Pay-Per-Performance Marketing Under Attack – Total Attorneys Responds

Earlier this year, a Connecticut attorney named Zenas Zelotes filed ethics complaints in 47 jurisdictions, alleging that I and more than 500 of his and my colleagues, each named individually in the respective complaints filed in their jurisdiction, had violated the applicable rules of professional conduct and engaged in a national criminal conspiracy to mislead consumers in each state by participating in the Total Attorneys group advertising ventures. Although we would have preferred to confine our response to the appropriate legal forums, Mr. Zelotes has chosen to publicly comment to the media. In light of the article appearing today in the Connecticut Law Tribune, I feel I have no option but to personally address the issue.

Mr. Zelotes has waged what in my opinion is a reckless attack on my company, me and his local and national colleagues without so much as a phone call to any one of us expressing any of his concerns about the propriety of the advertising model. Many of these attorneys have been practicing for decades while observing the highest standards of ethics in legal practice without even one complaint against them, and have had their reputations attacked unnecessarily, without even a preliminary opportunity to address the substantive issues supporting the compliant nature of our program and their participation in it.

Since he filed the complaint in April, we’ve been puzzling over what could be motivating Mr. Zelotes, whom I’ve never met, to invest the time and financial resources required to pursue so many separate complaints, and even, just this week, to request criminal charges against me in the state of Connecticut. He has today provided some insight, telling the Connecticut Law Tribune reporter that he was motivated by business concerns, as my Web site was “taking business away from lawyers who don’t participate.”

In a nutshell, Mr. Zelotes’s 203-page complaint (including exhibits) alleges that Total Bankruptcy (and various other Total Attorneys companies) is a for-profit referral service, that the business model of the Total Attorneys marketing sites amounts to impermissible fee splitting, that our advertising is impermissible solicitation and that our advertising is misleading. The complaint is a hodge-podge of hearsay, factually inaccurate statements, and carefully selected lines from a myriad of state advisory opinions taken wholly out of context, all crafted together to paint a picture of our program that could not be ignored by state regulatory counsel.

For a detailed response to these allegations, read our Memorandum of Law and Fact, as filed in Illinois. Not only does our response fairly address every issue alleged in the complaint, but it also is an excellent overview of Internet performance-based pricing models. I also urge you to review Mr. Zelotes’s reply to our response, which speaks for itself.

Mr. Zelotes has also been making an extraordinary effort to publicize an unofficial Virginia Draft Opinion to many of the state disciplinary bodies to further steer their position.  Total Attorneys properly submitted its comments to Virginia regarding the opinion and in those comments discussed in detail the need to modify it to address various scenarios not otherwise considered, and the draft remains under consideration before the Virginia Standing Committee on Legal Ethics.  After becoming aware of Zelotes’s efforts to proliferate the Virginia Draft Opinion, the Virginia State Bar Committee on Legal Ethics elected to post the following notice on its website: “This opinion is a DRAFT Opinion and is subject to revision or withdrawal until it is finalized by the Ethics Committee”.

In most of these areas, Mr. Zelotes simply seems not to understand how Internet marketing works. That’s not a surprise. As Mary Robinson, former Administrator of the Illinois Attorney Registration and Disciplinary Commission, and my counsel in this matter, told the Connecticut Law Tribune, rapid developments in Internet marketing are outpacing many lawyers’ understanding of the complexity of their operation and pricing models.

And, as another ethics attorney, who has no affiliation with Total Attorneys or the ethics matter, told the reporter, the argument isn’t new. When a similarly- structured television advertising campaign hit the airwaves in the 1990s, it quickly came under the same kind of fire. The Alabama Supreme Court ruled that the program, which described itself as an advertising service and routed consumers to lawyers based on location, was not a referral service. See State of Alabama v. R.W. Lynch, 655 So.2d 982 (Ala. 1995). The marketing model in that case was virtually identical to ours.

Mr. Zelotes’s argument that the pay-per-performance model employed by Total Attorneys amounts to fee splitting defies even the most basic logic. Sponsoring attorneys pay fees based on exposure, regardless of whether or not a particular consumer ever retains them or they ever receive a fee.

The truth is that the pay-per-performance model employed by Total Attorneys is the industry standard in online advertising and is most notably employed by Google as the pricing model for their AdWords program. Total Attorneys’ program is a natural extension of the Google performance-based pricing model. Both times that ethics opinions have addressed performance-based pricing models, first in South Carolina and then in Kentucky, they have been found to be compliant.

While more traditional marketing methods such as television and yellow page advertisements appear to be flat-fee based, the pricing is actually adjusted periodically based upon variables such as Nielsen ratings and distribution data. Internet-based advertising allows for much more accurate and up-to-the-minute performance metrics and so the pricing can be adjusted on a much more regular basis. The vast majority of online advertising operates on a pay-per-performance basis and the broad acceptance of online performance-based pricing across almost every industry is testament to the perception in the market place that this pricing is much more reflective of the value conveyed to the ad purchaser.

Likewise, Total Attorneys isn’t a referral service. Our websites are licensed to one attorney per geographic location, and all consumer inquiries from that area are forwarded to the attorney who licenses the site for that jurisdiction. We conduct no screening, make no recommendations or assessments, and make no representations regarding the attorneys’ skills or credentials. On every page of our Web sites, consumers are alerted that it is an attorney advertisement and in no way are consumers misled into believing that it is a referral service.

It is difficult to respond in detail to Mr. Zelotes’s claims that our advertising amounts to solicitation or is misleading, in that he alleges no facts in support of those claims and further does not present one incident of actual harm that was caused to a consumer. We do not contact consumers unless and until they have requested that contact by completing a form on our Web sites. The TotalBankruptcy.com and ClearBankruptcy.com Web sites have together been visited by more than 7 million consumers and have processed nearly one million requests to be connected with an attorney, and have not inspired a single complaint to the Better Business Bureau (BBB); that organization has rated our companies operating both Web sites “A+”, the highest rating issued by the BBB.

In short, I’m confident that our business model is in compliance with all applicable ethical rules; we took great pains to ensure that it was before we launched our first marketing site, and have reviewed and revised our disclosures and our model on a continuing basis as various states introduced new rules regarding attorney advertising. I’m also confident that our attorney advertising falls within the bounds of protected commercial speech, and that prohibition of our current business model would violate our 1st Amendment commercial speech rights and those of our sponsoring attorneys.

Attacking performance-based pricing in attorney advertising on its face, simply because it is performance based, would also be detrimental to consumers, in particular to the more than 2 million people who search for legal services online each month. Denying attorneys the ability to participate in these forms of commercial speech would also deny consumers access to free legal information and the quick access to legal consultation that is provided by programs like those operated by Total Attorneys. In recent years, several states and consumer organizations have undertaken legal needs studies which revealed huge gaps in access to legal services and the negative impact of those limitations on the states’ populations. (See, for example, studies conducted in Washington State , Connecticut, and New Jersey) Making it easy for a consumer to locate information about a particular area of law online and connect quickly with a local attorney is a step toward alleviating those problems.

I hope and believe that the resolution of these complaints will at last provide explicit guidance on pay-per-performance marketing and clarify the distinction between group advertising and referral services in the legal arena so that all attorneys will clearly understand where the lines are drawn in the Internet age.

Relevant Legal Documents:

Zelotes Complaint with Exhibits

Total Attorneys Response filed in Illinois

Zelotes Reply

Kentucky Ethics Opinion