Problems with the "Pay Per Lead" Model for Attorneys

Since attorneys focus on solving a very specific type of legal problem for a very specific type of client, what if the attorney could pay for leads from those ideal clients? To be most beneficial, the leads would come in at the right time - when the client begins their search for an attorney and when the attorney is ready to take on a new case.

For most pay per lead models in the legal industry, the client leaves a message or fills out a questionnaire so that the most important information about the case can be presented to the attorney. Other pay per lead models, like Google's Local Service Ads (LSA), allow the client to contact the attorney directly with a phone call or message button.

To match a good lead with a good attorney, the pay per lead system should filter out the bad leads and the unqualified attorneys.

Although the technology to create such a system might exist, no company has come close to getting it right for the legal market. Automating the process is complicated by the fact that each practice area has very different requirements.

Problems also arise because for the consumer of legal services, their information needs to remain confidential. Even more problematic, the "pay per lead" model ignores the complicated maze of bar regulations for attorney advertisements that vary in each state.

Over the years, many pay per lead providers gave up on meeting the demands of the state bar regulatory entities that have voiced objections.

At Lawyer Legion, we pay attention to pay-per-lead advertising services for law firms in the United States. We also pay attention to bar rules in each jurisdiction that apply to a pay per lead model.

Top Pay Per Lead (PPL) Forms of Advertising

The top companies currently providing some form of a "pay per lead" service to attorneys include:

LegalZoom
- the "Business Advisory Plan" provides the consumer with year-round help from an attorney for certain practice areas of the law including contracts, NDSs, service agreements, statements of work, tax advice, legal forms, copyright, and trademarks
- the "Legal Advantage" personal legal plan offers unlimited 30-minute consultations on new legal matters for one low monthly fee for estate planning, family matters, finance, bankruptcy, employment issues, and tax advice
Google's Local Service Ads (LSAs) for Lawyers
- currently available only in limited practice areas and select cities
- sign up and log in to Google Local Service Ads for law firms
- connect with potential clients searching on Google for the legal services your law firm offers
- ads only show up for customers in your area
- attorneys pay only when the consumer contacts the attorney directly through the ad
- LSAs have not yet developed a good way to verify the attorney, their location, or primary practice area
Thumbtack
- provides pay per lead services for more than just attorneys
- attorneys pick the practice areas and budget
- only pay for the leads that are accepted and reject undesirable leads
- still has no good way to verify the attorney, their location, or primary practice area
Martindale-Nolo’s targeted Pay Per Lead Subscriptionprogram
- helps connect the attorney with customers by delivering their details to the attorney's email or smartphone
- covers every major area of law that clients are searching for including Bankruptcy, Criminal Defense, DUI/DWI, Divorce, Personal Injury, SSDI, and Estate Planning
- plan the pay-per-lead campaign with a proposal generator
- the proposal generator shows the expected lead volumes calculated from historical data and based on lead type, geographical coverage, and network availability
- explore "what-if" pricing scenarios after adding or subtracting case types and geographical coverage to build the ideal lead generation campaign
- find actual lead submissions from consumers
Unbundled Attorney
- connects clients and attorneys for limited scope or discrete task representation such as preparing court documentation or drafting written arguments, or advising the client on filing and court procedures
FindLaw
- offers a 12-month program for lead generation that focuses on specific practice areas of the law and geographical areas
LegalMatch
- attorneys join as a member of the service for a flat monthly fee and a long term contract
- members have access to view leads for certain practice areas and locations
4LegalLeads
- has been serving associates since the earliest days of online lead generation in 2001
- provides exclusive leads
- use the back office portal to target practice areas and locations
- was named as a Premium Solutions Provider with ABA Law Practice Division

Ethical Problems with Lead Generation Services

Over time, lead generation services will begin to play a bigger role in helping the public find a qualified attorney online. When using a pay per lead service, the attorney has to decide whether to trust the lead generation company with their law firm's reputation. Many attorneys complain about lead generation services because they have little control over:

the quality of the leads
whether unsavory or deceptive advertising practices were used to generate the lead
whether the lead generation methods violate bar rules for attorney advertising

Some pay per lead programs provide exclusive leads and others distribute their leads to more than one attorney at once. When the leads are distributed to more than one attorney, the attorneys might compete with one another to land the lead.

The biggest problem for the pay per lead providers is that even when it has a quality lead, the model often has a hard time determining the location and category for the lead so that it goes to the right attorney or group of attorneys.

Even more importantly, from the consumer's perspective, the connection with the attorney needs to be in a confidential setting. Giving out facts about the case to a third party creates serious confidentiality problems that the user might not discover until it is too late.

Many attorneys complain about the quality of the leads. Some providers use keywords such as "free" or "pro bono" to generate the cheapest and lowest quality leads. Other providers rely on "co-registration" or "send more information" options to send a lead from one site to another. Even more problematic, providers sometimes use an incentive to convince the lead to submit their contact information which results in a lot of unqualified leads.

Why are Pay Per Lead Programs so Expensive?

