Does JustAnswer.com Provide Legal Advice Online? Is this Site Ethically Compliant?

Just Answer is a question and answer platform that provides answers to users questions for a flat fee of approximately $30.00 per question. It turns out that one of the fastest growing categories within JustAnswer is the answering of legal questions by lawyers.  

Here are other the JustAnswer terms and conditions that apply to lawyers that participate in this service:

"Experts in the Legal categories must be attorneys licensed to practice law, and be
in good standing in at least one jurisdiction in the United States or foreign
country. Such Experts shall provide general information only, such as providing
descriptions of general principles of law, and shall not provide legal advice. In
responding to questions, Experts in the Legal Category shall not apply their legal knowledge or skills to resolve or advise on the Customer's specific factual circumstances described in the question, such as by proposing a specific course of action (other than advising the User to seek the advice of an attorney licensed to practice in the relevant jurisdiction). Experts in the Legal Category shall not form an attorney-client relationship on the Site."

To be qualified to answer questions as a lawyer within the JustAnswer platform, the lawyer has to take a test in the practice area and meet other qualification standards.

Disclosure: I answer legal questions on the JustAnswer.com website in my capacity as an attorney and a member of the Maryland Bar.

The Website is very well executed. Users can select from a panel of lawyers that are online at the time that the question is asked. You can name your price - indicate what you are willing to pay for an answer. You can see the credentials of the lawyers and their track record in answering questions, communications are secure and confidential, and the user can indicate the urgency of the answer, and the level of detail required. Answers are 100% guaranteed. If you are not satisfied you get your money back. You can select the State that you are located in, so answers can be state specific. Most questions are answered within minutes.

I have yet to see a state bar association offer such a service with the same level of Website sophistication and quality control.

 

JustAnswer.com is not a law firm, but retains part of the fee paid by the user, and pays a portion of the fee to the lawyer who answers the question, provided the user is satisfied with the answer. JustAnswer.com claims that this fee splitting between a law firm and a non-law firm does not violate the Rules of Professional Conduct because the answers are "legal information" and not  "legal advice". See previous blog post on LawPivot and this fee-splitting issue -- and a method of getting around the prohibition against fee-splitting.

A recent ethics opinion by the Ethics Advisory Committee of the South Carolina Bar, however, concluded that the JustAnswer website was not ethically compliant and advised South Carolina attorneys not to participate in the service. See opinion here.

The Opinion is worth reading, because it is likely that if other bar association ethical committees were presented with the question of JustAnswer's ethical compliance they would reach the same conclusion. Lawyer's who participate in ventures that are not ethically compliant expose themselves to liability and bar censure.

One key conclusion reached by the Committee is that the JustAnswer Website is providing legal advice not just legal information:

Because this specific website asks lawyers to provide specific legal advice in response to detailed questions, it is substantively inviting the creation of attorney-client relationships despite its likely ineffective attempts to disclaim them. Initial boilerplate responses to questions include requests for “more details about your situation” and the advice provided is often specific and contains legal conclusions based on application of the law to the facts presented. At a minimum, justanswer.com provides, not just question-and-answer, but a specific question-and-paid-professional-answer service that removes it from the radio call-in show/public seminar paradigm described in prior advisory opinions and is irreconcilable with the site’s disclaimers.

Therefore a lawyer participating in JustAnswer.com would be violating the prohibition against splitting fees with a non-lawyer. Other advertising statements on the JustAnswer Website would also cause the lawyer to violate South Carolina's lawyer advertising rules, by attribution. The bottom line is that the Committee recommended that lawyers who are members of the South Carolina bar should not participate in this service.

Comment:

The South Carolina's Ethics Committee's interpretation of its rules as they apply to the JustAnswer Website is not unreasonable and a straight forward analysis of undisputed facts about the way the service operates. Yet there is obviously a great demand for this service, and consumers have few alternatives to get answers to their legal questions for a reasonable flat fee online.

