Jackson v. LegalMatch.com ( 2019 )

Filed 11/26/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
DORIAN L. JACKSON,
Cross-complainant and Appellant,
A152442
v.
LEGALMATCH.COM, (San Francisco City & County
Super. Ct. No. CGC-15-547260)
Cross-defendant and Respondent.
OVERVIEW
LegalMatch.com (LegalMatch) is an online service company that connects
individuals seeking legal assistance to lawyers who have purchased a LegalMatch
subscription. LegalMatch sued Dorian Jackson, a lawyer, when he allegedly failed to pay
for his LegalMatch subscription. Jackson cross-claimed on the basis that LegalMatch is
operating an uncertified lawyer referral service in violation of Business and Professions
Code1 section 6155, rendering the subscription contract illegal and unenforceable. After
a bench trial, the court rejected Jackson’s argument, finding that LegalMatch does not
engage in referral activity within the meaning of section 6155. We disagree and therefore
reverse and remand.
1
All further statutory references are to the Business and Professions Code unless
otherwise specified.
1
BACKGROUND
I. LegalMatch’s Services
LegalMatch operates an online website, www.legalmatch.com, that connects
individuals to lawyers. Individuals who utilize the service are invited to fill out an intake
form with information about their legal issue. Users must select their specific geographic
location and the legal category that relates to their issue, such as business litigation,
family law, criminal defense, or intellectual property. Depending on the legal category
selected, LegalMatch requests additional information from potential clients about issues
“prospective attorneys would like to hear.” However, responding to the requests for
additional information is not mandatory, and the potential clients’ answers can be
“gibberish.” Potential clients may also write a “summary of [their] case,” but they are
not required to do so. LegalMatch’s website represents that this process is designed to
mimic a “lawyer . . . during an initial consultation.” Finally, individuals may require a
lawyer with a minimum number of years of experience and designate a preferred method
of payment.
Potential clients are required to accept LegalMatch’s terms and conditions before
the intake process is completed. In its terms and conditions, LegalMatch represents that
it “does not screen or vouch for any of its users.” Additionally, LegalMatch includes a
disclaimer that it “[p]rovid[es] a service where potential clients and legal professionals
can meet. [It d]oes not imply an endorsement of any subscribing attorney or service
provider. LegalMatch makes no representation concerning an attorney’s qualifications,
except the attorney was licensed to practice in at least one state at the time of registration
nor does it sanction statements that an attorney may post on the system. LegalMatch
makes no representations concerning the qualifications of non-attorney legal service
providers. [A client’s] case will not be reviewed by non-attorney legal service providers
by consent. LegalMatch does not screen individual cases or otherwise channel potential
clients to select attorneys.”
Once individuals have completed the intake process and accepted the terms and
conditions, LegalMatch communicates the information collected during the intake
2
process to lawyers who have subscribed to LegalMatch’s service. Only subscribing
lawyers associated with the geographic location and legal category selected by the
potential client receive the information. LegalMatch sends information to lawyers based
solely on the client’s selection of geographic location and area of expertise. After the
lawyers receive this information, each lawyer has the opportunity to affirmatively reach
out to the individual. The lawyer must first utilize LegalMatch’s platform to initiate
contact with the potential client. Depending on the client’s preferences, the potential
client may choose to send contact information to the lawyer so that they may continue
their discussion outside of the platform. Lawyers and clients negotiate between
themselves to determine the parameters of their attorney-client relationship.
LegalMatch’s business model relies on yearly or multi-year subscriptions that
lawyers may purchase to receive LegalMatch’s intake information. Each lawyer who
purchases a subscription is slotted into a geographic location and category of legal
expertise. The number of lawyers in a geographic location and category of legal
expertise is limited by an algorithm (allocation system) that maintains LegalMatch’s
profitability by balancing the number of clients and lawyers available. For example,
LegalMatch placed Jackson on a waiting list before he was accepted to the panel of
subscribing lawyers for the category of wills, trusts, and estates.
Potential clients may use the site for free, and LegalMatch receives no fee for the
successful formation of an attorney-client relationship.
II. Procedural History
Dorian Jackson purchased a subscription with LegalMatch, initially in the field of
business litigation and then, after he was accepted, in the category of wills, trusts, and
estates. When LegalMatch sued Jackson to recover unpaid subscription fees, Jackson
3
cross-claimed, asserting that LegalMatch was an uncertified lawyer referral service that
was operating in violation of section 6155.2
The parties attempted to resolve the issue of whether LegalMatch operated as a
lawyer referral service through cross-motions for summary adjudication. Because the
trial court was unable to decide the issues on summary adjudication, the parties
proceeded to a bench trial to present evidence on the issue of whether LegalMatch’s
system constituted a lawyer referral service.
