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Ethics professionals: Use caution with pay-per-lead advertising

By Correy Stephenson
Dolan Media

Though Wisconsin has closed the book on investigating a controversial pay-per-lead website and other states have done the same, ethics professionals advise lawyers to use caution with similar advertising models.

The issue arose due when Connecticut attorney Zenas Zelotes filed complaints in 47 states against Total Attorneys’ bankruptcy site, and approximately 550 participating attorneys. He alleged that Total Attorneys — which also offers sites for criminal defense, divorce, DUI and personal injury — violates prohibitions on fee referrals by using a pay-per-click advertising model.

But a New Jersey state ethics committee recently disagreed (PDF), concluding that if consumers are informed that attorneys must purchase the rights to be the exclusive lawyer listed in search results for a given zip code, the site can avoid violating Rule 7.1 of the state’s Rules of Professional Conduct.

“This was the first state that took a good, hard look at the advertising component of the complaint,” Zelotes said, though he also said New Jersey “threw in the towel” on the pay-per-lead issue.

“I hope that (the opinion) encourages other states to look meaningfully at these types of issues,” he said.

Kevin Chern, a Chicago attorney and president of Total Attorneys, said from the 47 complaints, 24 states opened up official investigations and 22 have closed those investigations, after concluding, “either by making a finding that there was no wrongdoing or making no finding at all, that they had no reason to conduct a further investigation.” Only Utah is still investigating.

Wisconsin was among the states that investigated the issue, said Pam Gracyalny, general counsel for Total Attorneys. In that instance, she said, the only action Total Attorneys needed to undertake was to respond to the complaint, for the Office of Lawyer Regulation’s preliminary inquiry. The OLR closed the file in April 2010.

But while lawyers may now feel they have the green light to use pay-per-lead sites, they should still exercise caution, said Andrew Perlman, a professor at Suffolk University Law School in Boston who focuses on professional responsibility and ethics.

“The devil is in the details,” he said, so “lawyers need to make sure the services they are using are not engaging in any false or misleading representations regarding the nature of the service.”

Dean Dietrich

Wausau attorney Dean Dietrich agreed, but characterized the New Jersey opinion as a yellow light for pay-per-lead advertising.

The opinion likened to a sophisticated Yellow Pages, said Dietrich, who heads the Wisconsin State Bar’s Committee on Professional Ethics.

“But it’s arguably problematic because it seems to imply that the service being obtained by the prospective client is from a screened, selected lawyer who has expertise and experience in the matter the person is inquiring about. And that’s not what’s happening,” he said.

Chern said the New Jersey opinion “validated (Total Attorneys) business model and said it is ok to pay for a performance-based pricing model as opposed to a flat fee.”

“We are very pleased with the opinion,” he said.

Pay per lead

Rules 7.2 and 7.3 of the Rules of Professional Conduct prohibit attorneys from giving anything of value to a person for recommending the lawyer’s services, or providing compensation for having made such a recommendation.

Under the Total Attorneys model, participating attorneys pay a monthly fee that is adjusted upward or downward based on how many consumers enter information and are put in contact with the attorney. Essentially, lawyers pay a certain dollar amount per contact.

The New Jersey Committee on Attorney Advertising noted that the Total Attorneys site “limits access to information, both by permitting only one attorney to participate per geographical area and by burying the list of participating attorneys.”

In its opinion, the committee noted “Websites that direct users to only one attorney based on the purchase of exclusive rights to geographical areas are suspect. To avoid misleading consumers, the methodology for the selection of the attorney’s name must be made clear, including the fact that the website limits participation to one (paying) attorney per geographical area. The website must inform the consumer in plain language that the ‘local bankruptcy attorney’ name provided to the user is based solely on the zip code provided and not by any evaluation.”

However, the committee determined that pay-per-lead advertising is not an impermissible attorney referral service, and therefore lawyers are not “flatly prohibited” from paying per-lead advertising charges.

“Just as ‘pay-per-click’ has become more prevalent in the Internet advertising community, ‘pay-per-lead’ or ‘pay-per-contact’ for Internet advertising is likely to become a more common model due to its inherent reward for effective advertising,” the committee said.

Website will change

Because the committee found aspects of the site misleading, such as requiring consumers to provide information for a “free evaluation” which did not result in a fact-specific consideration of the user’s legal situation but in consumers being connected to an attorney based on zip code, changes will be made, Chern said.

“Unfortunately, (the committee) was uncomfortable with some of the content issues on the site, specifically the disclosures,” Chern said.

He said the committee indicated the site had until October to make modifications. The committee will then consider whether any disciplinary action should be taken.

Wisconsin Law Journal’s Jane Pribek contributed to this report. She can be reached at [email protected].

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