The Metaverse for the Risk-Averse: Law Firms and Legal Advertising, Part 2

Law firms have begun to open for business in the Metaverse, raising questions as to how the Rules of Professional Conduct will apply in this new, entirely virtual context. This two-part article addresses the fundamental ethical norms lawyers must consider when practicing in the Metaverse, primarily through the lens of the Model Rules of Professional Conduct, and suggests areas of possible change for this new environment. In Part I, we focused on the lawyer-client relationship. Here, in Part II, we discuss how existing ethical rules may apply to law firms and associations in the Metaverse, as well as concerns raised by the advertising of legal services.

Supervision (Rules 5.1 & 5.3)

Under Model Rules of Professional Conduct 5.1 and 5.3, lawyers with managerial authority have ethical obligations to establish policies and procedures to ensure compliance with the ethics rules, and supervisory lawyers have a duty to make reasonable efforts to ensure that subordinate lawyers and nonlawyer assistants comply with the applicable Rules of Professional Conduct.

In the Metaverse, the duties of supervision will be particularly challenging. How will avators be supervised? As law firms begin to operate in this environment, they need to anticipate and address this challenge.

Practicing virtually and beyond that in the Metaverse does not change nor diminish this obligation. “A lawyer must give such assistants appropriate instruction and supervision concerning the ethical aspects of their employment, particularly regarding the obligation not to disclose information relating to the representation of the client and should be responsible for their work product.” See Rule 5.3 cmt. [2]. Moreover, a lawyer must “act competently to safeguard information relating to the representation of a client against unauthorized access by third parties, and against inadvertent disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer’s supervision.”

The duty to supervise nonlawyers extends to those both within and outside the law firm. See Rule 5.3 cmt. [3] (“when using such services outside the firm, a lawyer must make reasonable efforts to ensure that the services are provided in a manner that is compatible with the lawyer’s professional obligations. The extent of this obligation will depend on the circumstances, including the education, experience and reputation of the nonlawyer; the nature of the services involved; the terms of any arrangement concerning the protection of the client’s information; and the legal and ethical environments of the jurisdiction in which the services will be performed, particularly with regard to confidentiality.”); see also Rules 1.1 (competence), 1.2 (allocation of authority), 1.4 (communication with client), 1.6 (confidentiality), 5.4(a) (professional independence of the lawyer), and 5.5 (unauthorized practice of law).

The historical aversion to lawyers and nonlawyers owning a law firm will likely be challenged in the Metaverse. The concept of lawyers sharing legal fees, or common ownership of a law firm, is slowly eroding in the United States. A number of countries have eliminated this hurdle (e.g., Australia and the U.K.) and Arizona became the first state to eliminate Rule 5.4 entirely as of Jan. 1, 2021. Moreover, a number of jurisdictions in the United States have created the concept of a “regulatory sandbox” that allows nonlawyers to participate in the delivery of legal services to underserved populations. States that have allowed this option include Utah, Arizona, California, New York, Illinois and North Carolina.

As the Metaverse is being defined with each passing day, and as the price of “real estate” in the Metaverse increases, we will likely see nonlawyers seeking to invest in this new virtual world.

The opportunity to invest in law firms that have flags planted in the Metaverse should be anticipated.

Unauthorized Practice of Law; Multijurisdictional Practice of Law (Rule 5.5)

Basic questions about jurisdiction, venue, choice of law and conflicts of law are not so basic when the Metaverse is concerned. There is no general or national license to practice law in the United States. Rather, attorneys are admitted to the practice of law in individual states. That said, a U.S. lawyer may practice across state lines on a limited basis—either on a motion before the courts, which allows the lawyer to temporarily gain bar admission outside his bar state without taking another exam; or pro hac vice admission that harmonizes state processes regarding out of state lawyers engaged in litigation.

Rule 5.5 prohibits lawyers from practicing in jurisdictions in which they are not admitted, subject to some exceptions. One exception is for services provided on a temporary basis that are “reasonably related to the lawyer’s practice” in their state of admission. However, the ABA’s Multi-Jurisdictional Practice Commission Report acknowledges that there is no bright line distinguishing a “temporary” from a “continuous” practice. As a result, practitioners should review the rules of the state where they aim to practice even temporarily to avoid engaging in the unauthorized practice of law.

Advances in technology have made it possible for lawyers to easily work remotely and in virtual law practices. In December 2020, the ABA’s standing committee on ethics and professional responsibility issued Formal Opinion 495 holding that a lawyer may remotely practice the law of the jurisdiction in which he is licensed, while being physically present in a jurisdiction in which the lawyer is not admitted, provided he follows “specific parameters.” In doing so, the opinion recognized the reality of many lawyers’ experiences even pre-pandemic but especially post-pandemic: in a world of virtual file sharing, cloud-based storage, email communication and video-conference meetings, remote practice has become the new normal.

