Is My Referral Source Ethical? The Pitfalls of High-Tech Lead Generators
Updated: Sep 27, 2022
Lawyers are always looking for new referral sources. High-tech marketing companies have gotten into the referral business, making new client-generating products available. But are they ethical? A recent Florida Supreme Court decision determined that a lead generation app was not. (The Florida Bar v. TIKD Services, LLC, et al., No. SC18-149 (October 14, 2021).
In one of many efforts in the burgeoning legal marketing efforts, which seek to expand consumer access to legal services, the Court found that a company engaged in the unauthorized practice of law. Lawyers generally appreciate efforts to prevent the unauthorized practice of law by non-lawyers. But what implications might the ruling have for lawyers who benefit from such services?
In TIKD Services, the defendants, a Florida-based limited liability company and its CEO, operated a website and mobile application that assisted drivers with their traffic tickets.
The app allowed a driver to upload a digital image of his ticket which the defendants would review to determine whether they could help. The terms of service also authorized the defendants to hire and pay for counsel on a flat-fee basis. TIKD charged the driver a percentage of the ticket’s value and sent the driver’s information to a licensed attorney with whom the defendants contracted to provide traffic ticket defense to their customers. Drivers could reject an attorney’s representation and vice versa. If a driver chose to accept representation, the attorney would communicate directly with the driver and handle all aspects of the driver’s defense. TIKD paid all fees associated with defending the ticket, including court costs and fines assessed. The defendants did not guarantee a result and provided a full refund if points were levied against a driver’s license.
In finding that the defendants engaged in the unauthorized practice of law, the Florida Supreme Court noted that the defendants:
Had the potential to “substantially affect” the quality and timeliness of representation that a driver receives (the defendants were advertising to the public and soliciting drivers with legal problems, yet could easily miss critical deadlines that might affect a driver’s rights).
Collected fees from clients to pay court costs and fines, though the defendants were not a law firm and thus were not required to hold such sums of money in trust for a driver/client to ensure the funds would be available to satisfy those obligations.
Collected legal fees from clients though they were non-lawyers (an inherent conflict exists when nonlawyers such as the defendants procure income from providing legal services, because financial interest may conflict with the legal obligation to act on behalf of the driver/client)
As non-lawyers, they lacked the training and experience to ensure that the lawyers with whom they contracted were qualified to perform the services.