This situation is changing as law firms figure out how to deliver "unbundled" legal services online using virtual law firm platforms like DirectLaw and VirtualLawDirect.  Yet very few law firms offer this kind of service directly to consumers online - also known as "unbundled" legal services.

When lawyers do provide answers to consumers questions they usually do so through a third party Web portal like JustAnswer.com. The problem with participating in a third party portal is that:
(1) the portal may suffer from the same ethical issues as JustAnswer; and
(2) often the consumer can not connect with the lawyer directly so the potential for future work for the lawyer is not an option.

A list of other online legal advice portal websites can be found here.

Consumers seem very satisfied with the JustAnswer service. There is high demand for it. There is no empirical evidence of consumer harm.

Maybe its time to change the rules that regulate the legal profession so lawyers can serve the real needs of consumers at a price they can afford? Just to note, the United Kingdom has no such rule structure that constrains the delivery of legal advice by lawyers or non-lawyers, and there is no evidence of consumer harm in that country.

___________________________________________________________________________

In accordance with the   FTC 16 CFR, Part 255: "Guidelines Concerning Use of Endorsements and Testimonial in Advertising" I am disclosing that I have a material connection to some of the companies referred to in this Post. I am the Founder/CEO of  DirectLaw, a virtual law firm platform provider that supports the delivery of "limited legal services.". I participate as an attorney n the JustAnswer.com website. The opinions expressed here are my own. I did not receive any compensation from any source for writing this post. DirectLaw sponsors this blog by paying for the costs of hosting. 

 

Law Firms and Cloud Computing: Ethics Guidelines

Cloud computing for Law firmsState bar associations are starting to address the issue of law firms storing confidential client information in the cloud and are rolling out ethics opinions to guide law firm conduct. You can find a list of these opinions here on the American Bar Association web site. The basic standard that is emerging is that the attorney must use "reasonable care" under the circumstances. This makes sense. It leaves to the attorney the responsibility of making a management judgment about the risks in choosing one cloud solution over another. This assumes that the law firm has sufficient technical knowledge to evaluate these new risks created by the development of new information technologies. [This is the  subject of a future blog post!].

The Massachusetts Bar Opinion Ethics Opinion on this subject is troubling because it  explicitly requires:

"Consistent with its prior opinions, the Committee further believes that the Lawyer remains bound to follow an express instruction from his client that the client's confidential information not be stored or transmitted by means of the Internet, and that he should refrain from storing or transmitting particularly sensitive client information by means of the Internet without first seeking and obtaining the client's express consent to do so"

The requirement that in every case the client's express consent to store confidential information in the cloud is not realistic and not consistent with the way web technology is evolving. There are clearly situations where it would would be reasonable under the circumstances to secure a client's consent for storing confidential information in the cloud, but the way this Opinion is framed law firms will interpret to this mean that in every case the client's express consent needs to be explicitly secured. This adds unnecessary "friction" to creating the lawyer/client relationship.

This requirement actually puts Massachusetts lawyers, particularly solos and small law firms at a competitive disadvantage. Solos and small law firms now have to compete against software powered non-lawyer sites such as LegalZoom, LegacyWriter, MyLawyer.com, and RocketLawyer, to name only a few. None of these non-lawyer web sites require that their customers provide express consent to store their confidential data in the cloud, and if they do, the consent is buried so deep in the fine print that the average user is completely unaware of what they are consenting to.

The Opinion cites Google Docs as its leading example, which is a good example of how out of touch the Bar is with emerging technological trends. It won't be long before a person will be able to create a Will using a mobile app on their cell phones.

Must the user then be required to give their express consent before storing their data?  What does that "express consent" mean in a mobile application context? The necessity of preserving the integrity of the lawyer/client relationship through the appropriate application of ethical rules is clearly appropriate. But adding unnecessary "friction" to accessing legal services for the average consumer is just going to result them turning to alternative non-lawyer providers who operate with less restrictions. Restrictions like this impede innovation in the delivery of legal services by the legal profession. No wonder the legal profession is lagging behind every other service industry in adapting to the mobile social web.

