Future Law

ARDC Proposal Aims to Address Legal Market Inefficiencies

ARDC ProposalThe Illinois Attorney Registration and Disciplinary Commission (ARDC) has published for public comment an Intermediary Connecting Services Proposal (proposal).

The ARDC proposal recognizes long-standing market inefficiencies, in which potential clients often don’t consider lawyer services for matters that could benefit from legal assistance, and in which lawyers also don’t benefit from those opportunities.

The proposal also acknowledges major factors that may be contributing to market inefficiencies. These include a proliferation of for-profit services that connect lawyers to potential clients; ambiguity and uncertainty in the Rules of Professional Conduct around whether lawyers may participate in those services; and state ethics opinions prohibiting lawyers from participating in emerging forms of intermediary services.

In response, the proposal would regulate lawyers’ participation in for-profit matching services and regulate the services themselves. The proposal also contains new and heightened public protections.

The proposal and companion materials are available on the ARDC’s website.  Comments are welcomed from members of the bar, bench, business, and public until April 3, 2020.

Regulating lawyers

The ARDC proposal recommends amending Rule of Professional Conduct 7.2 to make clear that lawyers who pay a fee to a service provider that connects the lawyer to a client wouldn’t run afoul of Rule 7.2’s prohibition against a lawyer “giv[ing] anything of value to a person for recommending the lawyer’s services.”

Rule 7.2’s proposed amendments provide that a lawyer may pay the usual charges of a registered intermediary connecting service, including a reasonable fee for every connection that results in a client hire if the fees aren’t contingent on the outcome of a matter; the fee isn’t calculated or expressed as a percentage of the lawyer’s anticipated or actual fees; the connection is made based on criteria established by the lawyer; the lawyer discloses the connection fee to a matched client; and the lawyer doesn’t permit interference with the attorney-client relationship or the lawyer’s professional independence.

The proposed amendment to comment [6] states, “Payment of a connecting fee pursuant to Rule 7.2(c)(3) does not constitute fee-splitting under Rule 5.4(a).”  This approach differs from a 2018 ARDC study, which proposed that fees lawyers pay to a qualified lawyer-client matching service would be allowed as an exception to Rule 5.4 and could be calculated as a percentage of legal fees earned by the lawyer as a result of a match.

Regulating connecting services

Intermediary connecting services, as distinguished from lead generators, legal service plans, or lawyer referral services offered by a bar or legal aid association, would be subject to registration and regulation. The services must submit to the court’s jurisdiction as well as the disciplinary authority of the ARDC.

To protect the public, intermediary connecting services would adhere to certain minimum business and ethical standards, including not limiting or controlling a lawyer’s judgment. The requirements also include an annual registration fee, furnishing a copy of financial records of revenues generated the prior year, and a payment of .25% of the organization’s revenue from the previous year. This payment would fund regulation and, at the direction of the Court, contribute to an access to justice program.

Protecting consumers

In addition to the provisions in the regulatory framework of services, the ARDC proposal recommends adding a new rule — Supreme Court Rule 220 — to protect consumers. The rule would extend the attorney-client privilege and Rule of Professional Conduct 1.6’s confidentiality protections to communications between potential clients and lawyer-client connecting 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 proposal says.

The public can send comments on the proposal to information@iardc.org.

Update (4/16/2020):

The ARDC has extended the comment and the collaboration and consultation periods for the Intermediary Connecting Services Proposal as follows:

  1. The public comment period shall end 30 days after any “Stay at Home” order heretofore (Executive Order No 2020-18) or hereafter made by Gov. Pritzker is lifted or canceled.
  2. The 60-day collaboration and consultation period shall then commence immediately after the end of the extended public comment period.

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