AxiomLawSome colleagues asked me that other day if I knew whether Axiom is a law firm. I said I didn’t really know, so I decided to find out. There has been much buzz lately about AxiomLaw .  The company recently raised $28,000,000 in private equity funding, after an initial round of $5,000,000.  Axiom has recently launched a new Web site call ReThinkLaw  – a kind of forum Web site that is designed to "provoke thought and drive innovation in the business of law—leading to greater efficiency and positive change for the benefit of clients, firms and lawyers alike."

The AxiomLaw Web site and ReThinkLaw site makes it look like Axiom is a law firm.

For example:

AxiomLaw sounds like a law firm and has a domain name that makes it look like a law firm. When it describes itself it states that "it is not your father’s law firm" or it is  "a new model legal services firm."

But its not a law firm at all. The company’s real name is Axiom Global, Inc.,  It is organized as a "C" corporation, and incorporated in the State of Delaware, just like any other company. (This explains of course how it can have investors).

So if AxiomLaw is not a law firm – what does it actually do? It targets the General  Counsel’s office of large corporation’s and provides the following services:

  • It’s a high priced placement firm assigning lawyers to work for in-house General Counsel;
  • It’s an outsourcing firm working directly for General Counsel of major Fortune 500 corporations;
  • It does "projects" directly for General Counsel of major Fortune 500 corporations.

Should any one care whether AxiomLaw is a law firm or not?

  • Prospective attorney recruits might care whether they are being recruited by a law firm or something else;
     
  • Prospective customers should understand that only a company with an in-house counsel who is a member of the bar where the legal matter is being conducted can qualify for AxiomLaw’s services;
     
  • If you don’t have an in-house counsel, then you can’t use Axiom’s services. Not being a law firm. Axiom cannot provide services to the public (individuals or organizations) directly;
     
  • Prospective corporate customers should understand that the traditional lawyer-client confidentiality privilege does not apply. Any confidentiality must result from the relationship between the company’s general counsel and their outsourced lawyer workers by virtue of the agreement between Axiom and the corporation customer – but I wonder if that is sufficient.
     
  • Competing law firms might care that Axiom suggests that its services are "legal services" competitive with the services of other law firms, when in fact they are are just "services" by definition. Actually contracted support services by in-house counsel. Otherwise Axiom would be violating Unauthorized Practice of Law (UPL) regulations in every state. Since Axiom is not really a law firm it can make claims about its services, that are not subject to bar regulation. Some of the statements that Axiom makes about its services, a law firm is prohibited from making because it would be in violation of the advertising and disclosure rules which are operative in every state.
     
  • Law firms are prohibited from solicitation. AxiomLaw is not subject to the same constraints.
     
  • Maybe state bar association officials should be concerned that the location of the disclaimer on the AxiomLaw web site that states that Axiom is not a law firm and cannot give legal advice. It is difficult to find. . I finally found it here.  and here.

Is AxiomLaw a positive development for the legal profession? Who knows?

General Counsel of major companies seem to think so. AxiomLaw is demonstrating that certain kinds of services can be delivered at a much lower price, without compromising quality. By enabling corporate counsel to get done certain kinds of legal work that ordinarily would be provided by outside counsel at a much higher price, Axiom has opened up a major market be simply segmenting the kind of work that can be done more efficiently in-house with help from Axiom.

It seems to me, however, that an in-house counsel assumes the risk of malpractice when they contract with Axiom. Axiom is not a law firm so it can’t secure a law firm malpractice insurance policy. Moreover, the supervisor of the legal work is not Axiom, (technically it can’t be), but in-house counsel. When in-house counsel contracts with a company like Axiom they give up the assurance of quality legal services and accountability that they get from a traditional law firm. 

In checking directly with Axiom on this point, Axiom states that:

"The individual lawyers don’t carry their own malpractice, Axiom maintains a lawyer’s professional liability insurance policy that provides coverage for all Axiom attorneys, regardless of W-2 or independent contractor status. Almost all of our lawyers in the US are W-2 employees. Axiom does not, because we cannot, have access to or supervise the substantive work of our lawyers."

