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Supreme Court Disciplinary Commission launches ethical guidance program

April 9, 2018

Lawyers who participate in and pay for online legal referral services run the risk of violating multiple Indiana ethical rules, the Indiana Supreme Court Disciplinary Commission wrote in a first-of-its-kind advisory opinion released as part of a new ethical guidance program.

The court announced Monday that the commission will begin offering formal and informal ethical guidance to Indiana lawyers and judges via the Supreme Court’s website and the Indiana Courts Portal. The ethical guidance program was created after the court created a task force “to investigate the feasibility of formal advisory opinions and informal individual advice related to lawyer ethics.”

“Both are aimed to prevent ethical mishaps and enhance the overall professionalism of the Indiana Bar which includes about 20,000 lawyers,” the court said in its Monday announcement.

The commission’s formal ethical advisory will come in the form of written advisory opinions, which will be publicly available online. The commission issued its first advisory opinion on Monday, when it wrote that use of online legal referral services such as Avvo and LegalZoom could cause an attorney to violate Indiana Rules of Professional Conduct 1.2(c), 5.4(a), 5.4(c), 7.2(b), 7.3(d) and 7.3(e).

The commission’s opinion raised concerns about online legal service providers’ business models, which generally include prearranged legal fees to be paid by clients; marketing fees to be paid by attorneys; local attorney databases; and the threat of removal from the database if an attorney repeatedly declines representation sought through the online service provider. That model can lead to several potential ethical issues, including:

  • Improper fee splitting in violation of Rule 5.4(a)
  • Abdication of professional independence in violation of Rule 5.4(c)
  • Limited representation in violation of Rule 1.2(c)
  • Unreasonable “advertising” costs in violation of Rules 7.2 and 7.3
  • Misrepresentation of lawyer services in violation of Rule 7.1

One of the most controversial elements of the rise of online legal service providers has been the required payment of a “marketing fee” for inclusion on the providers’ websites and databases. Those fees do not comply with the “reasonable costs of advertising” permitted by Indiana’s rules because they are typically tied to the cost of providing legal services and are typically paid after an attorney provides services, the commission said.

“Though online referral services may differ in the details of the services offered, these business models raise several ethical concerns for the Indiana practitioner,” the commission wrote in its Monday opinion. “A lawyer should carefully review the relevant rules and understand that participation in online legal referral services may put him/her at risk of violating multiple ethical rules and that the lawyer may be subject to discipline.”

All Disciplinary Commission advisory opinions will be non-binding and will be issued “in response to a prospective or hypothetical question regarding the application of the ethics rules applicable to Indiana judges and lawyers,” the court said in its Monday announcement.

Unlike formal advisory opinions, the commission’s informal guidance will be offered to individual attorneys through a confidential request and response process. However, the commission will not provide informal guidance on issues involving:

  • Advertising
  • Marketing
  • Past conduct
  • Pending litigation
  • Actions not taken by the inquirer
  • Content of motions, responses, trial briefs or legal memorandums in pending litigation
  • Law practice/office management questions not related to ethical rules

To request informal guidance, attorneys and judges must complete a guidance request form, then upload the form to the Indiana Courts Portal. Guidance request forms can be withdrawn at any time prior to receiving a response from the commission.

The Disciplinary Commission receives roughly 1,500 ethical complaints each year, but about 82 percent are dismissed as having no valid issue of misconduct. However, the commission takes action against about 100 legal professionals each year, prompting an Indiana Supreme Court sanction.

For more on the Disciplinary Commission’s new ethical guidance program, see the April 18 issue of the Indiana Lawyer.

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