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New York has become the latest state to target attorney match service Avvo Inc. for ethical violations.

A new bar association ethics opinion says a lawyer paying Avvo’s marketing fee to participate in its legal services program is making an improper payment for a recommendation, in violation of state ethics rules. The New York State Bar Association released the opinion by its committee on professional ethics on Wednesday.

While the state bar’s ethics opinions are advisory only, they are widely read and followed.

Lawyers who continue to participate in Avvo’s legal services program “do so at their own peril,” said state bar president Sharon Stern Gerstman, counsel at Buffalo law firm Magavern Magavern Grimm.

But in an interview, Avvo’s chief legal counsel, Josh King, encouraged New York lawyers to continue participating, adding that Avvo would back any lawyer facing disciplinary action for his or her participation. To date, King said he is not aware of any attorney in such a position.

“I’m disappointed that they [the state bar ethics committee] didn’t pay attention to the constitutional limitations” of the rules of professional conduct in attorney advertising, King said.

The ethics opinion examines Avvo Legal Services, which King said has existed for about a year and a half and is only a narrow portion of Avvo’s business. Although he declined to say how many New York attorneys participated, he said it can be measured in the “hundreds” and less than 2,000.

The New York ethics opinion follows recent actions in other states such as New Jersey, where a joint opinion by three state’s Supreme Court committees has blacklisted three web-based servicesthat match litigants with attorneys, including Avvo, because of concerns over illicit fee-sharing and referral fees. Other states with ethics concerns over lawyer website services include Ohio, Pennsylvania and South Carolina.

Marketing or ‘Recommendation’?

The ethics opinion released Wednesday examines whether paying Avvo’s marketing fee complies with Rule 7.2(a) of the state’s rules of professional conduct. Under that rule, although lawyers may ethically pay nonlawyers for advertising and marketing services, they may not pay for a “recommendation.”

The Avvo Legal Services program at issue allows potential clients to choose participating lawyers in various practice areas for a fixed fee. Avvo assigns lawyers an “Avvo rating” based on information from lawyer websites and public sources.

Although Avvo assigns a rating to all lawyers in a jurisdiction, lawyers cannot offer their services through Avvo unless they meet Avvo’s minimum criteria and sign up with Avvo to be listed on the site and agree to Avvo’s pricing schedule and marketing fees.

Avvo pays each participating attorney all of the legal fees generated through Avvo by that attorney in the previous month, and separately charges each attorney a “marketing fee” for each legal service the attorney has completed during the prior month.

The ethics opinion notes that Avvo gives each lawyer an Avvo rating, on a scale from one to 10 to help potential clients quickly assess a lawyer’s background.

While Avvo’s website never describes a rating as a recommendation, the Avvo website also extols the benefits of being able to work with highly rated lawyers.

“We believe the way Avvo describes … the ratings of participating lawyers either expressly states or at least implies or creates the reasonable impression that Avvo is ‘recommending’ those lawyers,” said the ethics committee.

The committee said it also believed that Avvo’s advertising of its ratings, in combination with its statements about the high qualifications of lawyers who participate, “constitutes a recommendation of all of the participating lawyers.”

The ethics committee said its opinion does not preclude a lawyer from advertising bona fide professional ratings generated by third parties.

“But Avvo Legal Services is different,” the opinion said. “It is not a third party, but rather the very party that will benefit financially if potential clients hire the lawyers rated by Avvo.”

“Avvo markets the lawyers participating in the service offered under the Avvo brand, generates Avvo ratings that it uses in the advertising for the lawyers who participate in Avvo Legal Services and effectively ‘vouches for’ each participating lawyer’s credentials, abilities and competence by offering a full refund if the client is not satisfied,” the opinion said, concluding that lawyers who pay Avvo’s marketing fee are paying for a recommendation, violating ethical rules.

The state bar ethics committee also released on Wednesday a second opinion outlining general guidance on lawyer matching services.

That opinion said a lawyer may pay a service for leads to potential clients through a website where potential clients agree to be contacted, as long as the lawyer has been “selected by transparent and mechanical methods that do not purport to be based on an analysis” of the legal problem or the qualifications of the selected lawyer; the service does not explicitly or implicitly recommend any lawyer; and the website of the service complies with the requirements of Rule 7.1. In an interview, King, of Avvo, said the rules of professional conduct “absolutely have to be interpreted in light of the First Amendment.” He said Avvo is not going to change its practices in New York, but he is “happy to take feedback from bar associations” for a dialogue.

“I don’t see anything in this that would indicate there’s a need for us to change anything,” he said, saying such advisory ethics opinions around the country are “creating more havoc and worry than anything else.”

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