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November 15, 2015
Bar seeks to ‘juice up’ its LRS

‘We have clients who don’t have the ability to procure legal services, yet at the same time we have lawyers who need more work’

By Gary Blankenship
Senior Editor

In the continuing effort to improve access, the Bar is working on ways to more effectively match clients with lawyers. Bar member input is welcome.

One aspect is how the Bar should respond to private companies advertising “matching” services for lawyers and clients; possibly juicing up the Bar’s Lawyer Referral Service and those operated by local bars; improving access to legal services for the 80 percent of Floridians who can’t afford them; and, hopefully, finding a way to connect more clients with Florida lawyers, especially those new to the practice.

Renee Thompson Oh, yes, do all of this while complying with a Supreme Court mandate to rewrite rules for lawyers who belong to for-profit referral services to prohibit them from using those services, unless they are owned or operated by a Bar member. And keep in mind a few other miscellaneous related factors.

The Board of Governors had an information-only presentation and discussion on all that at its October 16 meeting at Atlantic Beach.

“This discussion is all about access. What the heck does access to justice really mean? Access to justice means the ability of the people in the state of Florida to procure representation; it also means the ability of lawyers in your circuit to be able to serve clients. It is the ability of people . . . to have adequate representation in some form to go to trial, get their divorce, have a resolution of a financial situation,” said board member Carl Schwait, who presented the information along with board members John Stewart and Renée Thompson and Young Lawyers Division President Gordon Glover.

He added: “It’s a strange paradox, isn’t it? We have clients who don’t have the ability to procure legal services, yet at the same time we have lawyers who need more work, who want to work.”

Schwait said the idea for the discussion came from Bar President Ramón Abadin, who asked him to plan for the discussion two months before the meeting.

It got an unplanned impetus in September when the Supreme Court, in a case on the Bar’s lawyer referral service rules, rejected a Bar-proposed amendment and instead instructed that it prepare a rule barring lawyers from joining for-profit services unless they are owned or operated by Bar members. The Bar must make its submission by May 24, 2016, adding urgency to the matter.

“Today’s discussion is going to be about three areas,” Schwait said. “What is a for-profit lawyer referral service? As of today, you don’t have to be owned or operated by a member of The Florida Bar.

“Second, we’re then going to talk about what is called online platforms and then we’re going to talk about The Florida Bar Lawyer Referral Service. Then we’re going to have a discussion. We’re not asking you to vote on anything; we’re not asking you to do anything. This is for questions and information.”

LRS History
Schwait kicked off the discussion with a history of lawyer referral services. He noted the Bar service began in 1972, and serves only areas of the state that do not have a local voluntary bar referral services. In 1986, the Supreme Court approved, at the Bar’s suggestion, allowing private for-profit referral services.

Originally a way to help lawyers connect with clients, Schwait said some for-profit company referral companies have become so expensive that small and medium-size firms can’t afford to participate. Private services were also formed that could refer callers to more than just legal services, such as medical care or real estate assistance.

In a recent rewriting of the Bar’s advertising rules, the regulations on lawyer referral services were held out for a separate review that eventually led to the creation of the Special Committee on Lawyer Referral Services. That committee, after two years of deliberations, proposed several amendments, including that lawyers could not belong to a referral service that also referred the caller to non-legal services for the same incident.

The Board of Governors rejected that suggestion, instead saying lawyers could accept referrals, as long as there was no requirement or understanding the lawyer would send the client to the other services offered by the private referrer and the client was informed about the potential conflict.

However, the Supreme Court, Schwait noted, rejected the board’s position and instead instructed the Bar to craft a new regulation requiring for-profit referral services be owned or operated by Bar members, which would place those services, not just the lawyers using them, under the court’s control. In a separate partial dissenting opinion, Justice Charles Canady said he would have adopted the special committee’s recommendation.

Stewart talked about the current state of the referral industry.

He noted that while the Bar’s service has an online presence, it mainly relies on telephone inquiries. In 2013-14, the service made 74,754 referrals, of which only 10 percent were made online. The board’s Program Evaluation Committee has voted to conduct a complete review of the Bar’s LRS.

Online LRS
Glover talked about the private companies in a growing online legal service industry that is attracting huge private investments. He said in 2012, $66 million was invested in private legal service companies. That amount rose to $456 million in 2013 and $1 billion in 2014. He said there’s a simple reason for that meteoric rise: The unmet legal needs market in the country is estimated at $45 billion.

To the extent these private companies seek to match potential clients with lawyers, Glover said these are questions for the Bar to answer: Are they referral services and hence under Bar rules? Or are they something else, such as “matching” services? He cited three notable examples of such private companies:

LegalZoom began as an online provider of legal forms but is now branching into matching people with lawyers. It has $100 million in annual revenues and hopes to employ between 20,000 and 50,000 attorneys in the next five years. Its target customers are the middle class and small businesses.