In explicitly permitting remote work, the ABA committee emphasized that Rule 5.5(a)’s purpose —to protect the public from unlicensed and unqualified practitioners of law—“is not served by prohibiting a lawyer from practicing the law of a jurisdiction in which the lawyer is licensed, for clients with matters in that jurisdiction, if the lawyer is for all intents and purposes invisible as a lawyer to a local jurisdiction where the lawyer is physically located, but not licensed.”

In other words, State A has an interest in ensuring the competence of State A’s licensed lawyers, but it does not have an interest in, for example, prohibiting State B’s licensed lawyers from practicing State B’s law while enjoying a more pandemic-friendly climate in State A. Each state, however, establishes its own laws and rules regulating the practice of law within its borders; there is no nationally uniform rule. Thus, the question of whether a properly licensed lawyer in State A, representing clients with respect to State A’s matters is engaged in unauthorized practice in another jurisdiction is dependent on the rules of the jurisdiction in which the lawyer is physically present. Thus, lawyers should always be mindful of the rules that apply in the jurisdiction in which they are located.

While this may resolve the issue with regards to the remote practice of law, the Metaverse poses an additional layer to this problem. It is still unclear whether the Metaverse will be its own world, with its own set of regulations and laws, and whether it would comprise its own concept of “jurisdiction.” Nonetheless, Rule 5.5 will likely be implicated within the Metaverse, albeit with some modifications, because where people go, the law will follow and even in a virtual immersive environment, the people have an interest in being protected from unqualified practitioners of the law.

The state-focused licensing and regulation in the United States that restricts lawyers to state practice could not be applied to the Metaverse since the Metaverse is still an unchartered territory (as no country has jurisdiction over it [yet]). Similar to the internet or social media platforms, the Metaverse is a realm disconnected from the jurisdiction of countries. To that extent, the question of whether a lawyer practicing in the Metaverse would be engaged in the unauthorized practice of law is still ambiguous. Ultimately, there could be many caveats if the answer was yes, especially since a lawyer would not be considered unqualified in the Metaverse if there are no laws or regulations to begin with.

Note that practicing in the Metaverse differs from practicing in foreign countries where a lawyer could run afoul of Rule 5.5. Although significantly different from U.S. licensure and regulations, other countries have established laws and ethical regulations of the legal profession. Thus, whether a U.S. lawyer could practice law in that host country would depend on the country’s local regulations. In some countries, there may be no restrictions at all, while in countries that do not recognize U.S. bar admissions, a U.S. lawyer may not be able to practice at all, whereas still in other countries, U.S. lawyers may be able to practice only U.S. law or work only as an associate with a local attorney.

Advertising Legal Services

Another concern endemic to the virtual practice of law is lawyers advertising and client solicitation. As more legal advertising has shifted to online venues, the question of what is and is not ethical has grown more confusing.

The Metaverse is set to become the future of digital marketing and other emerging technologies for legal marketing, as all industries and businesses will eventually be required to take advantage of the platform to better connect with customers and clients and improve their visibility in the digital atmosphere. Law firms and lawyers will be no exception.

A 2015 report by the Association of Professional Responsibility Lawyers (APRL) found that the rules of most states are “outdated and unworkable in the current legal environment and fail to achieve their state objectives.” The report concluded that anti-competition concerns, First Amendment issues, globalization of the practice of law, and rapid technology changes requires a “realignment of the balance between the professional responsibility rules and the constitutional right of lawyers to communicate with the public.” Further, when a firm’s practice crosses state lines, all their marketing efforts must be reviewed to make sure they follow the new state’s rules. Since online materials can be accessed from anywhere, APRL felt there should be clear model guidance to steer state bar associations in the right direction.

To address this, the ABA standing committee on ethics and professional responsibility presented a comprehensive proposal to rework the model rules on lawyer advertising. The ABA stated multiple reasons for updating and modernizing the model attorney advertising rules. First, the amended rules seek to promote national uniformity among advertising regulations. Many law firms and lawyers today have multi-jurisdictional practices; therefore, inconsistency among the states’ rules as to permissible advertising often leads to confusion, especially for those lawyers participating in various forums. A second goal was to simplify them in such a way as to make them easier to enforce for state regulators. Third, amidst the changes to the rules, the ABA wanted to ensure the new rules were drafted in such a manner as to preserve the strict exclusion of false or misleading attorney advertisements or communications.

The language of former Rule 7.1 stating that a lawyer cannot make a false or misleading communication in regards to an advertisement did not undergo any changes among the new rules. Finally, the ABA’s changes attempted to accommodate continued growths in technology and the legal profession in general. For example, the ABA wanted the ethical advertising rules to reflect the constant change in technology and the social norms that accompany technology, such as advertising via social media. The Model Rules on advertising were amended by the ABA House of Delegates in August 2018. Now, new Model Rules 7.1-7.3 are slowly being addressed and adopted in various states.

