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Legal Zoom and Avvo – Attorneys Beware

By: Arend J. Abel, Attorney

In April, the Indiana Supreme Court Disciplinary Commission issued its first ever advisory opinion, and it was a doozy.  It’s fair to say that the opinion puts the kibosh on the current business “lawyer consultation” models for online giants Legal Zoom and Avvo for a whole host of reasons.

Background

Not content to remain in the realm of automated preparation of legal documents, online companies such as Legal Zoom and Avvo have begun offering consultation with actual lawyers.  The lawyers are not, however, employees of the online entities, but “independent” lawyers.  The company establishes the fee for the service, which is typically a flat fee charged to the consumer.  Say $500 for estate planning advice and preparation of a simple will.  The client selects a lawyer from the company’s online database, sets up an appointment and receives the service.  In addition, the lawyer pays a “marketing fee” to the company for each matter the lawyer receives.

The Commission’s Opinion

According to the Commission, such an arrangement raises a host of issues under the Indiana Rules of Professional Conduct.  First, the Commission concludes, the marketing fee can be viewed as violating the rule that a lawyer may not split legal fees with a non-lawyer, a practice prohibited by Indiana Rule of Professional Conduct 5.4(a).  While the Commission’s reasoning is less than clear, it appears that the fact the marketing fee is not payable unless the lawyer earns a fee is the key to seeing the fee as simply part of the overall fee that the consumer pays.

The Commission’s reasoning for its conclusion that the arrangement risks an abdication of the lawyer’s professional independence is more extensive, but less convincing.  According to the Commission the abdication occurs because the client’s legal needs are “locked in” without prior consultation, and the lawyer must have a prior consultation with the client to determine the client’s needs.  However, nothing in the arrangement appears to prevent a lawyer from consulting with the client (indeed consultations are part of the model) and advising the client whether the services the client selected are sufficient to the client’s needs.  The Commission also concludes that the fact the online company sets the fee based on the time the company assumes the service will take to perform amounts to “direct[ing] the length of time lawyer should spend on the representation” such that the attorney may agree to provide legal services that cannot realistically be performed within the allotted time.  Again, though, nothing in the arrangement prevents the lawyer from spending the amount of time the lawyer independently deems adequate to get the job done right.  Finally, the Commission suggests that a “money back customer satisfaction” guarantee somehow abdicates the lawyer’s independence.  The reasoning behind this concern is particularly unclear.  Does it mean that individual lawyers can’t offer a money-back guarantees?  If it doesn’t, what’s the functional difference, if the “satisfaction” decision is truly in the hands of the consumer?  Or is the problem that the company, rather than the lawyer, will decide whether to refund the fee?

The commission also suggests that the arrangement could violate Ind. R. Prof. Cond. 1.2(c), which governs limited scope representations.  The rule requires both that the limitations be reasonable, and that the client consent.  While the Commission concludes that the “ ‘referral’ business model raises concerns about meeting this obligation,” the opinion does not explain why.

Unlike other passages of the opinion, that portion of the opinion stating that the marketing fee does not qualify as an advertising cost is not couched in conditional language saying the arrangement creates a risk of violation.  Rather, the opinion flatly states that the marketing fee “is not reasonable cost of advertising.”  That conclusion, if correct, would mean that participation likely violates Rule 7.2(b), which provides that a lawyer “shall not give anything of value to a person for recommending or advertising the lawyer’s services.”  Reasonable costs of advertising are an exception from this general prohibition, as are “the usual charges of a legal service plan or a not-for-profit or qualified lawyer referral service described in Rule 7.3(d)”  Rule 7.3(d) limits qualified referral services to those run by not-for-profit and government entities and bar associations, so for-profit online referral services wouldn’t qualify.

The opinion gives two reasons for its conclusion that the marketing fee is not the reasonable cost of advertising.  The fees are typically “tied to the cost of the legal services” rather than the actual cost of advertising the individual lawyer’s services.  In addition, because the fee is only paid after the lawyer renders the service, the opinion reasons it is more akin to fee splitting.

Finally, the opinion suggests that advertising by the online companies may falsely inflate the abilities of the lawyers to whom they make referrals, describing lawyers as highly qualified, knowledgeable, or even specialized, but allowing lawyers to take cases without prior experience.

Conclusion

In spite of the fact that much of the opinion is cast in conditional language, saying particular aspects of the arrangement “may risk” violating Indiana’s Rules of Professional Conduct, and the fact that the opinion is “non-binding,” an lawyer would have to be more than reckless to participate in the arrangements described above.  It remains to be seen how the online services react, but my prediction is there will be litigation against bar authorities over these issues.