After hearing evidence, the trial court issued a statement of decision in which it
found that LegalMatch was not a lawyer referral service governed by section 6155. The
court and parties agreed that determining whether LegalMatch operated a lawyer referral
service depended on the resolution of two questions, apparently gleaned from the
language of section 6155: “Does LegalMatch.com engage in referral activity? If so, does
it operate for the direct or indirect purpose of engaging in referral activity?” The court
found that “[t]he answer to both questions is ‘no.’ ” In reaching this conclusion, the trial
court reasoned that LegalMatch “[did] not in fact exercise any judgment on any legal
issue . . . [and did] not evaluate the consumer’s input in order to generate a conclusion
that a legal issue [was] presented.”
This appeal followed.
2
Section 6155 regulates entities that refer potential clients to attorneys. In
relevant part, section 6155, subdivision (a)(1) provides that “[a]n individual, partnership,
corporation, association, or any other entity shall not operate for the direct or indirect
purpose, in whole or in part, of referring potential clients to attorneys, and no attorney
shall accept a referral of such potential clients,” unless “[t]he service is registered with
the State Bar of California and . . . is operated in conformity with minimum standards for
a lawyer referral service established by the State Bar” or “is operated in conformity with”
standards set by the Supreme Court. Subdivision (h)(1) provides that “[p]ermissible joint
advertising, among other things, identifies by name the advertising attorneys or law firms
whom the consumer of legal services may select and initiate contact with,” while
subdivision (h)(2) states that “[c]ertifiable referral activity involves, among other things,
some person or entity other than the consumer and advertising attorney or law firms
which, in person, electronically, or otherwise, refers the consumer to an attorney or law
firm not identified in the advertising.” (§ 6155, subd. (h).)
4
DISCUSSION
Jackson asserts that the trial court erred when it found that LegalMatch did not
engage in referral activity because it did not exercise judgment on a client’s legal issues.
Based on our interpretation of the statute and the plain meaning of the term “referral,” we
agree. Under section 6155, it does not matter whether LegalMatch exercises judgment on
an individual’s legal issues before communicating that information to a lawyer. Rather, a
referral occurs when an entity directs or sends a potential client to an attorney.
I. Standard of Review
While reviewing a judgment based upon a statement of decision following a bench
trial, the appellate court reviews the trial court’s findings of fact under a substantial
evidence standard. (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.) In applying
the substantial evidence standard, an appellate court defers to a trial court’s findings of
fact by “liberally constru[ing] [them] to support the judgment.” (Ibid.) The court
considers the evidence in the light most favorable to the prevailing party and draws all
reasonable inferences in support of the findings. (Ibid.) However, questions of law—
such as the interpretation of a statute—are reviewed de novo. (Ibid.; see Smith v.
Superior Court (2006) 39 Cal.4th 77, 82–83.) Jackson does not dispute the trial court’s
factual findings regarding LegalMatch’s operations. Instead, he argues that he is entitled
to reversal under a de novo interpretation of section 6155 in light of the undisputed facts.
We agree and review the trial court’s interpretation of section 6155 de novo. (See
Community Youth Athletic Center v. City of National City (2013) 220 Cal.App.4th 1385,
1407 [applying de novo review to questions of statutory interpretation arising from a
judgment based on a statement of decision].)
II. Governing Legal Principles
In interpreting a statute, this court’s “fundamental task . . . is to determine the
Legislature’s intent so as to effectuate the law’s purpose.” (Meza v. Portfolio Recovery
Associates, LLC (2019) 6 Cal.5th 844, 856 (Meza).) The court first examines the
statutory text, giving it a “plain and commonsense” meaning. (Ibid.) If the language is
clear, the court must follow the text’s plain and commonsense meaning unless a literal
5
interpretation would result in absurd consequences the Legislature did not intend. (Ibid.;
City of San Jose v. Superior Court (2017) 2 Cal.5th 608, 616.) The plain and
commonsense meaning governs “unless the statute specifically defines the words to give
them a special meaning.” (MacIsaac v. Waste Management Collection & Recycling, Inc.
(2005) 134 Cal.App.4th 1076, 1082–1083 (MacIsaac).) The statutory language is not
examined in isolation but is reviewed in the context of the statutory framework while
giving effect to the apparent purpose of the statute. (Ibid.; Meza, at pp. 856–857.) If the
statutory language is ambiguous and allows for more than one reasonable interpretation,
we turn to maxims of construction and the legislative history to inform our interpretation
of the statute. (Meza, at p. 856; MacIsaac, at pp. 1082–1083.)
