March 2020 • Volume 108 • Number 3 • Page 16
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A Modest Proposal?
The ARDC advances a framework for allowing and regulating for-profit client-attorney matching services.
The Illinois Attorney Registration and Disciplinary Commission (ARDC) is seeking comments on a proposal to allow for the use of ARDC-regulated for-profit lawyer-client matching services.
The proposal also coins a new term—intermediary connecting services, or ICSs—for such businesses, often referred to as “matching” or “lead-generation” services. The ARDC unveiled its proposal on Feb. 3, 2020, when the clock started ticking on a 60-day public comment period. The proposal, “Intermediary Connecting Services Proposal of the Attorney Registration and Disciplinary Commission.” Comments can be emailed to firstname.lastname@example.org. (Background materials are available.)
The publication was prompted by a Dec. 3, 2019, directive from the Illinois Supreme Court that the ARDC suggest a regulatory framework—and seek feedback from the ISBA, the Chicago Bar Association, other legal organizations, and the public—for ICSs operating in the state. The 2019 directive itself came after years of study by the ARDC culminating in a 2018 report on for-profit client-lawyer matching practices throughout the U.S.
(Such services have stirred up controversy for years prior to this; in 2010, the ISBA published an advisory opinion against fee sharing with nonlawyers. In 2015, the Illinois Supreme Court adopted changes to the Illinois Rules of Professional Conduct (IRPC) specifically allowing lawyers to pay for lead-generation services. The industry also has struggled to gain a foothold as for-profit referral services such as Avvo and Upcounsel have recently closed down their matching products. Nonprofit lawyer directories, such as the ISBA’s Illinois Lawyer Finder, would not be regulated by the ARDC’s proposal.)
“This proposal represents years of work, study, and long-running conversations with the ISBA and other legal organizations as we’ve sought to refine and clarify how intermediary connecting services would operate in Illinois,” says ARDC Administrator Jerome Larkin. “Protecting the public and the legal profession were our top goals and drove how we shaped the parameters of the regulatory model we’re proposing.”
To allow ICSs to operate in Illinois, the ARDC’s proposal would require changes to the IRPC and the Illinois Supreme Court Rules:
- IRPC 7.2 would be amended to guide lawyers using ICSs. Payments to an ICS would not be considered a legal fee and could not be contingent on any legal outcome. An attorney must also disclose to the client the nature of any financial relationship with the ICS.
- Supreme Court Rule 730 would be amended to allow for the creation of a regulatory framework of ICSs and protect attorneys and the public from for-profit nonlawyer interference. ICSs would pay annual licensing fees and a tax based on their revenues. They also would have to comply with several reporting requirements and would be prohibited from practicing law.
- A new rule, Supreme Court Rule 220, would be created extending attorney-client privilege and IRPC 1.6(a) protection to communications between “potential clients and a broad swath of lawyer-client connecting services for the purposes of seeking legal representation or legal services.”
“By expanding the availability of additional marketing tools and implementing a registration and regulatory framework, the proposed regulations and rules seek to encourage more lawyer-client interactions and innovative approaches to advertising legal services and connecting lawyers,” the ARDC proposal states.
Where the ISBA stands
ISBA President David Sosin says the ARDC has addressed several concerns the Association has raised with the commission since it released the 2018 study and earlier drafts of the Feb. 3 proposal. Sosin says many of ISBA’s concerns have been about enforcement standards, fee arrangements, confidentiality issues, and the potential for nonlawyers to get involved in the practice of law. The Feb. 3 proposal addresses many of these issues, Northrup says.
“Generally, the ISBA is not opposed to a regulatory scheme for matching services or to attorneys paying a for-profit ICS within the context of reasonable advertising efforts. But it’s determined to prevent any entity, especially a for-profit business with nonlawyer ownership, from interfering with an attorney’s obligation to do what she or he thinks is best for the client or influencing or sharing the attorney’s fee arrangements with that client,” Sosin says.
Sosin says the ISBA expects to provide additional comments to the ARDC regarding the proposal, since several issues may need clarification, including:
Fees. Whether an ICS’s charge for a connection can be contingent solely upon a successful connection and whether an ICS can set the fee a lawyer can charge.
Client protection. Aside from treating communications between a user and the ICS as confidential, some protection from an ICS selling client information to others for commercial purposes might be warranted. In addition, as a matter of public transparency, the proposal might need to address whether participating lawyers can—or should—be allowed to artificially affect their ranking or visibility on the ICS.
Lawyer liability. The proposal should clarify whether a participating lawyer would be subject to discipline if the lawyer unknowingly participates in an unregistered ICS.
The Illinois Supreme Court’s directive to the ARDC states that within 21 days after the 60-day comment period ends, the ARDC is to submit a new proposal based on any feedback it received during the comment period. The ARDC also is to create a report describing significant disagreements between the proposal and other parties. The directive does not set a timetable for implementing any aspect of the proposal.
Pete Sherman is Managing Editor of the Illinois Bar Journal.
The ARDC unveiled its proposal, “Intermediary Connecting Services Proposal of the Attorney Registration and Disciplinary Commission,” on Feb. 3, 2020, when the clock started ticking on a 60-day public comment period. . Comments can be emailed to email@example.com. (Background materials are available.)