One likely impact of these developments is to destabilize the business model of the Big Law firms by sucking out the more routine work from big law firms which results in decreasing overall profitability.  As the Axiom’s of the world expand their services and their reach,  there will be less work for the large law firms resulting in a shrinkage of the market share of traditional law firms. (real law firms!). The firms that are left standing will offer the most high-end legal services but will probably raise their fees as they will be the only game in town as a supplier of complex legal services where law firm accountability is a necessity.

Do GC’s have any interest in a vibrant independent and expanding legal pr
ofession, or do they prefer a world where there will be less traditional law firms offering their services at higher fees?

Two final questions for consideration:

1. Should AxiomLaw be more transparent on its Web site about what kind of an organization it really is by making clear that it is not a law firm, and should it avoid comparisons with traditional law firms?

2. Maybe non-law firms like Axiom, with their access to capital and superior management and technological resources, should be able to offer legal services like a real law firm, but just make these new organization’s subject to the Rules of Professional Conduct like any other law firm.

Of course, private investment in a law firm is prohibited by Model Rule 5.4, but maybe it’s time that state bar associations recognize that there is a new kind of organization moving into the legal industry any way, so why not simply subject these new players to the same regulatory scheme as traditional law firms?

Would that level the playing field? Would that provide better consumer protection for both individual consumers and corporate purchasers of legal services?

Legal Referral websitesI have noticed recently the launch of many lead generation Web sites for lawyers.

In a previous blog post  , I noted that lead generation sites for lawyers as one category of legal start-ups were increasing and entering into an already crowded market space. By a "lead generation Web site" I mean a third party Web site whose primary purpose is to provide qualified leads to law firms. The site may be free to users, or sell legal advice to users for a fixed fee, but the purpose is still to generate leads for lawyers. A "lead generation web site" is typically what I call a multi-sided platform – one side involves users looking for a lawyer,  and other side are the providers who offer legal services. The lawyers who subscribe to the Web site typically pay a "marketing" or "advertising" fee to get access to the leads generated by the Web site.

More mature legal generation sites are expanding their features and depth of offerings TotalAttorneys recently received of infusion of $15 million in new venture capital from Bain Capital Ventures of Mitt Romney fame. A new CEO, Paul Ford, with expertise in developing lead generation Web sites is in place providing leadership.  TotalAttorneys now gives away their Web-based practice management system for a $1 a month, to attract attorneys to their more expensive legal generation services.  At $1.00 a month this is really good value for a web-based practice management application. However, for TotalAttorneys this web-based practice management solution that was originally developed by Stephanie Kimbro, now with Burton-Law,  and her husband and acquired by TotalAttorneys, is now just a marketing strategy for their lead generation services.  TotalAttorneys now claims that it is," the leading US company providing customer acquisition for lawyers"

I am not sure that ExpertHub, owned by InternetBrands, which acquired Nolo last year,  would agree with this assessment, with its broad network of practice specific legal sites now being reinvigorated with content from Nolo. [ See previous blog post on this acquisition ]. 

 

Virtual Law firm Success Factors

Continue Reading New Law Start-Up Lead Generation Sites: What Lawyers Need to Know

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.

 

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

LawPIvotLawPivot, is a Silicon Valley legal industry start-up,  a new breed of online legal advice Web site that provides legal answers through a network of attorneys. Sometimes the legal advice or legal information is free like AVVO and LAWQA,  and sometimes you pay a fee, which LawPivot and JustAnswer require. See more:  American Bar Association Journal article on LawPivot.

I had a technical, corporate legal question that I needed a quick answer to, so I decided to try LawPivot’s Confidential Question and Answer Service, pay their fee, and see how well it worked. I knew that LawPivot has a pretty extensive panel of corporate lawyers, so I thought this would be a good starting place. Because my question involved a technical question, I think  if I had asked our regular outside counsel I probably would have generated a $450.00 legal fee and a long memo — which I really didn’t need at this point.

