The Business Of Law

As I’ve written before, here and here, the rules of legal ethics are being forced to adapt to changing circumstances in the profession caused by the social networking revolution.  The latest example of this is a legal ethics ruling out of Florida in which the state’s Judicial Ethics Advisory Committee said that judges and lawyers should avoid “friending” one another on the popular social networking site Facebook.   (The opinion specifically says it isn’t picking on Facebook:  the rule would apply to similar types of social networking sites).

The AP has a nice write up of the Florida situation here.

Specifically, the committee was worried that “friendships” could create the impression that lawyers have a special relationship with their judge friends that could give rise to some kind of undue influence.  I appreciate the concern but am afraid that the cure does more harm than good.

One of the judges from Florida quoted in the AP story said the following: “We as judges can still be good judges and still have friends. Part of our job is to not let that friendship interfere in any way with our decisions,” he said.  Of course, he’s exactly right: Judges will always have relationships with attorneys who practice before them.

But here is where I think that the Florida advisory committee might have gotten this one wrong.  When does less information ever lead to greater safety?  If a judge feels that he or she knows a particular lawyer well enough to allow that person to view the pictures of the judge’s last skiing vacation with the kids, wouldn’t it be better for everyone to know that?

Consider what happened before and continues now in the Facebook age.  Judges and lawyers talk when they meet in the changing room at the country club or when they see each other in the local grocery store.  The medium is different (golf course, grocery store, or social networking site) but the relationship is no different. In fact, on Facebook, one could argue that the relationship is much more transparent.

One of the many advantages of our increasingly interconnected world is the idea that it promotes greater transparency.

We know judges have friends, and we know that the possibility exists that those relationships could influence their decisions.  We hope they don’t, but we know it’s possible.  So again I ask:  isn’t it better to know about those potential relationships?

Facebook and other social networking sites don’t create relationships; they are a manifestation of them, a medium through which those relationships occur.  In the case of judges and lawyers, I’d prefer that those relationships were out in the open, where everyone could see them and thus be the judge (pardon the pun) of whether a judicial decision is influenced by a friendship.

I want to give credit in this post.  Credit to the FTC for a very creative legal argument, but more importantly credit to Steven Krane of Proskauer Rose for blowing that argument up in Federal Court.

First a bit of background.  The case at issue had to do with whether the FTC could make law firms comply with a set of regulations designed to prevent identity theft known as the Red Flags Rule.  The rule requires that businesses develop and implement plans to protect the personal information of their customers by screening for certain identity theft “red flags.”  The RFR was born out of the Fair and Accurate Credit Transactions Act of 2003 and requires certain businesses, primarily financial institutions,  to establish “reasonable policies and procedures” to detect and prevent identity theft.

Here’s the FTC’s creative argument.  In seeking to regulate law firms, the FTC  argued that lawyers were essentially in the business of “extending credit” because they typically get paid after they complete their work.  Therefore, the argument went, they are subject to the RFR.  So basically if a lawyer gets paid after they work, they’re just like a bank and therefore subject to these regs.  See what I mean, give them credit for creativity.

Not so fast though. In August the American Bar Association filed suit in federal court in Washington, D.C., to prevent the FTC from applying the Red Flags Rule to attorneys. The ABA was represented by Steven Krane, an attorney at Proskauer Rose with an annoyingly impressive resume who in addition to his many accomplishments is Sokolove Law’s chief consigliere on professional responsibility issues.

On October 29, the judge granted summary judgment for the ABA.   There’s a nice write up of the case here.

The judge made the right decision.  Lawyers don’t extend credit to their clients; some of them simply get paid after the work is complete.  That doesn’t make them “creditors” by any common sense definition, anymore than plumbers, carpenters, accountants or any other service provider can be classified as a “creditor”.

What’s more interesting about the FTC case though is the question of federal regulation of the practice of law—an area traditionally regulated by the states.  Some have argued that we need a more uniform set of professional responsibility rules.  I would agree.  As the largest marketer of legal services in the country, I know full well the task of navigating 50 different sets of rules around legal advertising, and the time and resources that go into compliance with all those rules.

That said, I tend to worry about federal regulations where they don’t appear to be necessary, or worse, are redundant.  For example, lawyers already operate under strict rules of professional responsibility, which require confidentiality on behalf of clients, so why do we need a new federal regulation around identity theft?

At Sokolove Law, our mission is to open the doors of the American civil justice system to everyone. As lawyers and regulators consider new rules, or look to streamline old ones, it seems to me that this mission is a helpful prism through which to consider reform.  Of course there are other reasons for rules changes, but perhaps if we considered whether the effect of a change would be to expand or contract access to the civil justice system that might be a helpful litmus test.

It took three years and I am guessing an obscene amount of time, money and energy on all sides given the reliance on a 300 page Special Master’s Report, but the New Jersey Supreme Court recently overturned a controversial prohibition against New Jersey lawyers  advertising their inclusion in certain ranking systems like  Super Lawyers, Best Lawyers in America and Martindale-Hubbell AV.  The original prohibition had been based on the New Jersey ethical rule that bars as “misleading” lawyers comparing themselves to other lawyers.  While I applaud the baby step in the right direction, it is just that - a baby step and one that came with a ball and chain tied to the poor baby’s ankle.

