Updated March 29, 2022
What are Law-Related Services?
Almost ten years ago, I penned a short post on lawyer sales of law-related or ancillary legal services which are defined in ABA Model Rule 5.7 as:
services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services, and that are not prohibited as unauthorized practice of law when provided by a nonlawyer.
Back then, most firms were interested in offering related professional services – like title insurance, financial planning, accounting and tax prep and trust services (for estate planning), human resources compliance (for small business), social work and psychological counseling (for family law matters) and legislative lobbying and patent, medical or environmental consulting. But fast-forward a decade, and today’s clients have additional needs. Creatives and influencers seeking IP services may need marketing or branding expertise, employers may need privacy-compliant background checks and estate planning clients have a demand for secure online storage of testamentary documents.
At the same time, there are non-lawyer owned companies like LegalZoom or Rocket Lawyer selling legal information products and forms that many states do not consider to be traditional legal services requiring an attorney. And with the rise of low cost automation tools, and the success of companies like Hello Divorce or Hello PreNup which started as offshoots of traditional law firms, many lawyers are looking for ways to offer their own law-related products.
From my perspective, law firm offerings of non-lawyer related services is a win for both the firm and the client. Consider for example, a trademark lawyer who conducts a search and discovers that her client’s desired company name potentially infringes on an existing use. Rather than turn the client away,the trademark attorney could refer her to a branding expert to come up with a new name that would comply with any trademark restrictions. Or what about a small business firm that makes LLC incorporation forms available to small companies that can’t afford a lawyer. The forms provide an affordable way for the company to open for business and when the company grows, it is more likely to hire the firm at its customary rates.
Are Law-Related Services Consistent with Legal Ethics Rules?
When lawyers offer law-related services, several ethics rules are potentially implicated. A lawyer who refers estate planning clients to a financial services company that generates profit for the firm can give rise to conflicts unless lawyers disclose their interest in the related company. Likewise, offering a law-related service like a form can be deceptive if the client assumes that the lawyer will provide legal advice along with the form. Finally, lawyers who intend to offer law-related business services should always be done through a separate entity, as automation pioneer RIchard Granat advises, so as to ensure that the product can be sold to investors down the line. If the product is owned by a law firm, an outside purchase of the product could be precluded by ethics rules.
The ABA’s Position on Law-Related Services
The ABA and states have different approaches to the ethics rules that apply to lawyer-provided law-related services. ABA Model Rule 5.7, referenced above states that ethics rules will apply if the law-related services offered through the firm are “not distinct from services provided to clients.” So under the ABA rule, a firm offering clients marketing services or stress management services would not trigger ethics requirements, but HR-compliance services might.
An assortment of state ethics rules on law-related services.
Here’s what other states have said:
Nebraska Ethics Advisory Opinion for Lawyers No. 06-08 has a similar restriction to ABA Model Rule 5.7, explaining that:
even when the law related and legal services are provided in circumstances that are distinct from each other, for example through separate entities, the Rules of Professional Conduct apply to the lawyer as provided unless the lawyer takes reasonable measures to assure that the recipient of the law related services knows that the services are not legal services and that the protections of the client/lawyer relationship do not apply. Reasonable measures could include having a contract of the collection business communicate with the client having a new contact of the collection business communicate with the client besides the lawyer handling the case, new client sheet information and new file setup, letter of engagement for collection services explaining that this is an independent service being provided apart from any legal services which may be incurred, also having the client sign a contract of understanding so that the attorney has a form which will help to establish reasonable measures….
North Carolina 2010 Ethics Opinion 13 adopts a similar approach.
Boston Bar Association: (1999) The Massachusetts Rules of Professional Conduct (“the Rules”) permit law firms to develop ancillary businesses, subject to two important limitations. First, the entity which practices law may not permit any ownership interests to be held by any nonlawyer; and second, the businesses may not share legal fees with a nonlawyer. The new Rules, while more explicit and explanatory than the predecessor Code of Professional Responsibility on these questions, continue a longstanding prohibition within the legal profession against nonlawyers owning, or sharing in the profits of, a law practice.
Oklahoma Ethics Op. 316 allows a lawyer who provides legal services to a client in estate planning or trust matters to also provide non-legal, but ancillary, products or services to their law clients, either directly or through an affiliated entity – so long as the client’s interests are protected and the services are fair and reasonable to the client.
Georgia’s version of ABA Model Rule 5.7 Georgia version of 5.7 explains that if law-related services are related to an attorney’s practice, ethics rules apply. If there’s no relationship, then ethics rules won’t apply to the services.
The Future of Law-Related Services
Of course, with the deregulation of legal services, some of the ethics rules on law-related services may change too. For example, allowing non-lawyers to own firms or alternative business structures with lawyers may open the door to a whole array of hybrid services subject to more relaxed ethics requirements. That’s where the profession is heading – so lawyers who begin offering law-related services now under existing ethics regimes will find a significant first-mover advantage.