III. Analysis
A. Waiver
LegalMatch argues that Jackson has waived his statutory construction argument
because the parties purportedly agreed in the trial court to apply a “litmus test” from the
American Bar Association (ABA) that “would determine whether LegalMatch had
engaged in referral activity under [s]ection 6155.” LegalMatch further contends that
Jackson is barred from “rais[ing] new theories” on appeal because he argued below that
section 6155 was not ambiguous. We disagree.
“ ‘As a general rule, theories not raised in the trial court cannot be asserted for the
first time on appeal; appealing parties must adhere to the theory (or theories) on which
their cases were tried.’ ” (Vallejo Police Officers Assn. v. City of Vallejo (2017)
15 Cal.App.5th 601, 621.) But “[w]hether “the rule is to be applied is largely a question
of an appellate court's discretion.” (Parker v. Tract No. 7260 Assn., Inc. (2017)
10 Cal.App.5th 24, 36, rehg. den. Apr. 13, 2017, review den. July 12, 2017.)
LegalMatch asserts that the parties agreed to a controlling meaning of “referral” at
trial. Specifically, LegalMatch claims that the parties agreed that construction of the term
6
“referral” would be controlled by a purported “litmus test” 3 from the ABA’s Standing
Committee on Lawyer Referral and Information Service’s Model Supreme Court Rules
Governing Lawyer Referral and Information Services (ABA Model Rules). The
introduction to the ABA Model Rules states: “Lawyer referral programs offer two
important services to the public. First, they help the client determine if a problem is truly
of a legal nature by screening inquiries, and referring the client to other service agencies
when appropriate. The second and perhaps more important function of a lawyer referral
service is to provide the client with an unbiased referral to an attorney who has
experience in the area of law appropriate to the client’s needs.”
Jackson never agreed in the trial court that the ABA Model Rules provide the
controlling definition. Instead, as on appeal, Jackson relied principally on the plain
meaning of the term “referral” to argue that LegalMatch engages in referral activity
within the meaning of section 6155. Although Jackson did cite the ABA Model Rules in
his trial brief, he did so only to note that the analysis required by the plain meaning of
section 6155 is “consistent” with the ABA Model Rules. Jackson thus never agreed to
the ABA Model Rules as the sole and proper definition of “referral.”
LegalMatch is also mistaken in contending that Jackson has changed his position
on appeal. Jackson’s arguments on appeal remain consistent with the arguments he
advanced in his pre- and post-trial briefs. Both here and below, Jackson cites largely the
same dictionary definitions to support his argument that “referral” has a plain and
commonsense meaning. Jackson’s failure to discuss the statutory framework and
legislative history in his trial brief does not waive these arguments on appeal, as we
review de novo the question of statutory interpretation and Jackson’s primary argument
remains that the term “referral” is unambiguous. As noted above, under well-established
rules of statutory interpretation, a statute’s “plain and commonsense meaning” will end
the inquiry into how to interpret the term. (Meza, supra, 6 Cal.5th at p. 856.) Should we
decide that the term “referral” is indeed ambiguous, we would then “consider other aids,
3
The term “litmus test” is not used by the American Bar Association. It appears
to be a term coined by the parties in this case.
7
such as the statute’s purpose, legislative history, and public policy.” (Ibid.) Jackson’s
citations to legislative history on appeal merely follow this analytical framework.
In sum, we conclude that Jackson did not waive any of his arguments on appeal.
B. The Plain and Commonsense Meaning of “Referral”
We read the statutory text to give a “plain and commonsense” meaning to the term
“referral.” (Meza, supra, 6 Cal.5th at p. 856.) As used in the statute, the terms “refer”
and “referral” focus on the act that an individual or entity commits in sending potential
clients to an attorney.
Preliminarily, we note that there is a paucity of case law interpreting section 6155.
The only arguably pertinent authority is Hyon v. Selten (2007) 152 Cal.App.4th 463(Selten), which both parties cite. Selten, however, is not particularly helpful to our
analysis, notwithstanding LegalMatch’s assertion that Selten clearly states that the term
“referral” is unambiguous. Selten involved a contract in which Hyon and Colangelo
agreed to pay Selten’s company “to retain counsel” for Hyon and Colangelo and to
provide other litigation services. (Id. at p. 465.) The contract expressly provided that
Selten’s company would not be paid if it was “ ‘unsuccessful in arranging’ ” for counsel
for Hyon and Colangelo. (Ibid.) Without explanation, the Selten court found “as a matter
of law, that, under the contract, Hyon and Colangelo were paying [Selten’s company], in
part, to refer them to an attorney,” and held that the contract “violated section 6155”
because it “called for [Selten’s company] to ‘operate for the direct or indirect purpose, in
whole or in part, of referring potential clients to attorneys.’ ” (Id. at p. 468.)
