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October 3, 2003

Consumers Deserve Better Lawyer Referral Services

Filed under: pre-06-2006 — David Giacalone @ 9:40 am

Lawyer Referral Services have been on my mind the past couple of days, thanks to a little blurb by Dennis Kennedy at elawyerblog, Tom Mighells minimalist pointer at Inter-alia, and a substantive posting from the solo perspective by MyShingle‘s Carolyn Elefant.  They each referred to the Business Week article, “Online Lawyers: Starting to Click” (by Ted Popper, Sept. 30, 2003).   The article looks at the way potential clients get paired with lawyers — focusing on the use of internet technology at LegalMatch.com and on the reaction to such computer-based competition by bar groups that run traditional lawyer referral service (LRS) programs.    

 

While many bar associations are alarmed by the concept of for-profit referral services, the Business Week article notes that the Utah Bar is considering switching to LegalMatch for the provision of referral services to Utah consumers, thus prompting Carolyn to ask whether bar associations should outsource programs to entities like LegalMatch.

 

At the ABA’s 2000 National Lawyer Referral Workshop, President-elect Robert A. Hirshon noted that bar-related lawyer referral programs receive approximately seven million telephone inquiries annually.  He stated that the volume of calls reflects the public’s need for high quality service and valuable information about legal issues, and underscores the role of lawyer referral services in “helping people to make that first, most important decision about whether or not to contact an attorney.”   In summarzing Hirshon’s presentation, John Busch, Chair of the LRIS Standing Committee, wrote (emphases added):


Hirshon sees “a tectonic shift … so dramatic that it threatens to overwhelm [lawyer referral programs] … or even render them irrelevant.”  Hirshon was speaking of Internet services and new technologies, and he advised, “Rather than curse these new technologies, we must embrace them, capture them for our own purposes. . . . As the public learns over time to access information and services more quickly and efficiently through electronic sources, it is only natural that the same public will turn to these sources for legal advice…We are proud of seven million telephone calls, but who will respond to the 20 to 25 million Web site hits?” he asked.


Hirshon noted concern among LRIS entities about online providers who are more interested in the bottom line than public service. He warned, “The organized bar and your referral programs simply cannot cede the field to for-profit competitors.”


This process is underway, and is highlighted by the [ABA] Standing Committee on Lawyer Referral’s initiative to collaborate with iLawyer.com to establish a national lawyer referral network on the Internet.”  Hirshon described this as the first step in a long-term process.


According to Hirshon, “The goal must be the total integration of LRIS with the emerging technologies. This electronic information should be interactive, giving individuals an opportunity to obtain personalized responses … with a single visit.”   Significantly, the ABA President-elect also urged that the process be made more user friendly, by providing the consumer with:




  1. information about a referral lawyer’s “age, location, hours of operation, language skills, special access needs for the handicapped, educational background, experience or special training.”  And,


  2. information on mediation programs and alternative dispute resolution.

Three years later, the iLawyer.com venture envisioned by Hirshon and Busch is available in all or part of only 5 states (California, Colorado, Connecticut, New York, Washington).   For most consumers, the traditional bar-run LRS is still the primary resource when looking for a formal referral to a lawyer:   Under such programs, the consumer phones his or her local bar association referral service.   A staff member asks a few questions, and then gives the consumer the name, address and phone number of a lawyer from the appropriate subject panel.  The choice of the referral lawyer is made on a rotational basis — the next lawyer on the appropriate panel gets the referral. 

 

From the consumer’s point of view there are several major problems with the traditional LRS model, the cumulative effective of which is to make the service only slightly better in most instances than using the Lawyers by Practice section of the Yellow Pages:


  1. For the most part, so long as they are members in good standing of the bar, lawyers self-select for inclusion on the panel under a legal practice area or specialty.  (E.g., Utah application merely contains the statement, “I hereby swear that I am competent to handle and will accept referrals made in the following matters,” which are checked off in boxes.   Similarly, the Boston Bar requires a demonstration of experience only in the fields of bankruptcy, employment and tort law.   The City of New York Bar, on the other hand, requires that the applicant list three matters handles and a writing sample in each major subject panel requested by the lawyer.)   An LRS operating under the ABA’s Model LRS Rules Governing Lawyer Referral and Information Services is expected to establish experience criteria for each subject panel.   The ABA Lawyer Referral Directory has links to LRS programs in each state, and indicates whether the program is operating under the Model Rules.  The savvy consumer should go to the bar association’s website and find the requirements for lawyers wishing to join the LRS panel.
  2. Only one name is given for any single legal problem — the name that pops up next on the rotation, not the lawyer who would otherwise be most appropriate. 
  3. No relevant information about the lawyer is given, merely the lawyer’s name, address and phone number is given.

