The End Of Avvo Legal Services
BY Kerrie Spencer
Avvo Legal Services launched in 2016 offering limited-scope, fixed-fee, legal services in 18 states. Avvo terminated the service in July.
The service offered direct access to attorneys who provided limited-scope legal services at a fixed fee, including reviewing legal documents, uncontested divorces and citizenship applications. Avvo Legal Services found a niche of users who needed legal help but could not afford regular attorney legal fees. From the beginning, however, the service ran into ethical challenges. Over time, eight states ruled lawyers could not participate in the service.
The battle with state bar associations regarding Avvo legal services related mainly to fee splitting that raised ethical flags. It culminated in Avvo ending its service at the end of July 2018, although the company claims ethical issues were not to blame.
Avvo was bought by Internet Brands in early 2018, and its new owner soon faced issues. North Carolina’s State Bar Authorized Practice Committee sent a letter to Internet Brands requesting an explanation about how allowing consumers to purchase specific legal services for a flat fee “relates to the unauthorized practice of law.”
Avvo selected the services to be provided and determined the fee for each. The client would contact Avvo, choose a service and pay up-front. Avvo then notified an attorney, who would at this point contact the client and work directly with them. Avvo then paid its attorneys once a month by depositing money into the attorneys’ operating accounts. As a separate transaction, Avvo took its per-service marketing fees. The amount of the fee was tied to the cost of the legal service, which was likely the program’s downfall. According to many state bars, this arrangement constituted fee-sharing, which is not allowed.
The ethical issue at the core of Avvo’s troubles is the marketing fee involved in every transaction. Avvo profited from its services by facilitating a transaction between a lawyer and client and then taking a fee for its efforts.
In addition to North Carolina, seven state bar associations and ethics boards ruled that attorneys participating in for-profit referral services were violating state professional rules. At least four states seemingly lean toward permitting attorneys to participate: Tennessee, California, Georgia and Florida.
Two groups often left out of the conversation are individuals who need access to legal services but cannot afford regular attorney fees, and attorneys just starting out who need leads. Avvo had hoped to unite these groups. According to CEO, Mark Britton, “With this service, we could be the Match.com of legal. We put the needy consumer together with the needy lawyer.”
Services offered by Avvo included:
- Reviewing a business contract: $199 ($50 attorney marketing fee)
- Forming a single member LLC: $595 (marketing fee $125)
- Uncontested divorces: $995 ($200 marketing fee)
- Family green card application: $2,995 ($400 marketing fee)
Although many were not surprised to see Avvo end its fixed fee legal services, the closing impacts two major groups: people who cannot afford regular legal fees and new lawyers and law firms looking for clients. This begs the question: was there an alternative that might have resulted in a reasonable compromise?
One alternative proposal was drafted by the North Carolina State Bar Association, a more subtle approach with a set of regulations for an attorney-client matching system (ACMS), similar to Avvo’s fixed legal fee service offerings. It never saw the light of day, however, when Avvo discontinued its service. Illinois appears to be seeking a similar alternative in regulating ACMS, indicating the call to ban fixed fee for-profit services may be toning down.
The problem with Avvo’s service was the marketing fee, which was tied to both the number of clients a lawyer received and the cost of the service provided. If, for example, a company could offer something similar for a flat fee, that may not cross ethical lines.
If state bars can be persuaded to update their ethics rules to reflect both the technological landscape and the needs of low-to-moderate income Americans, services like this might be able to help find a way to close the gap in providing justice to all who need legal assistance.
A report published by the Illinois Attorney Registration and Disciplinary Commission, that oversees attorney discipline, criticizes the legal profession for resisting change in this area. The report recommends loosening Illinois’s professional conduct rules to let attorneys participate in for-profit referral services (like Avvo), because it would meet the needs of people who could not afford an attorney.
A search online produces several websites where Americans with legal problems can get legal help without paying a large retainer fee up front. One example is Unbundled Legal Help™ where those needing family law, bankruptcy, estate planning or immigration help can get their case handled by an Unbundled Attorney. For a family law matter, the prices may range from $500 – $1,500.
The Garrett Law Office in California offers unbundled legal services, also referred to as limited-scope services. The services offered are broken down and offered as individual items instead of full legal representation. Breaking down legal services and having a fixed price allows those who need legal services, but who cannot afford them, to get assistance without facing financial difficulties.
The debate over fixed-fee services and cost sharing begs the question of whether the legal profession wants to be able to offer reasonably priced legal services to those who need them. Lawyers should not be just for those who can afford them. Justice is supposed to be universal in its scope. Barring access to legal help for those without the means to consult an attorney is, in and of itself, an injustice.
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