Instead for  $49.00, I received within 24 hours 8 answers from as many lawyers.  Of the 8 answers I received, I marked 5 as not helpful for my purposes. But 3 were very much on target, and one answer was exactly what I was looking for.

This service is "Confidential", but no attorney/client relationship is created, and the answers are supposed to be "legal information" rather than "legal advice",  The reality is that what I received was pretty good legal advice that applied to the particular facts of my situation.

Overall the site was very easy to use and I was very satisfied with the result. I think that even if I were not an attorney with experience in corporate law, I would have been able to recognize which answer to my question was the correct one. I am not sure that this would always be the case, so my conclusion is that this kind of online service for the average user is a starting point for more research, not an end point. The service helps you make a decision whether you need to retain an attorney for additional assistance. This is a good example of the use of the Internet to deliver "unbundled" legal services at an affordable fee.

The Ethical Issues

LawPivot makes clear that they do not share any fees with an attorney. The site also makes clear that it is not a legal referral service and that it does not promote any particular attorney. LawPivot properly avoids making claims about the lawyers in their network such as they are "the best", highly specialized in their fields", or the most experienced lawyers in their specialty.

Apparently, lawyers are ranked by an algorithm  on how well and promptly they answer questions. Whether this technology violates traditional legal referral rules, which prohibits profit-making organizations to be in the legal referral business, is the subject of a future blog post. 

Is LawPivot, as a non-law firm, permitted to charge a fee for legal advice? Is this the unauthorized practice if law? Not if the fee is paid by the user for the use of the Web site, and not for the legal answer or legal advice itself. There is a bar association opinion that holds that a Web site may charge a user for the user of the Website, when purchasing a legal service, and that this fee is not a fee for the legal service itself. See for example, Nassau County OK’s Tie with Americounsel.

In the AmeriCounsel scheme, which dates back to 2000, the Nassau County Bar concluded that:

"[S[ince AmeriCounsel does not charge attorneys any fee and since AmeriCounsel does not "recommend" or "promote" the use  of any particular lawyer’s services, it does not fall within the purview of DR 2-103(B) or (D). Rather, AmeriCounsel is a form of group advertising permitted by the Cod of Professional Responsibility, and by ethics opinions interpreting the Code."

I think this opinion is still good law.

However, LawPivot has been forced to create a business model, based on a work-around of a Rule of Professional Conduct that no longer serves any useful purpose.

In my opinion,  a regulatory scheme that enables private companies to take a share of the legal fee for referring client work to law firms would have a positive benefit.  It would result in providing more resources to the Web provider so that it could develop more nuanced quality control systems, more extensive marketing programs,and invest in innovative client referral systems. The prohibition on splitting fees between non-law firms and law firms doesn’t serve the purpose for which the rule was originally designed — to discourage "ambulance-chasing."

In fact, the ABA’s Standing Committee on the Delivery of Legal Services most recently sent a letter to the ABA Ethics 20/20 Commission recommending that Rule 7 (2) (b) be eliminated. 

Model Professional Rule (7) (2) (b) states:

(b) A lawyer shall not give anything of value for the recommendation of the lawyer’s
services except that the lawyer may:
 (my emphasis).
(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;

 

Comment [5] to the Rule merely states, “Lawyers are not permitted to pay others for channeling professional work."

