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April 1, 2018

Court sets new rules for referral services
Companies that link consumers and lawyers must comply with new Bar rules

By Gary Blankenship
Senior Editor

The Florida Supreme Court has accepted Bar-proposed amendments to lawyer referral service rules that widen their application to any “qualifying provider” that links consumers and lawyers. But the court also ordered the Bar to submit a rule within 90 days that prohibits a lawyer from accepting clients from any entity that in addition to legal services also refers callers to any nonlegal professional work stemming from the same incident.

Those changes mean that companies that link consumers and lawyers must comply with Bar rules if they want to work with Bar members. It also means, as Justice Alan Lawson noted in a separate opinion, that the new rule the court ordered the Bar to draft will prohibit lawyers from taking referrals from companies such as 411-PAIN and Ask Gary. Both handle medical and legal referrals.

411-Pain promised to “act vigorously” to protects its rights.

The court issued its ruling March 8 and the new rules become effective April 30. Included in the changes is dropping the requirement that lawyers participating with qualifying providers carry malpractice insurance.

“The proposed amendments . . . address lawyer participation in ‘matching’ and other similar services not currently subject to regulation by the Bar that connect prospective clients with lawyers,” the court said in its per curiam opinion. “The proposed amendments to rule 4-7.22 establish a single regulatory scheme under which lawyer participation in such services is subject to the same restrictions as lawyer referral services, lawyer directories, and other like services in which lawyer participation is currently regulated. The Bar’s proposal prohibits lawyer participation in any service that connects prospective clients to lawyers for a fee, or any other type of benefit, unless the service complies with rule 4-7.22 and all other applicable rules.”

Initial Petition
The Bar filed its initial petition to amend lawyer referral service rules in 2015 following a report by the Special Committee on Lawyer Referral Services. The special committee, in its first of several recommendations, proposed that lawyers not be allowed to belong to services that also referred callers to other professional services stemming from the same incident. The panel was concerned about the potential conflict if a lawyer received a client from, for example, a medical/legal referral service and that client asked the attorney’s advice about getting medical care.

The Board of Governors rejected that recommendation, and said lawyers could belong to those services as long as certain disclosures were made to clients and nothing in lawyers’ dealings with those services affected their independent judgment.

The court rejected the Bar’s position in 2016 and ordered the Bar to draft a rule that required lawyer referral services to be owned or operated by a Florida Bar member and consider implementing the special committee’s first recommendation. Instead, on the recommendation of the Board Review Committee on Professional Ethics, the board submitted the more wide-ranging rules designating any entity that matched lawyers with potential clients as a “qualifying provider” that must follow Bar rules. It addressed services that refer to multiple providers by prohibiting participation in services that require cross referrals and noting in the comment that lawyers are prohibited by Bar rules from participating in any service that interferes with the lawyer’s independent professional judgment in representing clients.

Fast-Changing Market
The BRCPE said the changes were needed because of the fast-changing legal marketplace.

The court balked at that radical revision, but left the case open for the Bar to provide more information, which led to the March 8 ruling. In adopting the Bar’s recommendations, the court majority said it remained concerned about services that “refer clients to other professionals and occupational disciplines for services arising from the same incidents.

“The findings of the special committee on this matter are troubling and we continue to believe additional measures are needed to ensure the public is not exposed to harm. We therefore direct the Bar to submit a petition within 90 days proposing amendments to rule 4-7.22, and any other rule necessary, to implement the Special Committee’s first recommendation,” the opinion said.

The court’s earlier directive to the Bar to draft a rule that all private referral services be owned or managed by Bar members was absent in the court’s latest ruling.

Chief Justice Jorge Labarga and Justices Barbara Pariente, Peggy Quince, and Ricky Polston concurred in the opinion. Justice Lawson, joined by Justice Charles Canady, partially concurred and partially dissented. Justice Fred Lewis dissented without an opinion.

Dissent
Lawson wrote that he disagreed with the majority only on requiring the Bar to submit a new rule banning lawyers from belonging to entities that also referred callers to other professional services emanating from the same incident. He noted the Special Committee on Lawyer Referral Services’ recommendation on this issue is almost six years old.

“The few individuals who still express support for this recommendation have identified only two entities to which the prohibition would apply (‘411 Pain’ and ‘Ask Gary,’ both of which refer clients to legal and medical professionals) and have not identified a single incident of misconduct by those entities or by any lawyer or medical professional who takes referrals from those entities,” Lawson said. “Although I certainly recognize the potential mischief that could flow from doctor/lawyer cross-referral relationships, those relationships exist and appear to be common. I have not been able to discern any basis for concluding that Ask Gary’s or 411 Pain’s model of connecting an injured citizen to a lawyer — which this nearly six-year-old recommendation would prohibit — poses any danger not existent in direct doctor/lawyer referral relationships — which no one has ever suggested could or should be barred.”

