Virginia Lawyers Weekly

A proposed Virginia State Bar Legal Ethics Opinion says that attorneys act unethically when they participate in some third-party Web sites.

LEO 1851 concludes that it is unethical for an attorney to participate in a site that invites a prospective client to submit information and then automatically forwards it to lawyers; the site charges a fee based on an exclusive geographical listing, on strict limitations on the number of participating lawyers in a geographic area, or on a set fee per referral or client contact.

But the draft LEO misconceives the nature of Internet advertising, according to several critics who have filed responses to LEO 1851 with the VSB.

One opponent, a site called TotalBankruptcy.com, filed a 32-page, single-spaced comment and is represented by former VSB President Bernard J. DiMuro and Washington and Lee University Law School Dean Rodney A. Smolla.

TotalBankruptcy.com contends that its site presents advertising, not a referral service, and therefore has the First Amendment’s protection for commercial speech.

In proposed LEO 1851, the VSB’s Committee on Legal Ethics said that Rules of Professional Conduct “7.2(c) and 7.3(d) restrict a lawyer from giving something of value to a person or organization in exchange for recommending employment by a client or as reward for having made a recommendation resulting in employment by the client,” according to the proposed opinion.

“Unlike for-profit directory advertising, which is open to anyone who wishes to participate, and which is permitted by the rules, the third-party website in question limits its listing to less than five lawyers in a given geographical or practice area,” the committee said. “By restricting the number of lawyers who are listed, the website appears to be recommending participating lawyers to the prospective client.”

Payment based on the number of referrals amounts “to an impermissible quid pro quo for services because the fee paid by the lawyer is directly related to the number of prospective clients with whom the lawyer makes contact,” according to the proposed opinion.

Rule 7.2(c)’s prohibition on participating in for-profit referral services also applies “where the referral service fees are in excess of the amount required to cover reasonable overhead expenses,” the committee said.

Fairfax attorney Benjamin W. Glass III said the proposal is based on the flawed premise that such Web sites are making a recommendation for employment. Most are not and any inference that they are could be met with a disclaimer such as, “All attorney listings are a paid attorney advertisement, and do not in any way constitute a referral or endorsement by an approved or authorized lawyer referral service,” Glass contended.

The proposal also is based on the false premise “that a for profit lawyer referral service can never be used by a consumer to make rational decisions about the selection of counsel…,” Glass said. “It does not stand that merely because lawyer referral is for profit that it is therefore not helpful to consumers any more than to say that a not for profit lawyer referral service is good for consumers.”

Anish D. Shah, who operates the Chicago-based Web site, LegalFish.com, made much the same argument. “[W]e feel that a more appropriate remedy would be to require any advertising service, whether it is an attorney/client matching service or directory, to disclose to consumers any limitations in place and that the advertising service is in no way recommending any of its participating lawyers,” Shah wrote.

“Consumers will have full knowledge that only a limited number of attorneys are allowed to participate in the service and that other attorneys may be found elsewhere,” he added. In their comment, DiMuro and Smolla acknowledged that TotalBankruptcy.com limits the attorneys that advertise with it to one in each Zip code and charges a set fee per referral or contact.

But the attorney advertising is in the context of a Web site rich in general consumer bankruptcy information and contains this explicit disclaimer, DiMuro and Smolla note: “This Web site is not a bankruptcy lawyer referral service or prepaid legal services plan and the owner neither endorses nor recommends any sponsoring bankruptcy attorney.” The disclaimer makes it irrelevant that the Web site makes no effort to determine the qualifications or competence of the attorneys who advertise on it, they contend.

Any prohibition on charging the attorney a fee per click or contact ignores the reality of the advertising model established by Google that rules the Internet world, DiMuro and Smolla contended.

The VSB Committee on Legal Ethics is expected to consider LEO 1851 at its next meeting on July 23.

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