The Standing Committee’s letter to the Ethics 20/20 Commission states: 

"The comment provides no rationale for this conclusion, which frankly is a position swallowed by the Rule’s exceptions. Law directories have channeled legal services for well over a hundred years. Lawyer referral services have channeled work to lawyers since the mid-twentieth century. Prepaid legal services have channeled work to lawyers for nearly 50 years. Public relations and marketing have joined lawyer advertising as vehicles that channel work since the Supreme Court ruled that states could not prohibit lawyer advertisements in 1977. Law firms providing services to corporations and institutions have in-house marketing staff, some of whom are paid well into six-figures, for the purpose of channeling professional work to their firms. And most recently, we have seen a proliferation of online third-party intermediaries that in some instances defy categorization as advertisements or referral services. Intermediaries are discussed in detail below, but suffice it to say here that the channeling of professional services in the marketplace in and of itself is not inherently
inappropriate. Collectively, these mechanisms create access to legal services for potential clients of all economic strata. They are, however, most important for those of moderate or middle class individuals who infrequently use of the services of a lawyer and need the information provided by these resources to help them make the decisions about the legal services most appropriate for them. "

The Ethics 20/20 Commission gave no serious consideration to the Standing Committee’s proposal so this reform is dead for the foreseeable future — unfortunately. 

The problem with Rule (7)(2)(b) is that it has been made irrelevant by the Internet and arguably is a deterrent to innovation in devising new ways of enabling consumers to access legal services. This is a Professional Rule that chills innovation, rather than preventing consumer harm.

AmeriCounsel failed as a company because it could not generate sufficient cash flow as it was limited to charging a relatively small administrative fees for use of the Web site, as distinguished from earning larger fees that could result from channeling work to lawyer’s in their network.

I hope that LawPivot does not suffer the same fate as AmeriCounsel.
 

 

The ABA Commission on Ethics 20/20 Working Group on Uniformity, Choice of Law, and Conflict of Interest has identified some issues related to defining limits on Virtual Practice under Rule 5.5. Model Rule 5.5 (b) (1) requires a lawyer to obtain a license in a jurisdiction if the lawyer has an office or a “systematic and continuous” presence there, unless the lawyer’s work falls within one of the exception identified in Rule 5.5 (d). The Commission has identified as a potential problem the situation where lawyers are physically present in one jurisdiction, yet have a substantial virtual practice in another. The problem is “that it is not always clear when this virtual practice in a jurisdiction is sufficiently “systematic and continuous” to require a license in that jurisdiction.”

This comment could be interpreted to mean that lawyers who have a virtual law practice, mostly solos and small law firms, may have an issue about whether they need to “secure a license” in the other jurisdiction.

This is a solution looking for a problem where none exists as far as the typical virtual law practice is concerned.

A virtual law practice is commonly associated with the online delivery of legal services. Lawyers engaging in virtual practice are only able to provide legal work that pertains to the laws of the state(s) in which they are licensed or they are in violation of 5.5. Whether or not their delivery methods or work with the clients takes place in a physical location other than where the lawyer is licensed, the key factor is that the lawyer is practicing the law of the jurisdiction they are licensed in and to which the client’s legal needs pertain. A law firm will have a website that anyone in any jurisdiction may find and read online. The lawyer places the appropriate disclaimers on the website and makes it clear in any registration process for a client portal that the law firm is only permitted to practice the laws of a certain jurisdiction. This is not misleading to the public nor is it the unauthorized practice of law.

For example, a client living in Florida who owns real estate in Maryland should be able to work online with a lawyer licensed in Maryland to handle the matter. That lawyer licensed in Maryland, whether he or she lives in Florida or New York, is not creating a “systematic or continuous presence” in the state of Florida to subject the lawyer to Rule 5.5(b). Contacts for the purpose of determining “systematic and continuous presence” in the context of determining “personal jurisdiction” have nothing to do with a virtual law firm that limits its practice to residents of the state in which it is primarily located, or serving out of state residents who have matters that are within the state where the attorney is licensed.

When an attorney creates a virtual law office, the gateway to the virtual law office is a Website that any other law firm would create and which is available for viewing by anyone in the world. The difference is the addition of a secure client portal where the prospective client and existing clients will register for assistance. The virtual law office Website states throughout where the attorney is licensed to practice law. The terms and conditions or disclaimers on the site should clearly explain where the attorney is licensed to practice law. This is no different than a traditional law firm Website.