For a similar viewpoint see: Carolyn Elefant's Blog Post: The Bar Associations Have Their Head in the clouds When it Comes to Cloud Computing.

For a thoughtful analysis of bar association ethical opinions on the use of cloud computing by lawyers see also:  Bob Ambrogi's blog posts at Catalyst.
 

UPL and Legal Document Preparation by Non-Lawyer Providers

The ABA Standing Committee on Client Protection just released a survey it conducted on unlicensed practice of law programs ( UPL) in United States jurisdictions in 2011-12.

Only 29 jurisdictions responded to the survey.  Twenty-three of the 29 actively enforce UPL regulations, although some jurisdictions indicate that insufficient funding or resources make enforcement challenging. Nine jurisdictions stated that enforcement is inactive or non-existent.

Of the jurisdictions reporting, 21 states permit some form of limited practice by non-lawyers. Here is the summary from the report:

Twenty-one jurisdictions authorize nonlawyers to perform some legal services in limited areas. Sixteen permit legal assistants, legal technicians or paralegals to perform some legal services under the supervision of a lawyer; six jurisdictions permit nonlawyers to draft legal documents. Other allowable nonlawyer activities include: real estate agents/brokers may draft documents for property transactions or attend real estate closings; nonlawyers may attend (and in some states participate in) administrative proceedings; and participate in alternative dispute resolution proceedings. Many of these jurisdictions do not classify these activities as the practice of law.

There are only six jurisdictions in the US that permit nonlawyers to prepare legal documents,
(without providing legal advice). These jurisdictions are California, Arizona, the District of Columbia, Florida, Maine, and Missouri. In these jurisdictions the "nonlawyers"  are referred to as -  "Legal Document Preparers" or "Legal Technicians".

[ Download Entire Report Here ].

Only one jurisdiction that we know of, the State of  Texas, makes an exception to the definition of the practice of law, and explicitly permits the sale and distribution of self-help legal software, software-powered legal web sites, self-help law books, and other technologically-based alternatives to the delivery of legal services.

It's no wonder that LegalZoom is required to state in its S-1 filing to go public - that violation of UPL statutes in many states is a major risk factor for its business:

"Our business model includes the provision of services that represent an alternative to traditional legal services, which subjects us to allegations of UPL. UPL generally refers to an entity or person giving legal advice who is not licensed to practice law. However, laws and regulations defining UPL, and the governing bodies that enforce UPL rules, differ among the various jurisdictions in which we operate. We are unable to acquire a license to practice law in the United States, or employ, or employ licensed attorneys to provide legal advice to our customers, because we do not meet the regulatory environment of being exclusively owned by licensed attorneys. We are also subject to laws and regulations that govern business transactions between attorneys and non-attorneys, including those related to the ethics of attorney fee-splitting and the corporate practice of law."

Some Observations

  • Some entity, such as the US Legal Services Corporation whose goal is to expand access to justice for all,  or an independent or university-based research organization, should undertake empirical research which analyzes whether non-lawyer practices actually cause harm to consumers within the states that permit nonlawyer document preparation.  Research should also be done on the impact that nonlawyer legal form web sites have on the consumer in terms of benefits and potential harm. Empirical research in England by the Legal Services Consumer Board on the issue of whether will writing by non-lawyers causes harm, concluded that it did. This resulted in making will drafting and will writing a reserved area under the new UK legal profession deregulation scheme.
     
  • We need more empirical research like the UK Study to inform public policy making in this area.  Perhaps if LegalZoom is successful with its public underwriting it could subsidize or contribute to such a study, as it would certainly be in their interest to do so!
     
  • Research should be conducted in those states that permit nonlawyer document preparers to evaluate whether more consumers have access to the legal system and at a lower cost by using nonlawyer document preparers, rather than attorneys. This data would inform public policy with facts, instead of generalized theories that it is necessary to limit legal document preparation services to licensed attorneys in the interest of  "protecting" the public from harm.
     