Attorneys also complain that paying for leads is more expensive than paying for other forms of online advertising including:

the law firm website using the best SEO strategies for the niche practice area
targeted "pay per click" ads on Google, Bing, or Facebook
listings in commercial on-line attorney directories
listings in directories for specialty bar association and legal organizations
business profiles for the law firm on platforms such as Google My Business (GMB) and other third party platforms to drive traffic to the main website
social media profiles on Facebook, Twitter, and Instagram

Bar Rules for Pay Per Lead Services

Attorneys are bound by the rules of professional conduct in their state for advertisements and other types of communications to the public. A violation of the bar rules when advertising can result in getting "correspondence" from the bar or facing disciplinary action.

Some states consider pay per lead or other types of lead generation services to be a type of paid lawyer referral service. Long before internet marketing existed, lawyer referral services managed by local bar associations provided a similar service.

Today, those lawyer referral services have a difficult time showing up online. In many states, the bar rules attempt to protect lawyer referral services managed by local bar associations or give them a marketing advantage. For example, Model Rule 7.2 and Comment 5 prohibit:

paying anyone to recommend a lawyer’s services
splitting fees with non-lawyers
using misleading advertisements

Bar associations in several states, including Pennsylvania, New York, and New Jersey, argued that on-demand service providers like Avvo, LegalZoom, and Rocket Lawyer provided services that might violate ethics rules concerning fee-splitting and referrals.

Three of New Jersey’s Supreme Court committees issued a joint June 2017 opinion restricting local attorneys from participating in the legal services plans offered by Avvo, LegalZoom, and Rocket Lawyer. The opinion noted that by charging a marketing fee for lawyers participating in its plan, Avvo was in violation of New Jersey’s Rule of Professional Conduct for fee-splitting and referral services found in Rule 5.4(a), 7.2(c), and 7.3(d).

Even for the plans that did not charge fees to attorneys on their plans, including LegalZoom and Rocket Lawyer, the committees still found their plans violated ethics rules because they were not registered with the state’s Administrative Office of the Courts.

LegalZoom and Rocket Lawyer ultimately registered with the state while Avvo sought to have the opinion reviewed by the New Jersey Supreme Court.

The New Jersey Committee on Attorney Advertising issued an opinion that "pay per lead" ads for lawyers were not inherently unethical, but must nevertheless conform to professional standards. In other words, the New Jersey bar rules on advertisements already prohibit ads that are false or misleading, create unreasonable expectations, or result in an impermissible fee sharing arrangement.

The Benefits of Lawyer Matching Services According to the FTC

The Federal Trade Commission (FTC) encourages competition in the licensed professions, including the legal profession. The FTC has "expertise is the analysis of the competitive implications of regulatory restrictions on advertising in the professions." See FTC's Comments on a Request for Ethics Opinion Regarding Online Attorney Matching Programs.

The FTC has noted that "[o]nline legal matching services are a valuable option...likely to reduce consumers' costs for finding legal representation and have the potential to increase competition among attorneys. Further, we see no likely prospect of consumer harm that would justify the prohibition of online legal matching services...." Id.

The FTC noted several benefits to lawyer matching services including:

"The information sent to inquiring clients is likely to allow consumers to compare the price and quality among several competing attorneys more cheaply than other methods of comparison.

For example, a referral service that assigns the next attorney on a predetermined list to a client requires the client to meet the attorney and then seek a second referral simply to formulate a basis for comparison.

Similarly, a directory such as the yellow pages is time-intensive because it requires the client to search for several attorneys and formulate his or her own method to evaluate lawyers.

Indeed, these options may be more costly and yield far less relevant information than the lawyer matching services under review."

Id.

The FTC recognized that by lowering consumers' costs for obtaining information about price and quality of legal services, "online legal matching services are likely to allow consumers who use them to pay lower prices and/or obtain higher quality legal services than they would have had they used their next best alternative means for identifying a legal service provider." Id.

Additional Resources

‘Pay-per-lead’ plan on its way to the Bar Board of Governors - An article published on March 15, 2017, in The Florida Bar News explains why the Florida Bar’s Standing Committee on Advertising referred a question to the Bar Board of Governors about a fee schedule for a “pay-per-lead” plan. The committee was concerned about whether the plan would comply with Florida Bar Rule 4-5.4, which prohibits sharing fees with nonlawyers. The article was published prior to the Florida Supreme Court adopting the new bar rules for “qualified providers.”

Opinion Spells Out How to Pay For-Profit or Commercial Qualifying Providers - In an article dated January 1, 2019, the Florida Bar News explains why the Board of Governors unanimously approved an ethics advisory opinion regarding prohibited payment methods charged by for-profit qualifying providers, which includes pay per lead providers. The opinion explains prohibitions on using pay per lead or other qualifying providers that are paid in a manner that constitutes an impermissible division of fees with a non-lawyer. According to the opinion, the following payment methods were found to be generally "impermissible”:

A charge calculated as a percentage of the fee received by a lawyer.
A charge calculated as a percentage of the client’s recovery in the matter.
A charge based on the perceived value of the case referred to or accepted by a participating lawyer.
A flat charge that differs based on the perceived value of the case referred to or accepted by a participating lawyer.
A flat charge per case accepted by a participating lawyer.
A flat charge per case accepted by a participating lawyer that differs based on the type of matter (e.g., personal injury versus family law).

This article was last updated on Wednesday, March 17, 2021.

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