By Edward McIntyre
LegalMatch.com is and has been a popular online service that connects individuals seeking legal services with lawyers who purchase LegalMatch subscriptions. It has been around a long time — some 20 years — and is believed to have many thousands of lawyer-subscribers in California. Its days, at least in California, however, may be at risk.
State Bar Lawsuit
On May 4, 2020, the State Bar, through its Office of General Counsel, sued LegalMatch.com in the San Francisco Superior Court, Case No. CGC-20-584278, seeking preliminary and permanent injunctions against the company for operating an unlawful uncertified lawyer referral service in violation of Business and Professions Code section 6155, as well as statutory civil penalties as section 6156, subdivision (a) provides.
The State Bar complaint also states: “Attorneys who accept or who have accepted referrals from LegalMatch also violate Business and Professions Code section 6155.” [Complaint, ¶ 10, emphasis added.]
How did we get here?
LegalMatch Picked a Fight
When a lawyer named Jackson, a subscriber, didn’t pay his subscription fee, LegalMatch sued; Jackson counterclaimed, alleging LegalMatch was an uncertified lawyer referral service operating in violation of section 6155. That section requires, inter alia, that any lawyer referral service register with the State Bar and comply with State Bar rules.
Round One
Round One went to LegalMatch. The trial court determined that it wasn’t engaged in referral activity and that it did not operate for the direct or indirect purpose of engaging in referral activity. The trial court’s rationale: LegalMatch didn’t exercise judgment on any legal issue or evaluate the consumer’s information to reach any conclusion that the consumer had presented a legal issue.
Round Two
Round Two, however, went to Jackson. In Jackson v. LegalMatch.com (2019) 42 Cal.app.5th 760, issued November 26, 2019, the Court of Appeal reversed, giving a “plain and commonsense” meaning to the term “referral” — not defined in section 6155 — that focused on “the act that an individual or entity commits in sending potential clients to an attorney.” The court also found this reading of the term “referral” consistent with section 6155’s purpose: to regulate unlawful solicitation and “ambulance chasing.” Lawyer referral services may operate, but only if they register with the State Bar and comply with standards the State Bar or Supreme Court set. The court specifically rejected LegalMatch’s argument that the court had to use the ABA Model Rules’ definition of a referral service because, for statutory interpretation, the text and purpose of the statute control — not ABA Model Rules that, while helpful, are not binding in California. On March 11, 2020 the California Supreme Court denied LegalMatch’s petition for review. Jackson v. LegalMatch.com became final.
A March 20, 2020 letter, attached to the complaint as Exhibit A, sheds more light on the history of LegalMatch and the State Bar. On March 20, The Office of General Counsel wrote to LegalMatch, reciting its history of communication with the company from shortly after the court of appeal decision. At one point, LegalMatch sought assurance from the State Bar’s former Executive Director that no lawyer who accepted referrals from LegalMatch would be subject to State Bar discipline. Obviously, a commitment she couldn’t make. It also sought “temporary registration.” Sorry, not available. LegalMatch sought “flexibility” about the State Bar rule that legal referral service panel members had to have malpractice insurance. The State Bar responded that malpractice insurance is mandatory — by statute and State Bar rules. The March 20 letter gave LegalMatch until March 31 to complete an application to become a certified legal referral service. The State Bar’s letter also demanded that LegalMatch cease operation in the state until it became certified.
On May 4 the State Bar sued.
Round Three
On May 5, the State Bar sought a TRO shutting LegalMatch down until it becomes certified. Section 6155, subdivision (e) provides for injunctive relief. The State Bar’s position is straightforward: a final court of appeal decision determined that LegalMatch is making lawyer referrals; a statute mandates State Bar certification to protect the public, including malpractice insurance; LegalMatch is not certified. Shut it down until it becomes certified; protect the public.
LegalMatch, on May 6, argues that it did file an application for certification on March 31, the State Bar’s deadline, paid the $10,000 fee; that it’s been around for 20 years; that it’s tried, at least since the court of appeal decision, to comply with California regulation; and that a TRO will harm it worse than a denial will harm the State Bar, which has not sought to enjoin other, similar referral services.
On May 7, the court orally denied the TRO, without prejudice, subject to the status of LegalMatch’s application to become a certified legal referral service — according to a lawyer at the hearing. How long that process will take and whether the company’s operation as an uncertified referral service will affect its application are, obviously, unknowns. To survive in California, however, it likely will have to jump smartly through every hoop in the certification process, including making sure that all subscribers carry $100,000/$300,000 malpractice insurance.
Meanwhile
Will the State Bar initiate discipline proceedings against LegalMatch subscribers? Its own complaint states they also violate section 6155, subdivision (a) by accepting referrals from an uncertified lawyer referral service. Could the State Bar use Business and Professions Code section 6068, subdivision (a)’s mandate that a lawyer support the Constitution and laws of California [see In the Matter of Lilley (Review Dept. 1991) 1 Cal. State Bar Ct. Rptr. 476]? Or Rules of Professional Conduct, rule 7.2(b), prohibiting payment “for the purpose of recommending or securing the services of the lawyer or the lawyer’s law firm” with its explicit exception for payments to certified legal referral services, to support disciplinary action?
By suing LegalMatch has the State Bar now put lawyers explicitly on notice that their further participation in uncertified legal referral services carries ethics and discipline risk? A word to the wise — risk avoidance suggests the answer is yes.
Edward McIntyre is a professional responsibility lawyer and co-editor of San Diego Lawyer.