The State Bar denied the website LegalMatch's application to register as a lawyer referral service, saying the company is non-compliant with current statutes following an appellate court ruling.
Some attorneys criticized the decision, saying LegalMatch is not a referral service, but more of an information supplier, and the action may inhibit innovation in access to justice and be a wake-up call for similar companies.
Ellen A. Pansky of Pansky Markle Attorneys at Law said in an email Thursday that LegalMatch should not be considered a lawyer referral service at all.
Business and Professions Code Section 6155, which regulates lawyer referral services, should not be used to restrict honest commercial-free speech, she said.
"I am aware of no empirical evidence that supports a concern that clients who are matched with an attorney for an initial interview, at the prospective client's request, have been harmed by the matching process such as the one used by LegalMatch," Pansky said. "Without any evidence that the advertising of the availability of legal services, even if it comes within the definition of 'referral activity,' results in some sort of public injury or harm, what is the legitimate state interest justifying the regulation?"
Pansky argued that an analysis applying the First Amendment is required, which has been done in previous similar cases.
LegalMatch, which has been providing clients with names of attorneys who may be able to help them for 20 years, has been struggling to register since November when a court held it is a lawyer referral service and must be certified. LegalMatch's petition for review by the California Supreme Court was denied April 7.
"As laid out in the letter denying certification, LegalMatch's application revealed significant deficiencies, including a lack of malpractice insurance for a number of its panel attorneys and failure to ensure that its attorneys are qualified to provide legal services to the public," Donna Hershkowitz, interim executive director at the bar, wrote in an email after the decision was announced Tuesday. The bar sued the company in May, calling for an emergency injunction until LegalMatch had been certified.
Superior Court Judge Ethan P. Schulman in San Francisco denied the motion, saying the bar's counsel had misled the court by not revealing the agency had an application pending on which it had not acted. The State Bar of California v. LegalMatch.com, CGC-20-584278, (San Francisco Super. Ct., May 4, 2020).
The bar completed its review of LegalMatch on March 31, but the company didn't receive the letter until this week, said Chief Operating Officer Anna Ostrovsky in an email. Ostrovsky also said the bar's list of requirements are technicalities and the company expects to be fully compliant by next week.
"Had the State Bar provided us with information on these deficiencies seven weeks ago, when they were first identified, we would have been compliant seven weeks earlier," Ostrovsky said. "I find it very troubling that while the State Bar has focused its energies on shutting down our operations or suing us for damages while we are doing our best to comply, there are currently certified referral services that don't meet some of the technical issues laid out by the State Bar's letter and numerous other referral services that have not applied for certification at all."
According to Diane L. Karpman, legal ethics expert at Karpman & Associates, this is a wake-up call to other similar services. Karpman said advertising regulations hadn't been enforced in a long time because of case law that states the bar ought to work with a lawyer on these matters. "The bar will work with you," Karpman said. "They usually enforce it with silk gloves in the sense that they don't need to litigate because they will open a dialog."
She said, "All the advertising statutes require honesty and truth in representations to the public." Of LegalMatch's application, Karpman said, "There are so many substantive errors that it's just shocking."
In the bar letter's concluding remarks, the agency said the company must cease and desist its operations in California and attorneys connected to it may not accept referrals until it's certified. Ethics lawyer Jonathan I. Arons in San Francisco said he understands the application doesn't comply with the bar's rules but the bar should still have given LegalMatch a chance to amend the errors.
"These are things that can be fixed," he said. "So I don't quite understand why the bar chose to deny the application outright. It's much like when you file a complaint in a lawsuit and the other side files a demurrer and the court says the demurrer is sustained without leave to amend. In many cases, all they have to do is fix it. This looks like all they've got to do is add a couple of people to the panels."
Arons said rules for lawyer referral services and legal advertisement need to be reviewed.
Kendra L. Basner, partner at O'Rielly & Roche LLP, also said LegalMatch is not a lawyer referral service, despite the appellate court's ruling. Basner said the bar's rules are antiquated and impede innovators' ability to help consumers get access to justice.
"This battle between the bar and LegalMatch was never rooted in consumer protection because no consumer harm has ever been cited in this action or the case that preceded it," Basner said. "Without a compelling consumer protection rationale these efforts look like nothing more than resistance to change and competition, which contradicts the bar's other efforts being made to supposedly improve access to justice through considering rule changes and implementing a regulatory sandbox."
"The State Bar, as a public protection agency, has a strong and legitimate interest in ensuring that panel members of lawyer referral services carry a certain level of malpractice insurance," Heather L. Rosing, chief financial officer at Klinedinst PC, said in an email. "Just recently, in fact, the State Bar conducted a statutorily mandated study through its Mandatory Insurance Working Group to determine whether all California attorneys should be required to be insured. The lack of adequate documentation of insurance for several panel members is notable, though perhaps can be remedied."
Rosing also said it is well-known that consumers can be misled through advertisements for legal services, "so it is understandable the State Bar would be concerned with the publicity materials of LegalMatch. Again, it's possible this can be remedied."