  • Legal document preparation software is getting smarter -- more intelligent-- Web-enabled document automation applications can now generate documents that really do reflect a person's individual circumstances. These applications are getting smarter and the intelligent templates easier to build. Other than in Texas, there is an issue as to whether legal software, standing alone, constitutes the unauthorized practice of law, despite disclaimers to the contrary.

    State Bar UPL Committees should consider adopting the Texas UPL exception to avoid charges of monopolistic behavior, to gain the confidence of the public that the organized Bar is really interested in expanding access to the legal system through the use of technology, and to encourage innovation in the delivery of legal services. [Disclosure
    We operate an intelligent legal forms software company ].
     

 It would be interesting to see whether legal fees are also lower in jurisdictions which have competition from nonlawyer document preparers as these authors claim.

LegalZoom: The "Good Enough" Legal Solution

LegalZoom, the leading online provider of legal services to consumers and small business, as predicted here previously, finally filed for an IPO last week. The company is seeking to raise $120 million to expand their services both in the US and internationally.

LegalZoom's data in the S-1 filing is now available for everyone to analyze:

  • In 2011, 490,000 orders were placed through their web site;
  • 20% of all limited liability companies in California were done by LegalZoom;
  • During the past ten years, LegalZoom has served over 2,000,000 customers.
  • Revenue in 2011 was $156 million.

These are impressive statistics and provide support for the proposition that consumers and small business prefer a very limited legal solution that is just good enough to get the job done, rather than pay the high legal fees charged by the typical attorney.

This is LegalZoom's analysis of the legal market for consumers and small business, buried on p. 62 of the S-1 filing: 

"Making the right choices with respect to legal matters can be difficult, especially for those with limited time and resources. The U.S. legal system consists of overlapping jurisdictions at the city, county, state and federal levels, each of which has its own evolving laws and regulations. Businesses may be subject to additional laws, regulations and legal issues applying specifically to the industries in which they operate. In addition, the policies and procedures associated with the creation, filing and certification of legal documents are often arcane and confusing."

        "When in need of legal help, small businesses and consumers lack an efficient and reliable way to find high quality, trustworthy attorneys with the appropriate experience to navigate this complex legal system and handle their specific needs. Small businesses and consumers often do not understand their legal needs or know where to start looking for an attorney. Some are wary of attorneys in general, and others may have heard from friends or family about negative experiences with attorneys or the legal system."

        "The high and unpredictable cost of traditional legal services also presents challenges for many small businesses and consumers. In 2011, the average billing rate for small and midsize law firms was $318 per hour, according to ALM's 2012 Survey of Billing and Practices for Small and Midsize Law Firms. Attorneys are frequently unable to predict the time required to address a client's legal matter, sometimes billing thousands of dollars to research a legal issue they have not previously encountered. This can be particularly true of generalist attorneys that offer many disparate legal services to members of their local communities. Unlike attorneys at large global law firms or specialty boutiques who handle high volumes of similar matters and develop expertise in specific domains, generalists can find it difficult to efficiently address a client's particular legal issue due to their lack of specialized expertise. Due to the high and unpredictable costs of traditional legal services, many small businesses and consumers limit their use of attorneys and instead often attempt to resolve legal issues without assistance."

       "As a result of these factors, many small businesses and consumers often are unsure of or dissatisfied with the legal services available to them, and many either elect not to seek help or take no action to address their important legal needs."

Many lawyers are in denial about the desire of consumers and small business to purchase their services. They will assert that consumers and small business are exposing themselves to liability by using LegalZoom's limited services which will bring regret later. But consumer's don't seem to care. What they get from LegalZoom is "good enough." The numbers tell the story.