UPDATING THE CONTRAST IN PRIVATE RIGHTS OF ACTION IN INDIANA

By: David J. Cutshaw, Attorney

In May of 2016, we contrasted the ability of a private citizen to sue a doctor for a violation of the child abuse reporting statute and the right of a doctor to sue a lawyer for an inadvertent disclosure of a doctor’s name in a medical malpractice complaint.  Since May of 2016, Indiana Courts have continued to refuse to imply a private right of action for violations of other statutes in the following circumstances:

Doe v. Ind. Dept. of Child Services, 81 N.E. 3d 199 (Ind. 2017):  The Indiana Supreme Court refused to infer a private right of action where the identity of a confidential informant who reported child abuse was released by DCS directly to the suspected abuser, resulting in threats to and harassment of the informant and his family.  The statute in that case required DCS to keep the identity of the informant confidential.  The Indiana Supreme Court held the informant had no legal recourse against DCS, adding more meaning to the no-good-deed-goes-unpunished mantra and creating the danger that other informants will hesitate to report child abuse at his or her own physical peril.

Shirey v. Flenar, 89 N.E. 3d 1102 (Ind. Ct. App. 2017):  The Court of Appeals refused to recognize a private right of action when a physician lost or destroyed a patient’s records contrary to the requirements of an Indiana statute that requires the doctor to preserve a patient’s records and produce them to the patient when properly requested.  In this case, the patient was unable to sue her doctor who did not produce her medical records for her inability to fully document her personal injury claim due to the lost/destroyed records.  Again, doctors can sue lawyers for inadvertently disclosing their involvement in a medical malpractice suit, but a patient cannot sue a doctor under the circumstances in Shirey.

First Thing We Do Is Blame the Lawyers

By: David J. Cutshaw, Partner and Gabriel A. Hawkins, Partner

Cohen & Malad, LLP has been involved in several what we call mass tort medical malpractice cases.  In essence, these cases involve situations where a doctor or surgeon has performed unnecessary procedures, not for the patient’s benefit, but for the benefit of the doctor’s pocketbook or ego.

As an example, an ENT in northern Indiana was performing unnecessary sinus surgeries.  He advertised that he could fix sinus problems and snoring.  He would bring the patient into his office, take a sinus CT scan (an xray of the sinuses), tell the patient that he or she had extensive sinus disease (when he or she did not), and then schedule the patient for seven to eleven sinus surgeries that cost tens of thousands of dollars.  He did not do the surgeries he reported and got paid for, and instead just poked a hole in the patient’s maxillary sinuses (which often made the patient worse.)  When we filed several claims against the ENT Surgeon, he cashed out, converted his cash to diamonds and fled the country.  He remained on the run for five and one-half years until he was apprehended in the Italian Alps in a tent.  Those cases were settled for millions.

As another example, we also have claims against a group of cardiologists who were implanting unnecessary pacemakers and defibrillators—and in many cases falsifying medical records to make it appear that those devices (which have wires that are screwed into the patient’s heart muscle) were appropriate—when they were not.  We are currently looking at other cases where an ENT was billing for procedures that he did not do, similar to the case of the ENT in northern Indiana noted above.

When these cases arise, doctors, medical associations, and the public blame the lawyers, claiming the lawyers are only trying to line their own pockets.  But the lawyers did not perform the unnecessary procedures; the doctors did.  Filing these cases often puts a stop to this predatory conduct and puts the doctor out of business, so to speak.  When this occurs, the doctor cannot hurt or endanger patients anymore; and we are very proud that we have been able to stop doctors from this conduct through these mass tort medical malpractice case filings.

In the case of the northern Indiana ENT, doctors in his area knew what he was doing for at least two years before we began filing lawsuits, but did nothing to stop it.  In Indiana, there is a regulation that requires doctors to report other doctors who engage in improper conduct to the Health Professions Bureau, formerly known as the Medical Licensing Board, which will investigate the matter and take action to suspend or revoke the offending doctor’s license to practice medicine.  844 IAC 5-2-8 provides:  “A practitioner who has personal knowledge…that another practitioner…has engaged in illegal, unlawful, incompetent, or fraudulent conduct in the practice of medicine shall promptly report such conduct to a peer review or similar body….This provision does not prohibit a practitioner from promptly reporting said conduct directly to the medical licensing board.” (emphasis added).  The doctors who knew about this unethical and harmful conduct did not report the offending doctor and the conduct continued for at least two more years.