In the course of so holding, the court rejected Selten’s reliance on legislative
history materials that related to an earlier version of section 6155, noting: “[E]ven if we
found the statutory language sufficiently ambiguous to require resort to legislative
history—which we do not—the materials cited by Selten would have no effect on our
decision, because they relate to a version of the statute that did not include the language
on which we rely.” (Id. at p. 470.) When it rejected Selten’s assertion that the statute
was ambiguous, the court was referring to the phrase “operate for the direct or indirect
purpose, in whole or in part, of referring potential clients to attorneys”— not the term
8
“referral,” which Selten did not meaningfully interpret. (Id. at pp. 468–470.)
Accordingly, Selten does not illuminate the meaning of that term, and we have found no
other authority that does.
We thus conduct our own analysis of the statutory text. The word “referral” and
its cognates appear multiple times in section 6155. First, the statute provides that an
individual or entity “shall not operate for the direct or indirect purpose, in whole or in
part, of referring potential clients to attorneys, and no attorney shall accept a referral of
such potential clients” unless the referring individual or entity is registered and meets
certain standards (§ 6155, subd. (a)(1), italics added.) Second, an individual or entity that
does refer potential clients to attorneys must be “operated in conformity with minimum
standards for a lawyer referral service established by the State Bar or Supreme Court.”
(Ibid., italics added.) Third, “[c]ertifiable referral activity involves, among other things,
some person or entity other than the consumer and advertising attorney or law firms
which, in person, electronically, or otherwise refers the consumer to an attorney or law
firm not identified in the advertising.” (§ 6155, subd. (h)(2), italics added.)4
Section 6155 provides no definition of “referring” or “referral.” Instead, the
statutory text appears to focus on the act of connecting potential clients with attorneys,
with the additional requirement that the covered individual or entity operate for the direct
or indirect purpose of doing so. (§ 6155, subd. (a).) Read in the context of the statute,
the plain meaning of the term “referral” means no more than the “act or an instance of
sending or directing to another for information, service, consideration, or decision.”
(Black’s Law Dict. (11th ed. Westlaw 2019).) Other dictionary definitions support this
interpretation. For example, Webster’s New Collegiate Dictionary defines “refer,” as
relevant here, as to “send or direct for treatment, aid, information, or decision.”
(Webster’s 9th New Collegiate Dict. (1987) p. 989.) Even LegalMatch’s cited
definition—“to send to another for business or another matter, e.g., to refer a client to
4
The “advertising” mentioned in section 6155, subdivision (h)(2) refers to
“[p]ermissible joint advertising” as described in section 6155, subdivision (h)(1). (See
fn. 2 ante.)
9
another attorney”—focuses on the act of directing the client to the attorney and contains
no requirement that the referring party make an initial judgment regarding the client’s
circumstances. (Refer, TheLaw.com Dictionary
[as of November 26, 2019].)
Nowhere does the Legislature provide a special meaning for “referral” or suggest
that it is a term of art. As we must rely on a statute’s “ ‘plain and commonsense
meaning’ unless the statute specifically defines the words to give them a special
meaning,” (MacIsaac, supra, 134 Cal.App.4th at p. 1083), we decline to read into the
term “referral” a specialized meaning involving screening or the exercise of judgment
before sending a potential client to a lawyer.
Nor does the phrase “lawyer referral service” in section 6155, subdivision (a)(1)
create a specialized meaning of the term “refer” or “referral.” Although the Legislature
required a “lawyer referral service” to satisfy certain minimum standards, requiring
compliance with such standards does not resolve the question of what a referral is in the
first instance. (See § 6155, subd. (a).) The standards in section 6155, subdivision (a)(1)
simply set forth requirements that an entity must follow once it has already decided or
been found to engage in referral activity.
C. The Overall Statutory Scheme
Our plain and commonsense reading of the term “referral” is confirmed by
analysis of the statutory framework to ascertain section 6155’s purpose. The Legislature
enacted section 6155 within a broader framework regulating unlawful solicitation.
(§ 6150 et seq.) It had previously enacted the surrounding provisions to reduce
“ambulance chasing” activities. (Hutchins v. Municipal Court (1976) 61 Cal.App.3d 77,
85.) “Ambulance chasers”—such as lawyers, insurance agents, claims agents, or their
agents—would often visit “homes and hospitals to procure retainers at unseemly hours,
and when the injured person or the members of his family were in no mental condition to
enter into contracts for the engagement of lawyers’ services.” (Hildebrand v. State Bar of
Cal. (1950) 36 Cal.2d 504, 523 (dis. opn. of Traynor, J.).) Third-party ambulance chasers
who solicited cases and sold them to lawyers were apt “to seek out, not the most
10
competent attorney, but the one who [would] pay the most for a case.” (Ibid.)
