Minding the justice gap: a recent report on the role online referral services can play
James B Kobak, Jr
Hughes Hubbard & Reed, New York
On 3 March, the New York County Lawyers Association (NYCLA) adopted a 56-page report advocating that New York revise two of its ethics rules (and possibly eliminate one provision of its judiciary law) to encourage greater use of for-profit, online legal referral services (referred to as ‘online matching services’ in the report). The report was based on a forum held in June 2018 that addressed a range of topics, by speakers with a wide range of views and experience, and substantial research and study referenced in the report.
The motivation for the most recent report was the ‘access gap’ facing middle class and low-income Americans (and many medium-sized and small businesses) who need but are unable to avail themselves of the services of a lawyer. To some extent, this gap is a function of the costs of legal services delivered in conventional ways, but research has established that many consumers do not recognise the need for a lawyer, do not know how to find a lawyer or think they will dislike interacting with a lawyer in the traditional manner.
Meanwhile, many lawyers (including those burdened with student debt, located in rural areas or with niche practices) face what might be termed a ‘client gap’, spending very little of their time – according to one study, an average of only 1.6 hours a day – actually doing billable client work. As online technology and users’ familiarity with it improve, adequately resourced and publicised online matching services offer significant potential for bridging these gaps. In the words of the NYCLA report, ‘the organized bar must recognize that FPLMS (for-profit online matching services] should play a meaningful, though not the only, role in helping clients find the help they need’ and providing a means for lawyers to develop their practices This seems even more likely to be true in the increasingly online world to which Covid-19 has accustomed us, and which is likely to endure long after the virus is vanquished.
The rules which the NYCLA report advocates changing are Rules 5.4 of the Professional Responsibility Rules, (for some matters) New York Judiciary Law section 491, which prohibits a lawyer from dividing a fee with a non-lawyer, and Rule 7.2(a) which, with narrow exceptions for entities such as bar association referral services, prevents a lawyer from compensating anyone for recommending employment of a lawyer. These rules have limited online matching services to charging users of the service a uniform fee rather than entering potentially more lucrative arrangements for some matters with attorneys, constraining incentives for growth and investment in technological improvement and publicity. Testimony at the forum described the resources and research needed to develop effective, user-friendly technology and interfaces and promote services widely to the public.
NYCLA’s proposal would create an exception to the prohibitions on fee sharing and paid referrals that would allow lawyers to participate in for-profit online matching services provided they assured themselves that certain criteria are met:
- that the online service prominently and completely disclose its criteria for choosing or rating lawyers;
- that the lawyer comply with all attorney advertising rules;
- that lawyers only accept matters they are qualified to handle;
- that any lawyer ratings be based on bona fide criteria disclosed to prospective clients and not be solely ‘pay to play’; and
- that the services not interfere with the lawyer’s professional judgment in determining what services to perform or how much to charge for them.
Registration and direct regulation of the online matching services themselves might seem logical and, in a perfect world, perhaps a preferable alternative to the more indirect route of creating safe harbours for lawyers who participate in services that meet certain criteria as recommended by NYCLA. Indeed, that route has been advocated in Illinois and already exists (though with limits and few, if any, registrants) in Ohio, Florida and California. But the world is not perfect, and the NYCLA task force had misgivings as to how and whether a new regulatory system could be implemented in New York, or how widely it would be used.
The NYCLA proposal is likely to provoke a certain amount of controversy in New York, despite being relatively modest compared to international initiatives authorising alternative business structures or innovative approaches to legal services now being explored in a number of other US jurisdictions. A former president of the New York State Bar Association spoke against the proposal at the forum based on the traditional hostility to ‘runners’ taking advantage of vulnerable members of the public, fear of inroads on lawyer independence and a distaste for allowing others to benefit financially – potentially reducing compensation to the lawyer from the lawyer’s work. Part of this criticism emphasised the relatively long history of legal referral services maintained by bar associations.
The NYCLA task force, while giving serious consideration to these views, regarded them as somewhat overstated given the role online matching services already play and the absence of demonstrable widespread harm; it also believes that the criteria it recommends for participation by lawyers adequately protect the public and the core values of the profession. As for bar association referral services, the report fully supports them and advocates investment in their future growth. But it recognises the reality that the localised, often only county-wide geographic limits and ‘resource-constrained’ nature of these services prevents them from serving as the profession’s only answer to a serious access to justice problem.
 Report of the NYCLA Task Force Report on For-Profit Online Matching Services, available at: www.nycla.org/pdf/NYCLA%20Report%20_for%20Profit%20Legal%20Service%20Providers%20Final%20Report%20.pdf
 The panellists included James J Grogan, Deputy Administrator and Chief Counsel of the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois; Joshua M King, former chief legal officer of AVVO, Inc.; Mira Levitt, head of products at A Priori Legal; David P Miranda, Past President of the New York State Bar Association; Roy D Simon, Professor Emeritus at Hofstra Law School; Amy Wildman, at the time Deputy Director of the National Center for Access to Justice; and George O Wolff, Executive Director of the New York City Bar Association Legal Referral Service. The task force consisted of two NYCLA past presidents, Arthur Norman Field and James B Kobak, Jr., the author of this article; NYCLA’s president-elect, Vincent C Chang; the chairs of its Ethics Institute and Committee on Professionalism and Professional Discipline, Sarah Jo Hamilton and Ronald Minkoff, respectively; and NYCLA member and researcher and drafter extraordinaire, Kathy Walter. The 2010 report followed and built upon an earlier NYCLA report that recommended a 19-point plan for regulating the online document and legal forms industry as well as best practice guidelines for providers to follow. Accessible at www.nycla.org/pdf/NYCLA%20Task%20Report%20Online%20Legal%20Providers%20Forms%20.pdf (2017). The earlier report was subsequently approved by the New York State Bar Association and served as the basis for the Best Practices Guidelines for Online Document Preparers, adopted by the American Bar Association in August, 2019.
 2020 NYCLA Report at 9.
 Ibid, p 4.
 Ibid, p 40 (summary of remarks of Mira Levitt).
 The California Bar is seeking to prevent Legal Match from operating in state on the ground that it does not meet the state’s criteria for a permissible online referral service.
 2020 NYCLA Report, pp 48-49.
 Ibid, p 5.
 Ibid, pp 41–42 (summary of remarks of David P. Miranda).
 Ibid, pp 5, 19–24, 49–50. The report noted that advances made by profit-making services might ultimately be adopted by bar association services. It also recommended that for profit providers use their resources and experience to help develop robust online referral services serving the indigent.
 Ibid, p 5.