Under the new regulations, attorneys are free to include the ratings in their marketing materials so long as the conferring service made a legitimate inquiry into the lawyer’s qualifications, and no price was paid for the honor.  In addition, here comes the ball and chain part, ads must include a disclaimer that states “No aspect of this advertising has been approved by the Supreme Court” and describes the methodology for the ranking system or gives a description of where it can be found.

Legal disclaimers are in part what give lawyers a bad name.  I defy anyone to argue with a straight face that the small print or speed talking you see and hear on all different types of advertising, including lawyer advertising, provides any real benefit to the consumer. So as a navigator of the often complicated and varied rules of legal marketing in the 50 states, I’ll still gladly take this baby step forward, even with the ball and chain.

Everyone knows the old cliché, “you break it, you bought it”. Well we may need to create a new version of that old saying when it comes to lawyer’s interaction with internet sites such as Avvo and Martindale-Hubbell that talk about them. The new saying being, “You touch it, you own it”.

In the world of legal marketing, almost all law firms now have websites, and many are using blogs to publish their expert commentary on legal topics. Some are even including social networking sites like Facebook, LinkedIn and Twitter as part of their effort to promote their services. Finally there are sites like Martindale-Hubbell, SuperLawyers and Avvo that post informational listings of attorneys.

We have seen a continued struggle as state ethics regulators try to apply ethical rules that were often put in place well before the creation of the Internet to the Internets newest applications such as sites like these. A new ethics ruling out of South Carolina reflects just this struggle.

It’s a given attorneys are responsible for the ethical compliance of their advertising. That is, if you place an advertisement you have to be sure it conforms to the applicable ethical rules. What rules apply is a whole other issue.

But what about listings on Avvo, or Martindale-Hubbell? Are those listings third party information, or are they more like ads? Well according to the Ethics Advisory Committee of the South Carolina Bar, lawyers who “claim” their listing on these websites, become responsible for ensuring that the content on the listing is accurate and in conformity with the advertising and other ethical rules. Here’s the problem though: even if a lawyer claims their profile that does not mean that they control all of the material on it. For example most of these sites, allow third parties to make comments about the attorney. Those commenting might be other attorneys or current or former clients.

The South Carolina opinion makes very clear that while websites may post informational listings about lawyers without their knowledge or consent. Once a lawyer, however, participates in the listing, the rules change. “By claiming a website listing, a lawyer takes responsibility for its content and is then ethically required to conform the listing to all applicable rules,” the opinion said. That means that if a client posts a testimonial about how wonderful his or her lawyer was, depending on the jurisdiction, the lawyer might need to either have the testimonial removed or ensure that it has the proper disclaimer. So here are some one of the many unanswered questions – If a lawyer is now required to monitor the web sites that talk about him or her, how often must he or she do it? Once a week, a day, an hour? If the website is now considered an advertisement, because the lawyer “claimed” it, when does a change in the web site require a resubmission of the site for the states that require advertising submissions? What if the change was only to a section the lawyer does not control and that does not implicate the applicable ethical rules?

Greetings readers, my name is Gabriel Miller, and I’m the General Counsel of Sokolove Law.  As the top lawyer for the largest marketer of legal services in the country, I spend a great deal of my time watching very closely the rules of professional responsibility across the country.  From time to time, I’ll weigh in here to comment on interesting happenings in the area of legal ethics.

Last week, law.com brought news that Connecticut outlawed the practice of hiring so-called “runners” to solicit legal business for personal injury lawyers.  The Law.com article had a great description of how the system worked:

“People known as “runners” would be on stand-by, listening to police scanners and waiting for an auto accident to occur so they could rush to the scene. Their job was to contact accident victims and steer them toward specific doctors, chiropractors and, often, personal injury lawyers. The runners would be paid for each client they delivered; sometimes the runners would wait in busy hospital emergency rooms and spot people waiting to be treated and then whisk them out with a promise that they knew a doctor who could see the person immediately.

Runners also obtained police reports and contacted accident victims at their homes. Connecticut trial lawyer, Kathryn Emmett also had heard from other trial lawyers that some accident victims were being encouraged to file insurance claims and lawsuits based on phony injuries”

Connecticut joins 9 other states who have outlawed this practice, punishing lawyers with up to a year in jail and fines up to $5,000 if they are caught hiring “runners”.

What’s really interesting about the law is that it brought trial attorneys and the insurance companies together on the same side of a political debate.  In fact part of the impetus for the law came from the Connecticut Trial Lawyer’s Association, whose members starting hearing about runners’ unscrupulous practices from their clients.

The practice is more common than one might think with lawyers in Philadelphia, New York, and New Jersey having been convicted in recent years for violations of anti-runner laws.

Simply put, the practice of hiring runners, and other such actions give all attorneys, but particularly personal injury lawyers a bad name. There is a big difference between providing access to the civil justice system by educating people about their legal rights and options, and preying on people when they are the most vulnerable.

The Connecticut Trial Lawyers and their colleagues around the country are smart to support reasonable regulation to weed out the bad actors.

If you have a question about this or another topic on legal ethics and professional responsibility or if you know of a topic you’d like me to comment on, drop me a note.