Solos and small law firms will find that it will be very difficult to compete against LegalZoom with its superior capital resources. The organized bar (State and ABA) has given up on trying to put LegalZoom out of business on they theory that the company is violating UPL ('unauthorized practice of law") rules. Any organized bar attacks will be resisted by LegalZoom which will now have the capital to fight any challenges to its business model. The American Bar Association has created a Solo and Small Law Firm Resource Center, but it is too little and too late.

LegalZoom is here to stay and will expand its market share as the major provider of the delivery of legal solutions to consumers and small business.

LegalZoom will, inevitably, put many solos and small law firms out of business as it grows and expands its suite of services.  For a related analysis on my theory about the venture capital industry and disruption in the legal industry see video at: Legal Startups - An Overview at PointOneLaw ].

To survive in this fast changing environment, solos and small law firms need to figure out strategies that extend their brand online, without detracting in any way from their role as a trusted adviser in the communities where they live and work.  I see too many solos and small law firms that think they can emulate LegalZoom's success but don't have either the capital or the skills to compete in an online environment.

The competitive response for solos and small law firms should be to create a "click and mortal" strategy that combines what can be learned from LegalZoom with the best management practices of a law firm that has the capacity to deliver "limited" or "unbundled" legal services at a competitive price point, both in the office and online.

Here is a previous blog post which lists steps that solos and small law firms can take to become more competitive in this rapidly changing environment. The cost of adapting to this new competitive environment is not the cost of software, which is relatively inexpensive. The cost is the investment in time that the lawyer has to make to learn new online skills, create more efficient production procedures, and adopt marketing approaches that amplify a lawyer's expertise both online and offline.

It will be interesting to see what the legal landscape for solos and small law firms looks like five years from now. 

North Carolina Bar Regulates Legal Cloud Computing

Legal Cloud ComputingA  proposed Ethics Opinion of the North Carolina Bar  that provides guidelines for attorneys using cloud computing services, commonly known as SaaS (Software as a Service),  contains language that is troubling because of its potential impact on solos and small law firm practitioners who are creating virtual law practices. The Bar is soliciting comments prior to making the Opinion final. Here are some comments for consideration.

The Opinion states that to comply with the attorney's duty to keep client data confidential there should be:

"a separate agreement that states that the employees at the vendor’s data center are agents of the law firm and have a fiduciary responsibility to protect confidential client information and client property."

 

DirectLaw is a SaaS vendor that hosts law firm data at a Tier IV Data Center that implements the security controls that a bank or major financial institution uses.  The idea that our data center would enter into an agreement that would make its employees agents of a law firm is not realistic. There is not sufficient consideration to expose the Data Center to this kind of liability, and there is no way that they would modify their terms and conditions to meet the needs of a single SaaS vendor. I doubt that counsel for the Data Center would ever approve such language. The Data Center would just tell us to take our business elsewhere. Amending the contract terms just for SaaS vendors that service the legal industry is not likely to happen.

There are other approaches to providing assurance to law firms that client confidential data is secure and less burdensome.

I think a better guideline would be to suggest or require that SaaS vendors host their data at a data center that is a Tier IV Data Center.  A Tier 4  Data Center is one which has the most stringent level requirements and one which is designed to host mission critical computer systems, with fully redundant subsystems and compartmentalized security zones controlled by biometric access controls methods. The Data Center should also be SAS 70 certified. The Data Center should also have PCI DSS certification if credit card data is stored within the Data Center. With these safeguards in place,  a law firm should be  considered to have undertaken reasonable due diligence to satisfy the obligation to insure that client data will remain confidential.

There are other problems with the North Carolina opinion. Another guideline:

"requires the attorney to undertake a financial investigation of the SaaS vendor: to determine its financial stability."

What does that mean? I am not about to divulge our private financial statements to just any lawyer who inquires. How is it relevant? If there are provisions for data capture and downloading data that is stored in the cloud, and the law firm has access to that data, what difference does it make if the SaaS actually goes out of business?