“Ambulance chasers” often did not have the best interests of the clients at heart and
would use “overreaching and high-pressure tactics to acquire clients.” (Jacoby v. State
Bar (1977) 19 Cal.3d 359, 379 (Jacoby) [noting that such conduct was not at issue].)
The Legislature thus enacted broadly-worded statutes to bar any person from
acting as a runner or capper for an attorney or soliciting business for attorneys “in and
about the state prisons, county jails, city jails, city prisons, or other places of detention of
persons, city receiving hospitals, city and county receiving hospitals, county hospitals,
superior courts, or in any public institution or in any public place or upon any public
street or highway or in and about private hospitals, sanitariums or in and about any
private institution or upon private property of any character whatsoever.” (§ 6152,
subd. (a)(1).) A runner or capper is defined as any person who “solicit[s] or
procure[s] . . . business for the attorney” while acting for “consideration in any manner”
or as an “agent for an attorney.” (§ 6151, subd. (a).)
Our Supreme Court has recognized that the statutory regulation of solicitation
satisfies important interests relating to consumer protection and attorney professionalism.
(See Kitsis v. State Bar (1979) 23 Cal.3d 857, 864, 867 (Kitsis); Jacoby, supra, 19 Cal.3d
at pp. 379–380.) In reference to state disciplinary rules regarding runners and cappers,
the Supreme Court stated that the “state has a compelling interest . . . to ‘reduce the
likelihood of overreaching and the exertion of undue influence . . . and to avoid situations
where the lawyer’s exercise of judgment on behalf of the client will be clouded by his
own pecuniary self-interest.’ ” (Kitsis, at p. 864.) Solicitation “robs the bar of . . . [and]
creates an atmosphere of commercialization rather than professionalism.” (Jacoby, at
p. 379.)
Section 6155 provides an important exception to this overarching statutory
framework and legislative concern regarding unscrupulous solicitation. As the
Legislature stated in the bill first enacting section 6155, citizens often “[found] it difficult
to locate attorneys willing to consult with them.” (Assem. Bill No. 29 (1987–1988 Reg.
Sess.) § 1.) Lawyer referral services could alleviate this problem, but a “potential for
11
abuse exists.” (Ibid.) Attorneys might be tempted to engage in activities akin to
“ambulance chasing” or employ runners or cappers to solicit clients. (Ibid.; see also
Kitsis, supra, 23 Cal.3d at pp. 861–862, 864.) To balance these competing interests—the
need for the public to seek out legal representation and to protect against unprincipled
activities that would abuse clients—the Legislature decided that “lawyer referral services
are of great value . . . [and] should be regulated in order to ensure that those services exist
for the true benefit of the public.” (Stats. 1987, ch. 727, § 1.)
Viewed in this context, the statutory framework surrounding section 6155 supports
our interpretation of a referral as the act of directing a potential client to an attorney. The
Legislature has created an exception to the prohibition on client solicitation through
runners and cappers by allowing lawyer referral services to operate as long as they are
registered with the State Bar and comply with standards set by the State Bar or Supreme
Court. (§ 6155, subd. (a).) Requiring lawyer referral services to meet minimum
standards ensures that consumers are protected when they engage with entities that
operate in a manner similar to runners and cappers. (See Stats. 1987, ch. 727, § 1; see
also §§ 6155, subd. (a)(1), 6152, subd. (a)(1).) Broadly interpreting referral activity to
focus on the act of directing a potential client to an attorney is consistent with the
overarching statutory scheme that generally prohibits client solicitation for consideration
or on behalf of an attorney, except when done in a manner that is regulated and compliant
with state standards. (§§ 6152, subd. (a)(1), 6155, subd. (a)(1).) Defining “referral” to
cover only an entity that exercises judgment or evaluates a case before directing a
potential client to an attorney unnecessarily narrows the reach of section 6155 and
thereby undermines the statutory purpose of public protection.
LegalMatch claims that the statutory framework is irrelevant because it “is not a
runner or capper.” We do not decide whether LegalMatch is either; rather, our review of
related statutes is confined to discerning the purpose of section 6155 by analyzing its
broader statutory framework.
12
D. Section 6155’s Legislative History
Although “referral” has a plain and commonsense meaning that makes our review
of the legislative history unnecessary, we briefly examine section 6155’s legislative
history to confirm that our interpretation is correct. (Meza, supra, 6 Cal.5th at pp. 856–
857.) When the Legislature first enacted the statute in 1987, section 6155 prohibited an
entity from marketing itself as a “referral service” unless it was registered with the State
Bar of California and followed minimum standards for lawyer referral services. (Stats.