Only residents of the state where the attorney is licensed, or out of state residents who have a legal matter within the state are permitted to register as clients of the law firm. Often the attorney may have the online client sign a traditional or digital engagement agreement that provides notice of which state’s law will apply should there be any dispute.

In addition, some virtual law office platforms have jurisdiction checks so that in order to register, the prospective client must provide their address. If the client is not physically located in the state, a notice is sent to the attorney reminding the attorney that before the client can be accepted as a client of the firm the attorney has to determined that the matter to be handled is a legal matter within the attorney’s jurisdiction. A notice is also sent to the client, reminding the client that the attorney is only licensed to practice law in the state in which the attorney is located. A client’s presence in a different geographic location than his or her attorney does not mean that a state’s ethics rules should come into play for the attorney handling a project that is unrelated to that state’s laws. Just because an attorney’s Website can be viewed in another state, doesn’t mean that a state should have disciplinary authority over that attorney because the Website and the law firm are not offering to provide “legal services” in that state. The alternative logic would suggest that a law firm should be available to be viewed only in the state in which the lawyer is a member of the bar – a truly absurd result – not worthy of further discussion.

To summarize: There are two separate questions about when a UPL claim would arise. First, what contacts does a state require to establish presence when the lawyer is not admitted there but is working with a client who physically resides in that state? Second, in the situation where the lawyer is admitted to practice in that state, but the lawyer physically wants to reside outside of that jurisdiction, what are the contacts that would need to be required to establish presence in the state where the lawyer is licensed? Again, the answer to both questions should be that the legal work that the lawyer provides to the client is what matters rather than where either the client or the lawyer is physically located. 

Stephanie Kimbro contributed to this post and see:  What constitutes virtual presence?  see also Carolyn Elefant’s post on this subject on her MyShingle Blog.

 

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.
 

LegalZoomLegalZoomRozman Legal Group, P.C., a law firm that was formerly a member of the LegalZoom network of attorneys,  recently filed a law suit against LegalZoom in U.S. District Court, for breach of the Panel Agreement that it entered into to become a member of the network.

LegalZoom maintains a Panel of Attorneys as part of a Legal Plan that provides its customers with the option of seeking legal advice in relationship to the their legal documents.

There are many claims in the complaint including breach of contract, breach of a non-disclosure agreement, and copyright infringement. The entire Complaint can be downloaded here, It makes for an interesting read.

For this observer, the most interesting claim is the alleged interference with the lawyer/client relationship.

Rozman alleges in the complaint, that LegalZoom interfered with the independence of the lawyer/client relationship, to wit:

  • the Rozman Legal Group  was discouraged "from entering into limited representation or general retainer agreements with Plan Members";
     
  • the Rozman Group was instructed to " answer Plan member questions generally and rhetorically so as to specifically not create liability for Rozman Legal Group or LegalZoom.
     
  • Rozman was told by a member of LegalZoom’s management "that the purpose of the Plan was to provide good customer service and that legal advice was ancillary."
     
  • Rozman also alleges that LegalZoom "sold family law leads usually for $75 and mesothelioma leads for as much as $1000 despite the LegalZoom policy that customer information was not sold to third parties"

It is hard to know what the real facts are of course, and I assume that discovery will shed some light on what really happened between the parties.

But the potential that there was interference with the independence of the lawyer/client relationship is ominous.

Reform of the British Legal ProfessionI have sometimes advocated that the American Bar should adopt some of the English reforms that enable non-law firms (companies) to own law firms, known as Alternative Business Structures. In theory, such an organization would have better access to capital markets which could finance true legal services innovation. In the United Kingdom processes and procedures are being put in place that are designed to insure the independence of the attorney. 

When I read the complaint in the Rozman case, the idea of private company ownership of law firms, or non-lawyer equity ownership of law firms, doesn’t seem like such a good idea after all. 

US attorneys participate in network arrangements with private companies, but there is no mechanism to monitor whether management practices are in ethical compliance. While these arrangements may look ethical on paper, it is the management practices that may tell a different story.