It would make more sense to simply require that a SaaS vendor carry Internet liability insurance for the benefit of its law firm clients. Law firms will have problems securing Internet Liability Insurance to cover data loss. Data loss as a result of a Data Center outage is not normally covered under a law firm's malpractice policy. For solos and small law firm's securing this kind of coverage would be a burden and cost prohibitive. It makes more sense to require the SaaS vendor to secure such coverage and make its law firm subscribers a beneficiary of the coverage.

Another guideline states that:

"The law firm, or a security professional, has reviewed copies of the SaaS vendor’s security audits and found them satisfactory."

How much does such an audit cost? Can solo practitioners afford such an audit? Who qualifies as a security professional? I think this requirement will act as deterrent to solos and small law firms who are seeking cloud-based solutions that they can use in their practice. I think that a less costly and more effective solution would be for an independent organization to issue a Certificate of Compliance to the SaaS vendor indicating that the SaaS vendors has satisfied or complied with well recognized standards. Like the Truste Certificate in the privacy area, this would give solos and small law firms this would provide stamp of approval that minimum standards have been satisfied. This would move the cost burden of undertaking due diligence to the SaaS vendor, rather than to the solo or small law firm practitioner.

Another guideline states:

"Clients with access to shared documents are aware of the confidentiality risks of showing the information to others. See 2008 FEO 5."

This guideline should be clarified because it is not clear what "shared documents" means. This kind of statement is likely to scare clients into thinking that a law firm that stores client data on the the Internet is putting the client's data at more risk than storing the data in a file cabinet in the lawyer's office.

As the American Bar American,  through its Ethics 20/20 Commission, and state bar associations adapt ethical rules to deal with the delivery of legal services over the Internet, it is important to consider that the burden of compliance may have a different impact on solos and small law firms, than on large law firms. The rules should not act as a barrier to solos and small law firms exploring new ways of delivering legal services online which are cost effective for both the law firms and their clients.

For a similar point of view see Stephanie Kimbro's blog post on the same topic.

Disclosure: DirectLaw is a SaaS vendor that provides a virtual law firm platform to solos and small law firms.

The Online Bar Association Meets 04/29-05/01 in Coral Gables, Fl

A new international bar association was formed last year, based in Miami, Florida, called the Online Bar Association. It is an eclectic group of attorneys some based in the United States and many based internationally, who have come together around a common interest - the online delivery of legal services.

The first inaugural meeting is this weekend, April 29-May 1, 2011 at the Westin Colanade Hotel in Coral Gables, Florida.  Here is information about the meeting and the agenda.

North Carolina Bar Ethics Starts Inquiry into "Cloud Computing" for Law Firms

The Ethics Committee of the North Carolina Bar, in response to an inquiry from a law firm, is assessing whether a law firm can utilize "cloud-based" legal applications where client and other law firm data is stored on the Internet.  It could result in a determination that law firms in North Carolina cannot operate as "virtual law firms."

Stephanie Kimbro, the founder of one of the first North Carolina virtual law firms, and  Virtual Law Office Technology, Inc., a web-based virtual law firm services provider, and originally a North Carolina company, (now owned by TotalAttorneys, Inc., which is based in Chicago),  has written an excellent post on this topic.

 "Cloud Computing" enables solo practitioners and small law firms to provide online legal services to individuals and small business at affordable legal fees, and therefore enables them to compete effectively against non-law firm providers, such as LegalZoom, which also operates in "the cloud."

The eLawyering Task Force of the Law Practice Management Section of the American Bar Association has submitted a statement to the North Carolina Ethics Committee on the issue of the relationship of "cloud computing" to solos and small law firms. the delivery of online legal services,  and access to the legal system by individuals of moderate income.

Interested parties who wish to submit comments, should submit them to:

Alice Neece Mine
Assistant Executive Director
North Carolina Bar Association
208 Fayetteville Street Mall
PO Box 25908
Raleigh, North Carolina 27611-5908
EMAIL: 
amine@ncbar.gov