1987, ch. 727, § 2.) However, in both 1992 and 1994, the Legislature amended section
6155 to expand its scope and coverage of entities that engage in referral services. (See
Assem. Bill No. 2970 (1991–1992 Reg. Sess.); see also Assem. Bill No. 3659 (1993–
1994 Reg. Sess.).)
When originally enacted, the statutory text provided that an “entity shall not use
the term ‘referral service’ or similar terms” if the entity’s purpose was “to refer potential
clients to attorneys,” unless the entity was registered with the State Bar or Supreme Court
and met minimum standards. (Stats. 1987, ch. 727, § 2.) The 1992 amendment,
however, expanded the statutory focus beyond the question of whether an entity was
calling itself a “referral service” or something similar. (Stats. 1992, ch. 150, § 1,
subd. (a).) That amendment deleted the language relating to “use” of the term “referral
service” and replaced it with language that remains today, providing that an “entity shall
not operate for the direct or indirect purpose, in whole or in part, of referring potential
clients to attorneys” unless the entity was registered with the State Bar or Supreme Court
and met minimum standards. (Ibid.) The amendment thus broadened the statute’s focus
from mere nomenclature to consideration of the entity’s underlying activity and purpose:
whether the entity in fact operated for the purpose of referring clients. This shift in the
statute’s application and reach indicates that the Legislature did not intend to allow
entities to escape the statute’s provisions simply because they did not denominate
themselves as “referral services.”
The 1994 amendment narrowed the types of activity that were considered
permissible advertising, while clarifying what would constitute certifiable referral
13
activity. (See Stats. 1994, ch. 711.) The original 1987 statute simply stated that “[t]his
section shall not be construed to prohibit attorneys from jointly advertising their
services.” (Stats. 1987, ch. 727, § 2, subd. (h).) But this provision left a gap in the
statute’s coverage by creating an undefined exception to the mandatory registration and
minimum standards required for covered entities. (See Stats. 1987, ch. 727, § 2,
subds. (a)(1), (h); see also Stats. 1992, ch. 150, § 2, subd. (a)(1).) By engaging in
“advertising”—which was undefined by the statute—as opposed to acting for the purpose
of referring, an entity could avoid the statute’s compliance requirements. The 1994
amendment eliminated this ambiguity by clarifying permissible advertising and
certifiable referral activity. (Stats. 1994, ch. 711, § 2, subd. (h)(1), (2).)5 Specifically, it
permitted joint attorney advertising and provided that “permissible joint advertising,
among other things, identifies by name the advertising attorneys or law firms whom the
consumer of legal services may select and initiate contact with.” (Stats. 1994, ch. 711,
§ 2, subd. (h)(1).) It also added that “[c]ertifiable referral activity, involves, among other
things, some person or entity other than the consumer and advertising attorney or law
firms which, in person, electronically, or otherwise, refers the consumer to an attorney or
law firm not identified in the advertising.” (Stats. 1994, ch. 711, § 2, subd. (h)(2).)
While the 1994 Amendment permits joint attorney advertising under narrow
circumstances (such as when the advertising attorneys are specifically identified by name
and the potential client may initiate contact with them), the Legislature broadly defined
certifiable (and therefore, regulated) “referral activity” to cover any entity “which, in
person, electronically, or otherwise, refers the consumer to an attorney or law firm not
identified” in permissible advertising. (Stats. 1994, ch. 711, § 2, subd. (h)(1), (2).)
Under these definitions, LegalMatch engages in certifiable referral activity, not mere
advertising. LegalMatch receives information from potential clients and sends that
5
In addition, the 1994 Amendment generally prohibited deceptive attorney
advertising and barred certain specific practices, such as guaranteeing outcomes or
touting the ability to “obtain immediate cash or quick settlements.” (Stats. 1994, ch. 711,
§§ 5, 6, amending §§ 6157.2 and 6158.)
14
information to lawyers. LegalMatch does not advertise the name of the attorneys
subscribed to their service to potential clients, and clients do not learn the name of their
potential lawyer until after the referral has occurred.
LegalMatch relies on a failed 2007 Assembly Bill to suggest that we should read
section 6155 to exclude entities like LegalMatch from the statute’s reach. In 2007, the
Legislature considered—but did not pass—Assembly Bill No. 692, which would have
defined lawyer referral services to include “a service provided through the Internet that
operates for the purpose of referring potential clients to California attorneys.” (Assem.
Bill No. 692 (2007–2008 Reg. Sess.) as amended April 18, 2007.) Because failure to
amend an existing statute offers “only limited guidance, if any” about the Legislature’s
original intent, we “attach little value to the Legislature’s subsequent failure to pass a bill.