So the question is:  When you have a large, well-capitalized company that provides major cash flows to a group of law firms engaged in its delivery system, what guarantees can be put in place which protect the independence of the lawyer and the client;s interest?

It is easy to envision that  LegalZoom which will soon be a public company –driven by  Wall Street’s demand for increasing earnings every quarter —  would manage its lawyer network in a way to maximize its commercial objectives.

There are solutions for this new breed of hybrid company that would give the public confidence that the ethical rules that apply to the lawyer/client relationship are being respect.   [ RocketLawyer, JustAnswer, and Law Pivot are other hybrid company that work with a network of lawyers that provide legal services, just to name a few ].

One solution that would give the public confidence that these companies are in ethical compliance would be for the company to create a truly Independent Review Board of attorneys with backgrounds in legal ethics charged with monitoring management practices to make sure that they don’t  undermine the lawyer’s obligations to their clients.  

Another idea could be a Legal Ethics Ombudsman, who is independent of management and the company’s  office of General Counsel.  Lawyers participating in the network would be required to consult or report violations to the ombudsman before resorting to litigation.

There is precedent for this in other industries.. e.g., peer review in medical institutions the New York Times has an ombudsman charged with monitoring ethical journalistic practice, and large commercial banks have independent risk officers (in theory!).

Creating this kind of impartial Board or Office to monitor the management behavior of the company and the lawyers it engages would be an important step towards assuring the public that their interests are protected. It could also minimize or avoid litigation like the Rozman law suit, which at the end of the day, will not likely be a satisfying experience for either party. 

Virtual Law PracticeThe latest edition of the ABA’s Law Practice Today webzine has good articles on elawyering and virtual practice and a really innovative piece by Marc Laurtisen titled,  Dancing in the Cloud, and an introduction to the elawyering concept by Stephanie Kimbro —  Getting Started With eLawyering).

I also wrote a short article on Document Assembly Over the Internet , which as readers of this Blog will know is an old theme for me.

For our latest analysis on what is working in the virtual law firm space, download our White Paper on Virtual Law Practice: Success Factors.

 

 

The Legal Cloud Computing Association (LCCA) has published responses to proposals issued by the ABA Commission on Ethics 20/20 and the North Carolina State Bar regarding the use of cloud computing within a law practice.

The Legal Cloud Computing Association ("LCCA"), formed in December 2010, is the collective voice of the leading cloud computing software providers for the legal profession, consisting of Clio (Themis Solutions, Inc.), DiaLawg, LLC, DirectLaw, Inc., NetDocuments, Nextpoint, Inc., RealPractice, Inc., Rocket Matter, LLC, and Total Attorneys, LLC.

Response to ABA Commission on Ethics 20/20

The LCCA’s letter to the ABA Commission on Ethics was issued in response to the Commission’s Initial Draft Proposals on "Technology and Confidentiality" published on May 2, 2011. The Proposals include certain modifications to the ABA Model Rules of Professional Conduct that are designed to facilitate the responsible adoption of technology that will increase the quality, and reduce the cost, of legal services.  The Proposals were issued as part of a process initiated in early in 2010 where the Commission published an Issues Paper requesting comments and feedback from the legal community.

The LCCA fully supported the Commission’s Proposals, and concluded that the Commission ‘s recommendations provided a reasonable framework the would enable law firms to make infomed decisions about using cloud computing resources.

Response to North Carolina State Bar Proposed 2011FEO6

The LCCA’s letter to the North Carolina State Bar pertains to Proposed Formal Ethics Opinion 2011FEO6. The Proposed FEO attempts to address the ethical issues relating to the use of Software-as-a-Service or cloud computing within a law firm environment.

While the LCCA supported the NC State Bar’s efforts to provide clarity on the use of cloud computing, the Proposed FEO as written would negatively impact a broad scope of attorneys from those who do nothing more than use a web-based email client or conduct online legal research to those that do full scale online delivery of legal services.

