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Avvo, LegalZoom, Rocket Lawyer Products Prohibited in NJ

Three New Jersey Supreme Court committees have recently prohibited three online services that allow clients and lawyers to interact for a small fee. Certain Avvo, LegalZoom, and Rocket Lawyer products have been deemed to be in violation of ethical standards in the state and are currently blacklisted. Moreover, Avvo is under fire for its improper fee-splitting.

In the Joint Opinion issued by the Advisory Committee on Professional Ethics, Committee on Attorney Advertising and Committee on the Unauthorized Practice of Law (ACPE Opinion 732, CAA Opinion 44, UPL Opinion 54), the committees state that “New Jersey lawyers may not participate in the Avvo legal service programs because the programs improperly require the lawyer to share a legal fee with a nonlawyer…”

On the other hand, it adds, “The Committees further find that LegalZoom and Rocket Lawyer appear to operate legal service plans through their websites but New Jersey lawyers may not participate in these plans because they are not registered with the Administrative Office of the Courts…” While these two services are permissible under RPC 7.3(e)(4), they are off limits due to the lack of registration.

Among other product offerings, Avvo offers customers the option to buy brief conversations with a lawyer for a flat rate, as well as other legal services provided by affiliated attorneys for other flat rates. In addition to its payment to the lawyers, Avvo also retains a marketing fee.

The committees found that Avvo’s marketing fee constitutes an impermissible referral fee and its service comprises an improper fee sharing. LegalZoom and Rocket Lawyer’s business models, however, do not violate the fee-sharing provision, as they offer subscription plans where lawyers give limited legal advice and free 30-minute phone consultations. The lawyers also “agree to offer a discounted fee for additional services” and do not get shares of the subscription fees.

All three services have submitted responses disputing this decision, commending the committees for their efforts to uphold ethical standards, clarifying their business models, and defending their efforts to improve access to legal services.

In response to the Opinion, The New Jersey State Bar Association President Robert Hille issued a statement saying that the association “has in recent years frequently expressed concern about the growing number of organizations that have sought to open the door to fee sharing, which could interfere with a lawyer’s independent professional judgement.”

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