Under this regime, the consumer basically has to go through a blind interview with the referral attorney, and either choose on the basis of that one interview or entail significant transaction costs to compare lawyers.   As the bar groups surely know, the dynamic would be very different, if the referral program gave the consumer background information on several lawyers (e.g., experience level, educational background, hourly fee rates, special office hours or language skills, etc.), who are experienced in the relevant practice area .   For one thing, the lawyers would know that they are actually (dare we say it) competing with eachother for the client’s business.  For another, the client would understand that all lawyers are not equal — not interchangeable, depending on the luck of the rotational draw.  

 

The situation would also be far more consumer-friendly, if each bar referral service complied with the advice quoted above from the ABA’s Hirshon (to give callers information about mediation and other alternative forms of dispute resolution) and with the analogous requirement in Rule II of the Model LRS Rules that:



A qualified service shall be operated in the public interest for the purpose of referring prospective clients to lawyers, pro bono and public service legal programs, and government, consumer or other agencies who can provide the assistance the clients need in light of their financial circumstances, spoken language, any disability, geographical convenience, and the nature and complexity of their problems.


While I would be happy to hear of exceptions, I believe that few, if any, bar assocation referral services would send a middle class caller to services other than private attorneys, unless there is a statute or court rule mandating that mediation be first attempted.   (For example, the Utah State Bar declares — right in plain view — that the immediate objective of its LRS is “to assist the general public, by providing a way in which any person who can afford to pay a reasonable fee for legal services be referred to a member of the Bar.”)

Another drawback of the traditional LRS system, which appears to continue in some of the iLawyer.com programs, are the referral fees.   There is, of course, the upfront fee paid by the client to the LRS program ($25 to $35) for the initial consultation with the attorney.   However, in some programs there is a fee paid by the lawyer to the program that is both significant and hidden from the client.   For example, the Boston City Bar takes a “remittance fee” of 15% of all fees earned by the lawyer from the referral over $500.   Similarly, the Association of the Bar of the City of New York charges an “additional referral fee” that is 5% of the first $10,000, plus 10% of the next $40,000, plus 15% of the amount over $50,000.

The NYC bar agreement states that “Each Panel Member agrees not to charge any additional fees or to increase his or her fee for the purpose of compensating for the amount due the Service under the percentage formula outlined above.”  And, ABA Model LRS Rule V also forbids charging a referred client combined fees and expenses that exceed the total charges which the client would have incurred had no referral service been involved.  Call me suspicious, but I don’t know how such a prohibition could or would ever be enforced.  It’s just too easy to capture some of the referral fee by “working a little more” for the referred client.



  • Given the fact that the NYC bar program is part of iLawyer.com, I’m a bit surprised to see the following item in iLawyer’s FAQ:   Q: Do the lawyers pay you to get cases?  No. We do not enter into any fee arrangement with the lawyer. Nor do we accept any money from the attorneys for the appointment we schedule for you.  

A program like LegalMatch seems to offer a number of advantages to consumers, besides the convenience of 24-hour availability online.   For example, it is clearly a benefit that “qualified, pre-screened attorneys compete for your business” and the consumer “can review each attorney’s LegalMatch Profile, describing the attorney’s education, experience, specializations, representative clients, and much more,” before deciding who to contact.  This assumes, of course, that (1) LegalMatch lives up to its claim that it enforces “demanding qualification standards for member attorneys” (see LegalMatch’s “Services Page“), and (2) that the service attracts a sufficient number of qualified lawyers. 


A program like LegalMatch seems to make a lot of sense from the attorney’s perspective, too, unless the attorney is afraid to compete head to head for specific clients.   If properly run, such a service can give lawyers, in LegalMatch’s words, “a solution that quickly and efficiently filters cases to them that fit in their schedules and expertise.”   The attorney gets to decide when he or she wants to make a client an offer of service, rather than seeing who happens to turn up at the end of a phoneline as an LRS rotation selection. 