The onerous requirements of the Proposed FEO, detailed in full in the LCCA’s response to the NC State Bar, would force many cloud computing providers to withdraw from the NC market entirely, thus negatively impacting the technological capabilities and competitiveness of NC-based law firms.

Unlike the recommendations of the ABA Ethics 20/20 Commission, the draft North Carolina bar opinion, as it stands, is likely to have a negative impact on the use of cloud computing resources and applications by law firms in North Carolina. One result is that North Carolina’s law  firms, particularly solos and small law firms would be handicapped when competing with law firms from other states.

We are hopeful that the revised opinion will be more compatible with the recommendations of the ABA Ethics 20/20 Commission.  Why is it necessary for each state bar to have their own set of guidelines in this area, when the companies that offer cloud computing services operate nationally?


The Committee on Attorney Advertising of the New Jersey Court System issued an Advisory Opinion this week that stated that a Total Bankruptcy web site,  published by TotalAttorneys®, a law firm marketing and services organization based in Chicago, is misleading and in violation of the Rule of Professional  Conduct 7.1 (a) .Download Full Opinion .

The Committee also ruled that the web site was not an impermissible referral service and that Attorneys are not flatly prohibited from paying for advertising on a "pay-per-lead" or "pay per click" basis. That’s good news for TotalAttorneys and other performance-based marketing schemes on the Internet.

The Committee sets out clearly that "Attorney advertising cannot be misleading or omit operative facts." and found that the website did not provide sufficient information to the user and is misleading. 

In this case, the user was directed to only one attorney based on the purchase of exclusive rights to a geographical area. To avoid misleading consumers, the Committee stated, the methodology for the selection of the attorney’s name must be made clear, including the fact that the website limited participation to one (paying) attorney per geographical area. Further, the Committee specified that all requirements to participate in the website must be clearly specified; a full list of participating attorneys must be readily accessible, and the website must inform the user that the attorneys have paid a fee to participate.

It is easy for attorneys to violate their professional obligations and expose themselves to bar sanctions, by ignoring the fine print in their agreements with Internet-based marketing websites.

For example, no less a credible organization as Lexis-Nexis®,  recently launched a direct to consumer web site, called  EZLAW.COM. The website purports to offer wills, powers of attorney and advance directives forms bundled with legal advice for a fixed and reasonable fee. A goal I would heartily endorse.

However, the site seems to suffer from the same issues as the TotalAttorney’s web site when viewed through the lense of the New Jersey Advisory Opinion.

At EZLAW, the site operator provides a mechanism for consumers to assemble legal documents on-line and then make available a network of attorneys to provide legal advice as part of the offered package. In describing its Attorney Network, EZLAW states that:

They are all prescreened by EZLaw to ensure that you get professional, experienced and confidential legal counsel. To be included in our network, attorneys must meet our rigorous 12-point checklist of criteria.

This suggests that EZLAW is vouching for the quality of the qualifications of the participating attorneys, not only whether an attorney has practiced a number of years or maintains a certain level of malpractice, and this could be construed as misleading.

Moreover, the NJ Opinion states clearly that as a form of attorney advertising, " a full list of participating attorneys must be readily accessible," but on the EZLAW web site no list of participating attorneys is to be found.

Moreover the limited representation agreement executed by the client with the law firm is provided by EZLAW on behalf of the law firm, so the client never knows the identity of the law firm prior to entering into an engagement with the attorney. Normally you would expect that the client would enter into a limited retainer agreement directly with the law firm. I never heard of a retainer agreement that wasn’t entered into directly between the client and the law firm. Not in this case.

Click here for a copy of the Representation Agreement between EZLAW and the client.  You decide whether  this agreement is ethically compliant? I am interested in hearing other opinions about this agreement. If you have one. please comment.

So what’s the bottom line? Lawyer’s need to read the fine print. Lawyers need to have a  full understanding of how their ethical obligations apply  to these new Internet-based marketing schemes lest they be caught in a web of disciplinary proceedings that wasn’t part of the bargain.