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LegalMatch.com Loses Fight with California Bar, For Now

Feb. 3, 2021, 11:15 PM

LegalMatch.com failed to convince a California court for the moment that a state law regulating the legal referral service unconstitutionally limits its free speech rights.

Judge Ethan Schulman, California Superior Court, on Wednesday adopted his tentative ruling that the law requiring legal referral services to register with the California Bar doesn’t impinge on the First Amendment.

Schulman held in sustaining the bar’s motion to dismiss after a virtual hearing in San Francisco that “there plainly is a substantial government interest in regulating lawyer referral services.”

“The mere requirement that a service be licensed, I don’t see how that is a problem under the applicable standard,” Schulman said during the hearing.

He gave LegalMatch 20 days to amend its complaint.

The decision is the latest in the long-running fight between LegalMatch and the California Bar as state bars around the country struggle to increase consumer access to lawyers and regulate legal practice while embracing technological innovation. Such regulation was once referred to as a regulatory wasteland.”

Uneven Enforcement Alleged

LegalMatch, which has operated for 20 years, didn’t immediately respond to a request for comment on the ruling. However, it has argued that the state’s Bus. & Profs. Code Section 6155 “exceeds constitutional limits and makes it impossible to provide advertising to many California attorneys while restricting consumer access to representation.

The company has also said that it’s forced to undertake onerous duties while the state bar hasn’t brought similar enforcement actions against other, larger referral services.

Richard Zitrin, founder of Univeristy of San Francisco’s Center for Applied Legal Ethics, disagreed that the California law infringes on speech or access.

“It’s a simple regulatory statute that—unlike most states—is neutral as to non-profit and profit-making” legal referral and information services, he said in an email.

Kendra L. Basner, a legal malpractice partner with O’Rielly & Roche in San Francisco, said the bar recognizes that change must occur in order to improve access to justice and the delivery of legal services through technology and innovation. But she said change isn’t happening fast enough.

“LegalMatch, unfortunately, fell victim to these antiquated rules even though there was no evidence that any California consumers were being harmed,” Basner said in an email.

Legal Burden

Schulman said the claims “fail to sufficiently allege that LegalMatch’s speech is burdened in an unreasonable matter or that there is not a reasonable fit between the statutory registration requirement and the Legislature’s objectives.”

Anyway, he noted that LegalMatch already tried and lost its arguments in 2019 when the state’s highest court denied review of an appellate decision that it engages in referral activity.

Even if the issue hadn’t already been disposed of in that case, Schulman wrote, “LegalMatch fails to allege that there is not a reasonable fit between the statute’s legitimate purpose and the means chosen to achieve it.”

Nor does LegalMatch state a claim under the overbreadth doctrine because the U.S. Supreme Court held lawyer advertising is commercial speech, the court said.

Attorneys are permitted to advertise in California, even those without malpractice insurance, Sean T. Strauss, State Bar of California office of general counsel, told the court. But lawyers without malpractice insurance aren’t permitted to participate in lawyer referral services such as LegalMatch provides under the law and regulations.

The bar’s Task Force on Access Through Innovation of Legal Services last March released a report that found “a clear trend to leverage technology and innovative delivery systems to improve access to legal service.”

The court’s ruling recognizes the bar’s statutory obligations to certify and regulate lawyer referral services in order to protect the public, the bar said in a statement.

“Public protection and increasing access to justice are inextricably linked in the State Bar’s mission. That is why the certification requirements exist—to ensure that the public has access to quality legal services, which is consistent with access to justice.”

The case is the State Bar of California v. LegalMatch.com, Cal. Super. Ct., No. GCG-20-584278, hearing 2/3/21.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

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