Sept. 16, 2009 – Thanks to the Internet, the client’s dilemma of “finding the right lawyer” has been turned on its head.

Web sites, such as LawBidding.com recently launched in Milwaukee, enable lawyers to sort through clients seeking legal assistance and decide whether to offer services to them.

This innovation has created some debate over its impact on the practice of law and its ethical implications. But under certain circumstances, the approach has received favorable reviews.

LawBidding.com

Nicholas Cronin, the founder of LawBidding.com, explained that the inspiration for his web site came in the course of his work for the in-house legal department at Generac Power Systems in Waukesha.

“Part of this position entails finding attorneys for different issues all over the United States,” Cronin said. “Being a relatively new attorney, this process seemed very inefficient and thus this site was launched to make the process of finding an attorney more efficient and less expensive.”

Operation of Cronin’s site begins when those looking for legal services post a description of the work they need performed. Acknowledging that many of these matters may be personal and confidential, Cronin explained that only attorneys who have set up an account with the site are able to view the postings.

“To further protect personal information, the attorneys will not be able to see any identifying information other than the city, zip code and state where the legal matter is located,” Cronin states in his description of the service found at the web site.

Lawyers registered with the site browse the postings and then bid for the work, choosing an hourly, contingent or a flat fee structure. If clients do not like any of the bids, they have no obligation to choose an attorney, Cronin said.  If the client does find what they are looking for, the attorney selected is provided contact information and work can begin to resolve the legal issue, he said.

When the site launched on May 27, about 20 lawyers had registered, Cronin reported. Since then, he said hundreds of lawyers from all over the country have joined. Correspondingly, Cronin said the types of cases had increased to include areas ranging from family law to patents.

Registration with the site is free for lawyers and those seeking legal help. The site is supported by advertising revenue, Cronin said.

‘Winner’s curse’?

Richard Sheil, a solo practitioner in Oregon, registered with LawBidding.com, which he credited as leading “a wave of the future.”

“One of the benefits/costs of the information age is that it makes worldwide, or national, auctions a la eBay possible,” Sheil said. “By lowering the costs of information exchange dramatically, essentially to the costs of one's time, the Internet has led to auction-based markets in numerous fields – eBay, graphic arts, etc. Auctioning has become increasingly popular as a means of securing goods and services, and it is likely to grow in popularity.”

But he questioned whether lawyers might not undervalue their services when submitting a bid.

“LawBidding.com essentially is adopting an auction framework, and it is fairly clear that the principal incentive for the offeror of the work is to obtain legal work at a lower rate than the market,” Sheil said.

Sheil explained that in a typical auction, a bidder might offer to pay far more than an item is worth in order to be chosen. This has been called a “winner’s curse” and it is particularly problematic when the actual value of an item in a contested auction is generally unknown, he said.

When attorneys are competing with each other to win a prospective client’s business, Sheil said there is a risk of a “winner’s curse in reverse.” “Numerous qualified bidders on legal work might conceivably lead to the winner being significantly underpaid for their work, just as the winning bidder overpays for the auction item,” he said.

Responding to these concerns, Cronin distinguishes his site from a typical auction, explaining that a successful bid might not necessarily be the cheapest. Besides cost, a prospective client can also review the lawyer’s credentials, consider the lawyer’s estimated timeframe for completion of the job, and weigh other criteria important to the client.

Further, Cronin said that a lawyer likely calculates the amount to bid no differently than in traditional contexts where the lawyer consults with the prospective client, gathers information, and then quotes a price.

“On LawBidding, in addition to the information the client provides, the attorneys can place questions on a public discussion board shown with the case, or may private message the client if the question is more personal/private,” Cronin said. “Therefore, the attorney should be able to gather all the information they normally would need to price their service, just using a different medium.”

Ethical considerations

The State Bar of Wisconsin Professional Ethics Committee has not studied Internet services such as LawBidding.com. But other professional ethics groups have given them a favorable review, under certain circumstances.

In an opinion from the Association of the Bar of the City of New York, a site similar to LawBidding.com was deemed “not functionally different than any other bidding process that has become increasingly common in selecting counsel.” The association pointed out that “such procedures often occur following the publication of a Request for Proposals by a government or other organization, or, for that matter, any project that is posted on a (real) bulletin board.”

The association took note that ethical issues regarding fees are put to rest when attorneys are not charged for participating in the service and the service provider is not sharing any fees with the attorney.

Commenting on confidentiality issues raised by these web services, the association remarked that there was nothing “inherently improper about using the internet as a means generally to communicate with a client, especially given recent laws precluding unauthorized interception of internet transmissions.”

However, the association advised lawyers to find more secure means when they come into possession of “certain highly confidential or especially sensitive information that warrants more protection than the internet currently is able to provide.”

• Related: Looking for clients who are in need of help? Consider the State Bar’s Lawyer Referral and Information Service