There are also ethical standards that doctors should live by which have been issued by their professional associations.  For example, the American Board of Internal Medicine Foundation (which governs Internal Medicine doctors, Cardiologists and Electrophysiologists) has issued an ethical pronouncement which states:  “As members of a profession, physicians are expected to work collaboratively to maximize patient care, be respectful of one another, and participate in the processes of self-regulation, including remediation and discipline of members who have failed to meet professional standards….Physicians have both individual and collective obligations to participate in these processes.”

If doctors took these legal and ethical considerations to heart, there would be no need for mass tort medical malpractice cases or lawyers who often have to step in an put a stop to such conduct which harms patients, raises the cost of medical care, and deprives patients who actually need care from receiving proper treatment.  So, the next time you are tempted to blame the lawyers, look below the surface and understand that the fault lies elsewhere.

Taking Access Rights and Altering the Nature of Property Can Have Lasting/Devastating Effects

By: J. Eric Rochford, Eminent Domain Attorney

Taking access rights to commercial or special use properties can be devastating to the business operated on site as well as the remaining value of the real estate.  However, just because a condemning agency takes access to property, doesn’t necessarily mean that it will or is required to pay for it.  The determination of when/if access rights are compensable in a particular taking can be complex.  Often times removal/relocation of access to property can result in the business shutting down and the remaining value of the real estate being reduced to pennies on the dollar compared with what the owner previously thought or expected the property to be worth.

Delays on I-69 Construction Project and the Impact on Section 6 Land Acquisitions

By: J. Eric Rochford, Eminent Domain Attorney

By now I’m sure all Hoosiers are well aware that the construction of I-69 Section 5 between Bloomington and Martinsville has been significantly delayed – by significant I’m referring to years, not months.  The primary design-build contractor and subcontractor for this section of the I-69 Project, I-69 Development Partners and Isolux Corsan, completely blundered the project and Isolux Corsan is now pending bankruptcy.  The big question for the property owners along the final portion of the I-69 Project, Section 6, is: what impact do the delays on Section 5 have on the timing for the land acquisition process for Section 6?

The Impact of IndyGo Red Line Project for Broad Ripple Property Owners

By: J. Eric Rochford, Indianapolis Eminent Domain Attorney

The City of Indianapolis’ most recent effort in “rapid transit” is the IndyGo Red Line.  Phase 1 of this project is estimated to cost $96 million.  It will travel from College Avenue in Broad Ripple, along 38 Street, down Meridian Street, through Fountain Square and ending at the University of Indianapolis.  The 13.5-mile stretch of bus line will require the elimination of travel lanes, parking spots, and driveways on College Avenue, 38^th Street, Meridian Street and Virginia Avenue.  The project is almost certain to have a significant impact on vehicular traffic both during and after construction for those drivers who use these streets in Broad Ripple and downtown Indianapolis.  However, some property owners will bear a much more significant burden.

What is an Order of Protection?

By: Casandra L. Ringlespaugh, Attorney

The Indiana Civil Protection Order Act, or ICPOA, is a set of laws passed Indiana in 2002 in regards to domestic and family violence. Under the ICPOA, Courts can issue Orders to protect people from domestic or family violence, stalking, or a sex offense. These Court Orders are called “Protection Orders” or “Orders for Protection,” and the terms are used interchangeably. A protective order may be issued when a Judge finds, by a majority of the evidence, that the respondent (other person) represents a credible threat to the safety of petitioner…

Use of File Sharing Site Causes Waiver

By: Arend J. Abel, Attorney

Lawyers for an insurance company got a nasty surprise when a federal district court held that their use of the file-sharing service Box® waived attorney-client privilege and work product protections for the company’s entire claims file.  On February 9, in Harleysville Insurance Company v. Holding Funeral Home, the United States District Court for the Western District of Virginia decided that putting the file in an online “folder” for which it had previously sent a link to a third party waived both the attorney-client and work product protection.

Judicial Qualifications Commission Gives Green Light to Tweeting at Trial

By: Arend J. Abel, Attorney

You may remember just over a year ago when a partner in Barnes & Thornburg’s Chicago office was sanctioned for live-tweeting a trial.  That event makes all the more surprising an Ethics Opinion that the Indiana Commission on Judicial Qualifications issued last month.  According to the Commission, live-tweeting a trial does not amount to “Broadcasting,” which is barred by Rule 2.17 of the Code of Judicial Conduct, except in very narrow circumstances or with prior permission of the Supreme Court.