(Martin v. Szeto (2004) 32 Cal.4th 445, 451.) Although the court in Doe v. Becerra
(2018) 20 Cal.App.5th 330, 342 suggested that unpassed legislation could be instructive,
the court there relied on unpassed legislative bills that preceded the statute, not unpassed
legislative bills that succeeded the statute’s enactment.
In sum, the legislative history supports our interpretation of the statute’s plain
meaning and broad reach.
E. The ABA Model Rules
LegalMatch argues that we must determine whether it engages in referral activity
within the meaning of section 6155 by reference to a so-called “litmus test” derived from
the ABA Model Rules. As previously noted, the introduction to the ABA Model Rules
states that lawyer referral programs “help the client determine if the problem is truly of a
legal nature by screening inquiries” and “provide the client with an unbiased referral to
an attorney” capable of handling the client’s needs. Relying on the ABA Model Rules,
LegalMatch argues that a lawyer referral program must screen a client’s issues prior to
directing a client to an attorney. According to LegalMatch, this characterization of
lawyer referral programs by the ABA should control our interpretation of section 6155.
We disagree.
15
First, when this court engages in statutory interpretation, the statutory text and
purpose control. (Meza, supra, 6 Cal.5th at p. 856.) The ABA’s characterization of
lawyer referral services, while perhaps illuminating, cannot supersede the plain meaning
of the statutory text and the Legislature’s intent. (See Frye v. Tenderloin Housing Clinic,
Inc. (2006) 38 Cal.4th 23, 52, fn. 12 [noting that while ABA Model Rules may be
“ ‘helpful and persuasive’ . . . [they] are not binding”].) LegalMatch directs our attention
to an Alabama Supreme Court case where the ABA Model Rules were determinative in
evaluating whether an advertising agency engaged in referral activity. (Alabama State
Bar Ass’n v. R.W. Lynch Co., Inc. (1995) 655 So.2d 982, 984.) However, the Alabama
court relied on the ABA Model Rules to resolve a question of ethics, not a question of
statutory interpretation like the one we face here. (Ibid.)
Second, the statutory language at issue precedes the ABA Model Rules’ existence.
Specifically, the ABA Model Rules were published in 1993, while the relevant statutory
language—including the terms “lawyer referral service,” “referring,” and “referral”—was
enacted in 1987 and amended in 1992.6 (Stats. 1987, ch. 727, § 2; Stats. 1992, ch. 150,
§ 1.)
We thus decline to read into section 6155 an ABA-derived requirement that an
entity must “screen” client inquiries before it will be found to have engaged in referral
activity.
F. Application to LegalMatch’s Operations
Based on the undisputed facts found by the trial court and under our interpretation
of the statute, LegalMatch does engage in referral activity. As we have held, a referral
occurs when an entity engages in the act of directing or sending a potential client to an
6
Although section 6155 was amended in 1994, those changes did not affect the
definition of the operative terms. (Stats. 1994, ch. 711.)
16
attorney.7 The act of referring is complete when LegalMatch routes a potential client to
attorneys who match the geographic location and area of practice—regardless of whether
LegalMatch exercises legal judgment on an individual’s issue before communicating that
information to lawyers on its panel.
As described above, after potential clients input their information into
LegalMatch’s online intake forms, LegalMatch sends that information to attorneys
associated with the relevant business practice and geographic location that the client has
requested. The act of sending the information to the selected lawyers constitutes and
completes the referral. As LegalMatch’s key witness explained, “[c]onsumers come to
our website, and they present their case, and based on the category of law and the
location that they need help in, are automatically sent to prospective attorneys; and if that
attorney has access to that area of law and geographic location, then they have an
opportunity to respond to the case.” LegalMatch’s admission that consumers are “sent to
prospective attorneys” is the equivalent of being “directed to” or “referred to” an
attorney.8
7
LegalMatch seems to argue that it does not “screen cases,” “assess attorneys,”
nor “discriminate or prioritize among the subscribing attorneys.” While LegalMatch does
not screen or assess lawyers after they have joined LegalMatch’s service, it appears that
LegalMatch does engage in some types of screening before lawyers may join its service.
Limitations are placed on the number of attorneys that may purchase subscriptions for
any particular geographic area and type of law. Thus, instead of directing clients to all
lawyers who share a particular geographic location and expertise, as a phonebook or
telephone directory might, clients are directed to a subset of attorneys, namely those who
have been permitted to join LegalMatch’s panel for that practice area. For example,
Jackson could not immediately join the wills, trust, and estate practice, but rather had to
wait until an opening was available. Moreover, LegalMatch informs consumers that they
can “review the experience, expertise, track record, availability, and fee structure, of pre-
screened lawyers who match [the consumers’] criteria before deciding whom to contact”
(italics added), and further states that “[w]e screen all potential LegalMatch lawyers.”
