Virtual Law Firm, Real Conflicts Allegations & Controversy (Or: #Altlaw #Regularconflicts)

Recently (April 2020): “UpRight’s Fee-Splitting Win A Boon For ‘Virtual’ Firm Model” —

  • “While the decision for UpRight Law focused on a narrow question of federal bankruptcy law, the court’s obvious tolerance for a firm in which hundreds of “partners” simultaneously run similar solo practices will support the move toward innovative business models in the broader legal industry.”
  • “According to the trustee, UpRight’s model is essentially an elaborate referral network that doesn’t qualify as a law firm under Section 504 — and thus is not covered by the fee-split exception — or the state ethics rule against fee-splitting.”
  • “Judge Limbaugh also rejected the trustee’s argument that UpRight’s lack of a national conflict system — UpRight lawyers do their own checks against their individual client lists — was evidence that the firm is not really acting like a firm at all.”
  • “UpRight lawyers ‘are bound by the conflict of interest rules regardless of whether a conflict check system is in place,’ the court reasoned. ‘The presence or absence of such a system — and whether the partners actually abide by the conflict rules — has no bearing on whether the partners have combined to form a law firm in the first place.'”
  • “The case also illustrates a fundamental risk management question for any group of lawyers who organize to share information or expertise, and whether that cooperation inadvertently creates a ‘firm’ for purposes of imputed conflicts and client information.”
  • “David Menditto, associate general counsel for litigation at UpRight Law, said the court was rightly focused on all the aspects of how the business operates, both publicly and internally. ‘What matters is how we act, and we act like a law firm,’ he said. ‘There is an ongoing relationship through the representation of a client, there is support provided to the lawyer if its needed, and the lawyer can be replaced if they’re not performing. So it’s really not just some loose affiliation of people who get clients from the same source.'”

Earlier (February 2018): “When #Altlaw Is Bad, It Is Truly Horrid” —

  • “Upright is an #Altlaw fantasy come to life — a new business model with a self-proclaimed mission of promoting access to justice through ‘cutting edge technology’ and 24/7 online access… Upright farms out most of its cases to local attorneys called “partners” who maintain their own practices.”
  • “Earlier this month, a Louisiana bankruptcy court sanctioned Upright and its local attorney for professional negligence. Worse, this past week, the darker side of Upright’s practices came to light in a blistering ruling by a federal bankruptcy court Virginia in response to a complaint filed by the Region Four Bankruptcy Trustee against Upright Law, several of its principals and two solo attorneys who acted as Upright’s local partners.”
  • “Upright would contract with local attorneys with independent practices to handle cases received for a given jurisdiction. Upright provided the local attorneys with a separate ECF number to use when filing cases for Upright clients. Although participating attorneys had their own firms, they became limited partners of Upright and were held out to the public as partners;”
  • “The court found that the local attorneys knew that Upright’s non-lawyer consultants were giving legal advice to clients, and that the Upright-Sperro deal violated bankruptcy laws and raised serious conflicts of interest. Thus, the court revoked one of the local lawyer’s privileges to practice before the court for one year and fined him $5000, while a second less remorseful local attorney was similarly fined and suspended for 18 months.”
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