New ABA ethics rules target attorney marketing on Internet, social media (Part 3 in a series)

Online lead generation addressed in new rules and comments

Questions about the ethical propriety of lawyers paying non-lawyers for online leads hit the headlines in April, 2009, when a Connecticut lawyer filed a complaint in 42 states against Total Attorneys, which sold bankruptcy leads to lawyers.

Want to buy high-quality client leads that comply with ethics rules? Email Michael J. Evans at mjevans@mjevans.com.

The argument against the practice was that it allegedly violated Rule 7.2(b) of the Model Rules of Professional Conduct. That’s the rule that forbids lawyers from giving anything of value for recommending his or her services, with limited exceptions (i.e., permissible advertising). Here’s the language of 7.2(b) in 2009:

(b) A lawyer shall not give anything of value for the recommendation of the lawyer’sservices except that the lawyer may:
(1) pay the reasonable costs of advertisements or communications permitted by this Rule;
(2) pay the usual charges of a legal service plan or a not-for-profit or qualified lawyer referral service. A qualified lawyer referral service is a lawyer referral service that has been approved by an appropriate regulatory authority;
(3) pay for a law practice in accordance with Rule 1.17;
(4) refer clients to another lawyer or a nonlawyer professional pursuant to an agreement not otherwise prohibited under these rules that provides for the other person to refer clients or customers to the lawyer, if
(i) the reciprocal referral agreement is not exclusive, and
(ii) the client is informed of the existence and nature of the agreement.

Over the course of several months, Total Attorneys won every decision in a series of states. The remaining complaints were apparently dismissed without published opinions. The defeat of the complaints against Total Attorneys seemingly settled the issue of the legality of lawyers paying for online leads, without the ethics rules actually speaking to the issue.

Earlier this year, the Standing Committee on the Delivery of Legal Services wrote a letter to the ABA Commission on Ethics 20/20 recommending changes in the rules governing advertising. One of the recommendations was the total deletion of Rule 7.2(b), which has created a lot of confusion among both lawyers and legal marketers.

But in August, 2012, the ABA House of Delegates adopted amended Model Rules, and made no changes to the actual text of Rule 7.2. Instead of changing the Rule, the ABA chose the curious route of using a comment to the Rule to recognize (and attempt to regulate) the selling of leads to attorneys.

The sale of leads to lawyers is discussed in a substantially-amended Comment [5] to Rule 7.2. The underlined words are new, while the omitted words are shown with strike-through text.

[5] Except as permitted under paragraphs (b)(1)-(b)(4), lawyers are not permitted to pay others for channeling professional work recommending the lawyer’s services or for channeling professional work in a manner that violates Rule 7.3. A communication contains a recommendation if it endorses or vouches for a lawyer’s credentials, abilities, competence, character, or other professional qualities. Paragraph (b)(1), however, allows a lawyer to pay for advertising and communications permitted by this Rule, including the costs of print directory listings, on-line directory listings, newspaper ads, television and radio airtime, domain-name registrations, sponsorship fees, banner ads, Internet-based advertisements, and group advertising. A lawyer may compensate employees, agents and vendors who are engaged to provide marketing or client development services, such as publicists, public-relations personnel, business-development staff and website designers.  Moreover, a lawyer may pay others for generating client leads, such as Internet-based client leads, as long as the lead generator does not recommend the lawyer, any payment to the lead generator is consistent with Rules 1.5(e) (division of fees) and 5.4 (professional independence of the lawyer), and the lead generator’s communications are consistent with Rule 7.1 (communications concerning a lawyer’s services).  To comply with Rule 7.1, a lawyer must not pay a lead generator that states, implies, or creates a reasonable impression that it is recommending the lawyer, is making the referral without payment from the lawyer, or has analyzed a person’s legal problems when determining which lawyer should receive the referral. See also Rule 5.3 for the (duties of lawyers and law firms with respect to the conduct of nonlawyers); Rule 8.4(a) (duty to avoid violating the Rules through the acts of another). who prepare marketing materials for them.

Note the restrictions [contained in a Comment, not a Rule] on lawyers paying others for generating client leads.

  • The lead generator must not recommend the lawyer.
  • Payments to the lead generator must be consistent with Rule 1.5(e) (division of fees)
  • Payments to the lead generator must be consistent with Rule 5.4 (professional independence of the lawyer).
  • The lead generator’s communications must be consistent with Rule 7.1 (communications concerning a lawyer’s services).  To comply with Rule 7.1, a lawyer must not pay a lead generator that states, implies, or creates a reasonable impression that it is recommending the lawyer, is making the referral without payment from the lawyer, or has analyzed a person’s legal problems when determining which lawyer should receive the referral.
  • See also Rule 5.3 for the (duties of lawyers and law firms with respect to the conduct of nonlawyers); Rule 8.4(a) (duty to avoid violating the Rules through the acts of another).

So, what is new here? First, the explicit acceptance of allowing lawyers to pay nonlawyers for client leads.

Second, there is language that raises almost as many questions as it answers.

And this leads me to ask another question: why did the ABA choose to leave the Rule intact while attempting to impose regulation on the sale of leads in a mere Comment?

There’s a big difference between ABA Model Rules and Model Comments. The difference is explained in the ABA’s Model Rules of Professional Conduct: Preamble and Scope. Paragraph 19 of the Preamble and Scope makes it clear that compliance with a Rule is mandatory, and a violation of a Rule is grounds for attorney discipline. The first sentence of Paragraph 19 makes this clear: “Failure to comply with an obligation or prohibition imposed by a Rule is a basis for invoking the disciplinary process.”

Is compliance with a Comment mandatory? In a word, no. Here’s the complete text of Paragraph [21] of the ABA Model Rules Preamble and Scope:

The Comment accompanying each Rule explains and illustrates the meaning and purpose of the Rule. The Preamble and this note on Scope provide general orientation. The Comments are intended as guides to interpretation, but the text of each Rule is authoritative. (emphasis added)

One would think that an issue that required 62 words to explain would deserve to be in a Rule, not a Comment.

I have two more observations about the ABA rule changes:

  • Obviously, the Rules apply only to lawyers, and bar associations can regulate non lawyer lead-generators only at a distance, by threatening disciplinary actions against lawyers who buy leads from lead-generation companies that don’t comply with the suggestions in Comment [5].
  • It’s disappointing that one of the major issues of Internet marketing was handled with so little clarity, using murky language such as this: “a lawyer may pay others for generating client leads … as long as any payment to the lead generator is consistent with Rules 1.5(e) (division of fees) and 5.4 (professional independence of the lawyer), and the lead generator’s communications are consistent with Rule 7.1 (communications concerning a lawyer’s services).

My conclusion is this: the ABA knows that lawyers buy client leads, they don’t want the client-lead-generator to do anything inappropriate, but they find it very difficult to reach a consensus define exactly how lead-generation should work.

Although it’s somewhat unsatisfying, perhaps it’s the best approach in the lightning-fast world of online marketing, where new ideas and technologies make it almost impossible for the ABA to keep up with current online attorney marketing practices.

The verdict: if you want to buy client leads, you need to deal with a company that is committed to doing it ethically and is (a) either knowledgeable about the new ethics rules, or (b) will let you give them instructions on exactly how the leads are to be generated. After all, the only person who can get disciplined over buying unethically-gnerated clients leads is you, the attorney.

This is the last part of a series on the new ABA ethics rules changes. Comments are open on this post, and I would welcome you to share your opinions, criticisms, disagreements or questions.


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