Legal Ethics, Small Law Firms, Solo Practitioners, Technology

The Commercialization Of Legal Ethics, And The Avvo Defense

Why do solos and smalls find themselves in a perpetual state of catch-up?

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Ethical and Legal - businessman confused Standing at the crossroWhile perusing the Interwebs for a topic for this week’s column, I came across what sounded like an interesting article, The Commercialization of Legal Ethics by Professor Renee Knake. From the title, I thought that the piece might be proposing ways to move ethics regulation from the stodgy, old-school grievance committees – perhaps through an artificial intelligence program that could answer open-ended ethics questions more quickly than a human-manned hotline, or a mobile app that would make the obscure and often pay-walled ethics regulation more accessible to the average lawyers. To my disappointment, however, the sexy-sounding title turned out to be nothing more than a rebranding of the concept of e-shaming as a means to promote ethics compliance – an idea that’s been making its rounds amongst bloggers for over a decade . Essentially, Knake argues that lawyer-rating sites like Avvo and UpCounsel, or even non-lawyer review sites like Yelp, can supplement or replace traditional ethics regulation.

To me, however, the commercialization of legal ethics means something different: it contemplates a system where VC-backed legal tech companies that seek to push the envelope on legal ethics invest their expansive resources in changing the rules either directly (such as through a constitutional challenge) or indirectly (by simply proceeding however they wish in the face of regulatory risk), then let the benefits trickle down to solo and small-firms that are more risk-averse. Call it the “Avvo Defense.”

For years, I’ve argued that the reason that many solos and small law firms don’t innovate isn’t because of a guild-mentality but rather, because of uncertainty regarding adoption of a new technology, be it cloud computing or social media or online advertising. As many solos and smalls have told me, they don’t want to be a “test case” and they prefer to proceed cautiously, waiting for bar regulators to issue an opinion approving the proposed conduct instead of taking the “well, nothing says that I can’t do that” approach. Yet by the time regulators get around to issuing an opinion, the opportunity to gain a first-mover advantage is lost, and solos and smalls find themselves in a perpetual state of catch-up.

Legal tech companies don’t take this approach – indeed, if they sat around waiting for certainty, they’d be a glimmer in someone’s eye rather an $800 million industry giving lawyers a run for their money. Now, legal tech has some advantages over solos and smalls. With money, they can afford to hire in-house ethics counsel and pay the cost of purchasing insurance to cover the cost of defending against adverse actions. As a result, they can get issues resolved much faster than an individual lawyer.

Take the case of Total Attorneys. Back in 2008, its “pay per click” advertising system was challenged before every bar association in the United States, including Connecticut, which decided to initiate a grievance proceeding against four lawyers who used the service. (Total Attorneys paid for their defense and they were exonerated). But guess what? As a result of the Total Attorneys litigation, just two years later, in 2011, the typically molasses-slow ABA issued guidance on pay per click, finding the practice consistent with ethics obligations.

Even if a legal tech company doesn’t challenge or defend against an ethics regulatory action, that they move forward into the questionable area may be a potential defense to lawyers. For example, take the Avvo Legal Services program where clients can obtain legal services for a matter for a flat fee. Clients pay the fee to Avvo which retains a percentage for marketing and administrative services and then passes it on to lawyers. Several regulators have taken the position that this practice constitutes fee-splitting – though Avvo disagrees. Now, I don’t know if Avvo (and other similarly impacted companies) plan to challenge the jurisdictions that issued adverse decisions. But I know that these programs are continuing, and soon will become accepted practice by default. Yet lawyers don’t have to sit back and wait for that day to come. We can implement similar programs – and if the bar comes after us, we can assert that we’re just doing what Avvo is doing. The same holds true for other stupid bar decisions. For example, when the New York Bar Association prohibited lawyers from listing “specialties” on LinkedIn, I noted that Axiom — an #altlaw company that markets itself as a new kind of law firm — was doing it too.

Until state bars can come up with a more efficient way to resolve uncertainty over ethics regulation, risk-averse solos and smalls will be left behind. Meanwhile, legal tech companies will grow, buying up more market share and making it difficult for solos and smalls to compete. Instead of trying to beat #alt law into submission by erecting more regulatory barriers, solos and smalls should ride into the future of law on their coattails. To me, that’s what the commercialization of legal ethics is all about.

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Carolyn ElefantCarolyn Elefant has been blogging about solo and small firm practice at MyShingle.comsince 2002 and operated her firm, the Law Offices of Carolyn Elefant PLLC, even longer than that. She’s also authored a bunch of books on topics like starting a law practice, social media, and 21st century lawyer representation agreements (affiliate links). If you’re really that interested in learning more about Carolyn, just Google her. The Internet never lies, right? You can contact Carolyn by email at elefant@myshingle.comor follow her on Twitter at @carolynelefant.

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