He also noted the new rules require the two services to cooperate with any Bar investigation of rule violations or conflicts of interest, and that would give the court a solid basis to determine whether further action is needed.

Tim Chinaris, an attorney representing 411-Pain, released a statement from the company praising the part of the opinion that expanded the Bar’s oversight of qualifying providers, saying that would provide for equal treatment of all such attorney-consumer matching services. But it criticized the order to the Bar to create a rule prohibiting lawyers from belonging to services that also do medical or other professional referrals.

“The court’s directive calls for a rule that, for example, would prevent a client-lawyer matching service from connecting a prospective client to both a real estate lawyer and a title company or real estate broker regarding the purchase of a parcel of real property. 411-Pain is concerned that such a rule would interfere with First Amendment advertising rights and would harm lawful, well-established businesses that are vital contributors to their communities,” the statement said. “411-Pain agrees with the dissenting opinion that this restriction is supported by only ‘innuendo and supposition.’ . . . 411-Pain will act vigorously in all appropriate venues to protect these rights.”

The amended rules define a “qualifying provider” as: “[A]ny person, group of persons, association, organization, or entity that receives any benefit or consideration, monetary or otherwise, for the direct or indirect referral of prospective clients to lawyers or law firms. . . .”

It goes on to say that group includes panels of lawyers that a service draws on to recommend or match with prospective clients, any published list of lawyers for consumer review, any group that pools advertising to attract potential clients, or any entity that provides tips or leads on potential clients for lawyers and law firms. Pro bono and voluntary bar lawyer referral services are not included.

Requirements
Lawyers may only work with qualifying providers that follow Bar rules on advertising, solicitation, and conduct. Lawyers may not work with any provider that requires them to refer prospective clients or any other persons to nonlegal services offered by that provider.

Other requirements are:

• The qualifying providers must furnish the Bar annually with lists of Bar members participating in their services.

• The qualifying providers must provide participating Bar members with documentation that the providers are complying with Bar rules.

• Like the current rules for lawyer referral services, qualifying providers may not engage in any advertising that implies they are a law firm or directly provide legal services to the public. Qualifying providers also are prohibited from saying they are approved by the Bar or that their advertising is approved by the Bar.

• Lawyers must report to the Bar within 15 days of agreeing to participate or ending participation with a qualifying provider.

• Lawyers must cease working with a qualifying provider within 30 days of being notified by the Bar that the provider is not in compliance with Bar rules or risk discipline.

No Malpractice Insurance
The court dropped rule 4-7.22(a)(4), which required lawyers participating in private lawyer referral services to carry at least $100,000 of malpractice insurance per claim or occurrence. The court also dropped requirements that advertisements must state that the entities are lawyer referral services and that lawyers pay to participate.

The revised comment to Rule 4-7.22 says, “It is the policy of The Florida Bar to encourage qualifying providers to: (a) make legal services readily available to the general public through a referral method that considers the client’s financial circumstances, spoken language, geographical convenience, and the type and complexity of the client’s legal problem; (b) provide information about lawyers and the availability of legal services that will aid in the selection of a lawyer; and (c) inform the public where to seek legal services.”

Rules Overview
The complete, updated rules will be posted on the Bar’s website on April 30, the effective date of the new rules. In the meantime, the Bar has prepared an overview of the new rules, including what’s new, what’s deleted, and what’s unchanged, and a Q&A on the new rules. It can be found on the Bar’s website at: www.floridabar.org/qualifyingproviderrule.

The court’s opinion came as the Bar is working to adapt to the changing legal marketplace as legal form and other nonlawyer companies offer new channels of legal services, including ways of matching lawyers with potential clients. Many such companies are offering to connect lawyers and consumers for specific services, such as an incorporation or simple divorce or short consultation, in return for a set percentage of a flat fee or for a set fee per referral.

The Bar Board of Governors recently determined that under its existing rules that the Avvo Advisor program, which offers consumers a 15-minute consultation for $39 (with the lawyer remitting $10 of that to Avvo as a marketing fee) is a lawyer referral service. Under the new rules, Avvo would apparently fall under the definition of a qualifying provider.

The BRCPE is also reviewing the ways that referral services and qualifying providers may charge for their services. The current Bar rules allow only a flat periodic fee while many companies want to base charges as a fixed fee per case referred or accepted or based on the perceived value of the case or the actual award when the case is resolved.

The court acted in In Re: Amendments to the Rules Regulating The Florida Bar – Subchapter 4-7 (Lawyer Referral Services), Case No. SC16-1470.

[Revised: 12-16-2018]