8
LegalMatch’s terms of service or disclaimers may limit LegalMatch’s exposure
vis-à-vis claims by potential clients, but they do not bear on the question of whether
LegalMatch’s act of sending the potential client to its stable of attorneys falls within the
meaning of “referral” and “refer” in section 6155.
17
The fact that the subscribing lawyer evaluates the case and must affirmatively
decide whether to reach out to the client does not make LegalMatch’s referral incomplete.
While a subscribing lawyer may choose to decline to take a case or reach out to a client,
the lawyer still receives the potential client’s information and may review the potential
matter; the referral has thus already occurred even if the lawyer never speaks to the
client. Although this communication occurs online, the situation presented by this case is
thus not appreciably different than the more common, traditional scenario in which a
potential client asks one attorney for assistance, the attorney instead directs the client to
an attorney with expertise in that practice area, and the second attorney declines to
respond. Clients in both scenarios would still have received a referral. Similarly, the act
of referring is not negated by the fact that LegalMatch communicates to its subscribing
lawyers the information provided by potential clients without communicating the client’s
identities.
Accordingly, when LegalMatch gathers potential clients’ geographic and case-
type information and sends those potential clients to attorneys who (a) match the location
and (b) have been permitted to join LegalMatch within a relevant practice area, the act of
referral is complete. Section 6155 requires no more for a service to fall within its ambit.
The trial court determined that LegalMatch does not operate for the direct or
indirect purpose of referring potential clients to attorneys. It reached this conclusion
without explanation (but presumably in reliance on its view that engaging in “referral
activity” requires an entity to exercise legal judgment before directing a client to an
attorney).
In light of our interpretation of the term “referral” and the evidence adduced at
trial, we conclude as a matter of law that LegalMatch operates for the “direct or indirect
purpose, in whole or in part, of referring potential clients to attorneys.” (§ 6155,
subd. (a)(1).) Indeed, LegalMatch states that it “connect[s] people in immediate need of
legal services with the right attorneys,” and admits that consumers’ inquiries are
18
“automatically sent” to subscribing attorneys. LegalMatch’s operations therefore fall
within the scope of section 6155.9
G. Unclean Hands
LegalMatch asserted below that Jackson’s unclean hands should bar his argument
that section 6155 prohibited enforcement of the subscription contract. In light of its
determination that LegalMatch was not operating a referral service covered by section
6155, the trial court stated that LegalMatch’s unclean hands argument “must fail”—by
which the court seems to have meant that it did not need to decide the issue. Because the
“doctrine of unclean hands is heavily fact-dependent” and generally involves a question
of fact (Cross-Talk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 639, 641),
the parties and court should resolve this issue on remand.
DISPOSITION
We reverse and remand for the court to evaluate the issue of unclean hands in light
of our interpretation of section 6155.
9
In a footnote, LegalMatch asserts that broadly defining regulated referral activity
would raise free speech concerns under the California and United States constitutions.
LegalMatch cites no authority in support of this one-sentence contention, and we thus
treat it as forfeited. (Singh v. Lipworth (2014) 227 Cal.App.4th 813, 817; Placer County
Local Agency Formation Com. v. Nevada County Local Agency Formation Com. (2006)
135 Cal.App.4th 793, 815.) We note, however, that even a fully-briefed argument might
well fail on the merits. LegalMatch engages in commercial speech, which has “limited”
First Amendment protection, and which may be regulated if the regulation is narrowly
drawn and directly supportive of a substantial state purpose, such as protecting
consumers from unscrupulous lawyer solicitation activity. (Florida Bar v. Went For It,
Inc. (1995) 515 U.S. 618, 623–624, 634–635 [upholding state regulation banning lawyers
and lawyer referral services from targeted direct-mail solicitation of personal injury
victims for 30 days after accidents]; see also Leoni v. State Bar (1985) 39 Cal.3d 609,
617 n.8, 628 [imposing attorney discipline based on letters sent to potential clients that
violated, e.g., rule 2-101(A) of the Rules of Professional Conduct, which then prohibited
false, deceptive, misleading, or coercive communications relating to attorneys’
availability for professional employment].)
19
_________________________
BROWN, J.
WE CONCUR:
_________________________
STREETER, ACTING P. J.
_________________________
TUCHER, J.
Jackson v. Legalmatch.com (A152442)
20
Trial Court: City & County of San Francisco Superior Court
Trial Judge: Hon. Curtis Karnow
Counsel:
Lohr Ripamonti & Segarich, Alec L. Segarich, Jason S. Lohr, for Cross-complainant and
Appellant.
Litigation Law Group, Gordon Fauth; Kenneth LaMance, for Cross-defendant and
Respondent.
21