Avvo began as an online rating service and directory for lawyers but now offers a matching service that gives clients a 15-minute consultation with a lawyer for $39, $10 of which goes to Avvo. “They are the largest legal marketplace in the world,” Glover said, noting the company generated $8.5 billion in revenues.

RocketLawyer has over 500 attorneys working with potential clients and takes in 1.5 million legal matters per month. The company offers potential clients a free 30-minute consultation with a lawyer and the guarantee the lawyer will discount his or her rates 40 percent for any additional work. RocketLawyer and the ABA have teamed up for a program to connect lawyers and clients, which will operate in three states, Glover noted.

Glover rattled off a dozen other companies that are operating and offering similar services.

With an estimated unserved market of $45 billion, Glover said, “Probably, it doesn’t surprise you to learn today we have an influx of venture capital money, as well as new startups daily, trying to enter this marketplace.”

Against that backdrop, Glover noted that the average new law school graduate has a debt of $140,000, 15 percent can’t find employment, and the average salary for those who do is $45,000.

“With this huge gap, this $45 billion market, in my opinion and the opinion of [the YLD] board, that young lawyers and really all the lawyers of Florida have a huge opportunity to enter this marketplace,” he said.

The Differences
Thompson contrasted the operations of private companies with the Bar’s LRS.

With the Bar, a client gets the name of an attorney and must contact that attorney’s office and schedule an appointment at the attorney’s convenience, she said. Online companies can easily be reached using computers, tablets, or smart devices and typically give the callers a specific time frame — frequently that day or the next day — when an attorney will contact them.

She also noted the Florida Commission on Access to Civil Justice is working on creating a statewide portal for low- and moderate-income Floridians seeking legal help. A lawyer referral service will be an integral part.

“We want that to be our lawyer referral service,” Thompson said. “It needs to be statewide, and it needs to be online.”

Also to be considered is what happens to the revenues local bars get from their referral services, if those are replaced by a single statewide service.

Schwait said the Bar will likely have to decide whether online companies, such as Avvo, RocketLawyer, and LegalZoom, are lawyer referral services under Bar rules and whether their way of doing business comports with those rules. He noted that typically such companies call themselves “matching” services or use a similar term. And those companies claim that any part of a charge to clients that they get — such as the $10 Avvo gets from a $39 15-minute consultation — is a technical or administrative fee, not a prohibited split of the lawyer’s fee.

(The Bar has not made any determination at this time whether the online services mentioned are engaged in improper fee- splitting.)

Those questions, Schwait said, may have to be answered by the time the Bar files its May 24 lawyer referral service amendments with the Supreme Court.

Partner With the Big Boys?
Board member Mike Tanner asked how the Bar could hope to compete with companies pouring millions of dollars into their online businesses.

“We’re looking at it,” Glover replied. “We feel the best way to do that is partner with one of them. Instead of trying to fight or compete, we’d like to partner.”

In response to another question, he said, one discussed model would have an active
Bar online referral service, with the Bar getting 20 percent of the fees generated, which would pay for a third party to do the technology part of the program.

“We’ve spoken with representatives of 15 online providers, and they’re all interested in working with us,” Glover said. “Is there a way to figure it out? We hope so.”

Schwait added the feasibility of partnering with a private entity will probably have to be addressed by the May 24 filing.

Thompson said, “I see down the road . . . whether it be the local level [bar] or state level [referral services] are dying on the vine. We have got to get the technology so we can have a place online. That’s where I see it.”

She also said the Bar’s advantage is its good reputation, and any referral operation with the Bar’s name will be seen as the “gold standard” for credibility with consumers.

Price Points
Board member Andy Sasso noted the legal service companies were angling for people who can’t afford traditional legal services.

“Aren’t we really talking about this as an economic issue where lawyers are going to have to work for a lot less? This is what it really boils down to in order to help the 80 percent of people who don’t have lawyers,” Sasso said.

Stewart replied, “There’s a tremendous number of lawyers who are prepared to do work at a different price point. . . . There’s a piece to it that there are lawyers who are going to want to serve. At a minimum, there’s a need for those lawyers to get work at any price.”

He added that lawyers will be able to use technology to serve those needs “and still provide for their families.”

While no concrete proposals were suggested or debated, that time will be coming, according to President Abadin, noting that many people cannot afford lawyers for critical things like domestic violence orders and divorces.

“It is a time of great change. We have folks in our marketplace who are not lawyers, and they are providing services to consumers. And consumers are going there for whatever reason — we’re too expensive; we’re hard to get ahold of; we’re not on the Internet,” Abadin said. “We need a hard look at this level. Who is going to provide service? How are they going to provide service? How are consumers going to find us?”

Schwait put it another way. He likened the uproar over admission by motion and reciprocity to a hurricane. “It’s gone, but we’re the Weather Channel, and when you look out into the Atlantic, there are other hurricanes, and one of them is online [legal services] and fee-splitting.”

[Revised: 07-11-2018]