments must be filed with the Supreme Court by August 15. The revised rules can be found on the Bar’s website at:

Schwait reminded the board that the latest revisions are far-reaching and virtually unprecedented. Instead of addressing private referral services, legal directories, and legal services companies that match lawyers with consumers for everything from simple document review to complex problems, the proposed rules eliminate those distinctions.

Now any private entities that connect consumers looking for legal services with lawyers are called “qualifying providers” regardless of whether they are a “traditional” referral service like 411-PAIN or ASK-GARY or a technology-based provider such as Avvo or LegalZoom.

“We have done away with the words ‘lawyer referral service.’ We’ve done away with the word [legal] ‘directory’. . . . Anybody — and I mean person or entity — that matches a lawyer to a person who needs a lawyer becomes what’s called a qualifying provider. It gives people choices, and that’s important, because in protecting the public we have to give the public choices while still ensuring that they are not misled or lied to, and that everything is on the up and up,” Schwait said.

There are controls on what qualifying providers can do, and lawyers can participate or accept clients only from the entities that follow the proposed Bar rules, he said.

“One thing we do not allow is fee-splitting, and that’s really important to the members; they don’t want fee splitting,” Schwait said. “A fee paid to a qualifying provider that is a percentage of the lawyer’s fee: Improper. A fee paid to the qualifying provider based on the lawyer’s success: That’s not permitted. A fee paid to the qualifying provider based on the perceived value of the case: You can’t do it. A fee paid to the qualifying provider when the qualifying provider directs, regulates, or influences the lawyer’s judgment: Not permitted.

“We do permit the following: an advertising or technical fee that doesn’t matter how large or small your divorce case is, your personal injury case is . . . . That number remains the same, because it is merely a technical or administrative fee. That’s why it’s not fee- splitting.”

Likewise, any advertising done by qualifying providers must not be misleading, false, or deceptive, Schwait said.

He noted Bar members have expressed concerns that lawyers who participate with qualifying providers will not be required to carry malpractice insurance, as are lawyers who belong to lawyer referral services under current rules.

“We had no rational basis for requiring malpractice insurance,” Schwait said, adding the goal of the two committees was to provide a level playing field for all different kinds of qualifying providers.

When the court sent the lawyer referral service rules back to the Bar, it ordered that the revised rules require that for-profit referral services be owned or operated by Bar members. It also noted a special committee said the Bar should prohibit Bar members from belonging to services that also referred callers for other professional services, such as medical or real estate work, as well as legal services, and said the Bar could make further suggestions in this area.

The proposed rule amendments do neither.

“We don’t find any rational basis to say that a qualifying provider has to be owned or operated by a member of The Florida Bar,” Schwait said.

That was a unanimous vote from the two committees, Schwait added.

However, the committees’ members were not unanimous about whether lawyers could belong to a qualifying provider which might, for example, refer a caller, who had been in an accident, for both medical and legal services. The committees’ members did agree a lawyer could not belong to a qualifying provider that requires lawyers to refer clients to any nonlegal services offered by that provider.

The majority voted to “leave that judgment to lawyers to understand when there is and when there is not a conflict,” Schwait said. Proposed comments to that rule would specify that lawyers remain responsible for compliance with conflict rules, including disclosure to clients of the relationship with the qualifying provider.

The product of the two committees is the culmination of years of Bar efforts that began with a study of for-profit referral services, including those that refer callers for both legal and nonlegal services and a rewriting of lawyer referral service rules. When the court rejected those rules, the Bar expanded its efforts to look at a new wave of legal service providers, such as Avvo, LegalZoom, RocketLawyer, and others that offer online forms and ways to connect clients and lawyers for a wide variety of legal services.

Schwait and Stewart, in response to a question, said the two committees’ recommendations do not address operations of nonprofit lawyer referral services run by the Bar and local bar associations around the state.

“We are, through the Program Evaluation Committee, reviewing The Florida Bar’s Lawyer Referral Service, which has different rules,” Stewart said, adding the review includes local bar referral operations.

“They are not being left out of the equation . . . . We sent out a request for proposals to a variety of vendors to put together a very modern and very robust system.”

He added a statewide service is being contemplated that will incorporate the local bar referral services and maintain the revenues those bars receive from those operations. Stewart added it is questionable whether local bar operations alone can compete with advertising and services offered by fast-growing private companies.

“They don’t have the ability to continue those operations in the foreseeable future because of the competition from the for-profit providers. And we think The Florida Bar on a statewide basis has the ability to do that,” he said.

Schwait added that dozens of companies are entering the legal services field, from Amazon to Lexis/Nexis and the rule amendments are aimed at that.

“You’re not going to stop anything. What we’re trying to do is get them all under our ambit so we can ensure the public is protected, that lawyers have choices, and the public has choices,” Schwait said.

Board member Jay Cohen said members are concerned the new companies coming into the state will eventually operate as nonlawyer-owned law firms.

“I don’t think that’s a logical next step,” Stewart said. “There is, I think, no natural nexus to them matching people because they advertise, and lawyers want to pay for that advertising, and that is somehow giving them some ownership interest in law firms. That is really fearmongering more than it is reality.”

[Revised: 07-19-2018]