  • I like the fact that the very first section of the LegalMatch consumer application form asks whether he or she has a preference as to the level of attorney experience — and notes that more experience is likely to mean higher fees.  On the other hand, I was a little put off to see that LegalMatch tells attorneys:  “We encourage quality competition, not price – in fact member attorneys are often advised to raise their rates to better reflect their expertise.”   That policy needs a re-write.

Carolyn at MyShingle worries that a service like LegalMatch will charge a fee that is too high for a beginning solo to pay.   If a bar association is shifting its entire program to an entity like LegalMatch, the sheer numbers involved should produce both Bar negotiating power and economies of scale that would reduce the subscription fee considerably.   Also, some bar groups appear to charge more than a “nominal” fee to join traditional LRS programs.  For example, Utah charges $250 a year, the Boston Bar requires a $400 membership in their association, plus $95 to join the panel, and the New York City Bar charges a base fee of $200.   In addition, as pointed out above, some bars are receiving hefty referral fees from the lawyers, and LegalMatch does not charge such fees.   [If a neophyte solo is so inexperienced, unsuccessful, or unable to budget, to afford joining a program like LegalMatch, perhaps subsidizing said solo is not such a great idea.]   


As for the iLawyer.com program, it offers some promise as an improvement over traditional LRS programs (including online 24/7 convenience), but also has some of the old drawbacks.   The iLawyer website FAQ states:



 “Based on your description of the legal problem, Bar Association staff determines the appropriate area of law and considers their list of attorneys experienced in that area of law.   From that list, the Bar Association contacts attorneys until they find an experienced attorney who can help.” 


Contacting the attorney in advance to help assure a good fit and good timing is a plus.  However, it appears that iLawyer neither offers the consumer additional information about the lawyer in advance nor offers more than one lawyer to choose from in deciding who to first consult.


Consumers deserve better referral programs than currently available through the vast majority of bar associations.   Even if bar associations fail to embrace new options like LegalMatch, I’m glad to see that LegalMatch is out their giving consumers more choice and prodding bar groups to improve their programs.   The fact that an online referral system is for-profit is not a particular problem for me —  just about everything bar associations do is primarily for the profit of their members, despite any non-profit pretensions. 

UPDATE (10-27-03): See Declarations & Exclusions Blog  Should Clients Bear the Risk When Attorneys Risk Going Bare? for a discussion on informing the client when an LRIS lawyer drops his malpractice insurance.


 

Missouri Lawyers Came Late to the Party, Still Get an $111 Million Slice of the Tobacco Fee Pie

Filed under: pre-06-2006 — David Giacalone @ 3:47 am

A five-year battle to reduce fees received by lawyers representing Missouri against Big Tobacco ended this week.  The Missouri high court refused to hear an appeal awarding $111 million to private attorneys hired just 5 months before a settlement was reached in the multi-state case against the tobacco industry.  (AP/Jefferson City News TribuneCourt turns down appeal of tobacco attorney fees,” 10-02-03, via Law.com Daily News WireOct. 3, 2003)  The five politically-connected latecomers, originally wanted $480 million for their tagalong suit.  

 

The lower court had rejected claims that the attorneys should not have been paid more than state assistant attorneys general ($99,000 a year max.), holding that they were “special assistant attorneys general.”  According to the News Tribune article, Missouri Attorney General Jay Nixon, who had hired the outside firms, stated that “The decision by the Supreme Court not to take the case is neither surprising nor noteworthy in our view.” 


Overlawyered.com has been closely following this case for the past few years.  Click here for coverage dated June 5, 2001, which includes this commentary:


When it came to the role it played in the multistate tobacco litigation, Missouri “didn’t need red-hot lawyers. Our lawsuit was what’s called a tagalong suit.  We were the 27th state to sue the tobacco companies. A national settlement was already in the works. … Five months after Team Missouri was assembled, [it] was reached.”  But that didn’t stop the lawyers who represented the state — some of whom “were distinguished more for their political connections than their legal track records”– from asking for a cool $480 million in fees, though they later declared themselves willing to settle for $100 million


Click here for Overlawyered’s Sept. 21, 2000 posting (unfortunately, many of the linked articles are no longer available), and here for the Oct. 5, 2003 update.

Comment [3] to Rule 1.5(a) of the Missouri Rules of Professional Conduct, concerning the requirement that a legal fee be reasonable, states that “When there is doubt whether a contingent fee is consistent with the client’s best interest, the lawyer should offer the client alternative bases for the fee and explain their implications.”   I would have loved to hear that conversation between lawyer and client.

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