Bidding by the Bar: Online Auction Sites for Legal Services* (2003)

I. Introduction In the past decade, the market for consumer goods and services sold on the Internet has greatly expanded. In 1996, the amount of commerce conducted over the Internet was estimated to be $2.6 billion, while at the end of 2001 that amount was estimated at $220 billion.1 [T]he value of U.S.-based e-commerce transactions ... is projected to increase to $3.2 trillion by 2004.2 The last five years have seen the rise and fall of many dot-corn business schemes. Although many of these schemes have failed, one business model whose presence and popularity has continued to increase each year is the consumer Internet auction site.3 The auction site eBay is not only a survivor, but a rapidly growing service. Its continued presence and growth demonstrate the need for buyers and sellers to be connected through an online auction format. Law firms quickly entered the Internet revolution with home pages and e-mail contacts. In 1994, two lawyers used the Internet to send an e-mail advertisement to tens of thousands of potential consumers.4 Lawyers then began to use the Internet to convey information to potential consumers through informational websites.5 In the last few years, several auction sites for legal services have been launched to connect potential clients with lawyers.6 An Internet market researcher recently predicted that consumers will spend $222 million for online legal services this year and that the market will grow to $2.8 billion by 2004.7 Lawyers are readily taking advantage of this new market by advertising, providing legal services,8 and even participating in auctions for legal services online.9 the end of 2001, there were close to 100 Web sites that aim[ed] to match lawyers with clients online.10 These included sites that were simply online directories of lawyers as well as online auctions.11 Many Americans see the appeal of online auctions. According to one commentator, At least thirty-one percent of Americans who access the Internet regularly, or about thirty-five million people, participate in online auctions.12 One online auction site for legal services advertises, [W]e have many cases coming in each week and not enough lawyers responding.13 This Note examines the processes used by four online auction sites14-LegalMatch,15 Lawyers Quotes Fast,16 eLawForum,17 and Firmseek18-and addresses the ethical issues inherent in these processes.19 Part II provides an overview and description of two broad models of online auctions for legal services. Part III addresses the question of whether these online auctions constitute lawyer referral services and analyzes the consequences of their classification as such or, alternatively, their classification merely as advertising fora. Part IV proposes that people who submit legal problems to online auction sites qualify as prospective clients within the meaning of Model Rule 1.18 of the American Bar Association (ABA) 2002 Model Rules of Professional Conduct (Model Rules) and analyzes the consequences of the duties owed by participating lawyers to these prospective clients. Part V addresses the issue of whether these sites or participating lawyers are involved in the unauthorized practice of law. Part VI discusses the possible liability of providers of these auction sites to injunctions by state bar associations or to suits by consumers for damages. Although each state has disciplinary rules that govern the practice of law in that state, this Note analyzes online auction sites for legal services under the Model Rules because most states have patterned their disciplinary rules after these Rules.20 This Note concludes that most of the online auction sites for legal services are referral services; therefore, they must be regulated and approved by the appropriate state authority. These auction sites also must be designed to limit the risk of harm to consumers by avoiding the unauthorized practice of law, loss of confidentiality, conflicts of interest, and harm due to consumers' lack of understanding of their rights and responsibilities in such transactions. …