A recent decision by the N.J. Supreme Court prohibits lawyers in that state from working with clients through online legal services, including Avvo, LegalZoom and RocketLawyer, because of concerns over alleged illicit fee-sharing and referral fees. 

And while the decision carries little weight outside New Jersey, it reflects similar growing questions within the legal community in Illinois and elsewhere.

"The decision of the N.J. Supreme Court, in answer to the threshold question, will it have an impact in Illinois? No, it won't. Every state gets to decide these issues. The Supreme Court decides these issues in Illinois," said Timothy Moran, chairman of the Illinois State Bar Association (ISBA) Future of Legal Services Task Force, and immediate past Chair of the ISBA Unauthorized Practice of Law Task Force

"However, the decision touches on issues that Supreme Courts and State Bar Associations throughout the country are struggling with, that is the growing presence of companies like Avvo and Rocket Lawyer. What their business models are proposing and what are the lines in respect to states' rules of professional conduct is a huge issue and very controversial," said Moran.

The Illinois State Bar Association is a voluntary bar association, as it is in New Jersey.

According to the New Jersey opinion, Avvo facilitates improper fee-splitting, while LegalZoom and Rocket Lawyer operate legal service plans that are not registered with the judiciary issued by the Advisory Committee on Professional Ethics, the Committee on Attorney Advertising and the Committee on the Unauthorized Practice of Law. 

The practices of services such as Rocket Lawyer and Avvo bring into question where certain lines should be drawn, as not all states, including Illinois, have yet decided how and whether lawyers should work with such services. Each question raised regarding the relationships between lawyers and these services raises more questions regarding ethics and practice, Moran said.

Services that charge a nominal fee to be on their list of lawyers without any contingent aspect comply with Rule of Professional Conduct. Problems arise, however, when there is a sliding scale system. Certain companies rank lawyers based on their research. If a lawyer chooses not to participate with the service, that lawyer may still be ranked low on that company's website. 

"That presents a problem for the attorney, his discretion whether to participate or not can affect his ranking, and his decision to protect to his integrity is compromised in this way," said Moran. 

In Illinois, for instance, every attorney has to have a trust fund that clients' funds must be kept in. 

"I don't know if these companies do this. Where are the fallback protections for the funds the clients pay (to these companies)?" said Moran.

In the state of Illinois, the interest on such trust fund accounts is steered to agencies providing legal assistance to those with low incomes. It is not clear if the funds that go to companies such as LegalZoom comply with this regulation.  

"As we get the answer to one issue it helps answer issues going forward," said Moran. 

"Every state has to come to its own conclusion," said Moran. "And, make no mistake, every other state is reading them to try to glean the thought process and rationale behind it. We all have to be vigilant and diligent." 

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Organizations in this Story

Avvo
1400 720 Olive Way
Seattle, WA - 98101

New Jersey Supreme Court
25 Market St
Trenton, NJ - 08611-2148

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