One tenet of the rules governing attorney advertising is the prohibition on misleading statements. The Model Rules, as revised, reinforce that attorneys may not make misleading statements about their firms, including in their letterheads. Rule 7.1. Further, Rule 7.2 previously stated that, subject to the requirements on honesty, a lawyer “may advertise information regarding the lawyer’s services.”

For some attorneys and firms, the definition of “advertise” became controversial. Questions were raised regarding whether “advertise” included a social media post about a successful outcome for a client, or perhaps an article describing an attorney’s experience with a specific legal issue. The ABA addressed those concerns by amending the word “advertise” to “communicate” in Model Rule 7.2, which now provides that “a lawyer may communicate information regarding the lawyer’s services through any media.” Thus, the rule avoids the issue of whether a communication qualifies as an advertisement but instead appears to permit any form of communication, subject to the requirement that it not be misleading.

While the changes try to bring uniformity to the rules, every state has tweaked the Model Rules and thus, an attorney should consult the local rules. Attorney solicitations in particular have been treated differently by jurisdictions. To provide some clarity on the issue, the ABA amended Model Rule 7.3(a) to define solicitation. The rule now provides that “‘solicitation’ or ‘solicit’ denotes a communication initiated by or on behalf of a lawyer or law firm that is directed to a specific person the lawyer knows or reasonably should know needs legal services in a particular matter and that offers to provide, or reasonably can be understood as offering to provide, legal services for that matter.” As such, posting online is not considered a solicitation given that a lawyer’s communication is not a solicitation if it is directed to a general audience, is in response to a request for information or is automatically generated in response to electronic searches.

The revised rules also appear to permit in-person solicitation of sophisticated clients. “Live person-to-person contact” means in-person, face-to-face, live telephone and other real-time visual or auditory person-to-person communications such as Skype or FaceTime, where the person is subject to a direct personal encounter without time for reflection. Such person-to-person contact does not include chat rooms, text messages or other written communications that recipients may easily disregard.

Indeed, although a lawyer is generally not permitted to solicit professional employment in person, amended Model Rule 7.3 permits such contact directly to lawyers, to those who have a relationship with the lawyer, or to a person “who routinely uses for business purposes the type of legal services offered by the lawyer.” Although attorneys still may not use coercion or harassment and may not solicit those who have made it clear they do not want to be solicited, these changes recognize that there is less concern where the client is sophisticated and has the ability to determine whether the contact should continue.

In the Metaverse, a law firm could combine the elements of traditional and digital marketing by featuring a billboard ad about its legal services or airing ads in the Metaverse during virtual events, especially when targeting that particular audience. Lawyer advertising and solicitation rules in the Metaverse are unlikely to require the passage of new rules or laws. However, how they would be applied remains to be seen. At a minimum, the communication needs to be evaluated for whether it is truthful and not misleading in the context in which it is delivered (i.e., in a fully immersive 3D world) and is clear and conspicuous to client or prospective clients in any world they are living in at the moment.

Including contact information may seem like a simple obligation (pursuant to comment 12 to Rule 7.2) that lawyers should not overlook when posting an ad, but this could prove to be more complicated in the Metaverse since it would be unclear whether such contact information would be referring to a lawyer or law firm’s real-world address and number or physical office location or the “virtual” one.

Additionally, lawyers must be cognizant of their intentions, and especially so within the Metaverse. While the amended Rule 7.3 allows live person-to-person solicitation in limited circumstances, it prohibits such solicitation in most situations because it can make the individual feel pressured thereby hindering her decision regarding the representation. This feeling of being pressured could be heightened in the Metaverse as it provides an immersive experience that could both look and feel real to the users.

Another issue posed by the Metaverse is the fact that the rules on advertisement and solicitation vary from state to state and therefore, it remains unknown whether the ABA’s Model Rules are the ones to be applied or which, if any, state’s rules and frameworks would apply. See Rule 8.5 for guidance.

Conclusion

Once the ethical guidelines of lawyers participating in virtual worlds have been established, the next step is to decide in whose hand the keys of responsibility should lie. Should it be solely left to the companies to decide or should users and undisclosed third parties be added to the conversation? Unless there is enforcement, it would not matter what ethical framework, if any, governs the Metaverse. Will we need Metaverse cops to police the regulations?

As we delve deeper into the Metaverse, we expect that lawyers and clients will increasingly embrace its incorporation into their real-world existence. In its infancy, no one could have imagined the overwhelming impact the internet would have on commerce; and it is the same now with the Metaverse. As this immersive revolutionary environment expands and evolves, so too will the regulatory and legal issues.

If the Metaverse evolves into the ultimate convergence of technology, content and human experience—as some expect it to—anticipating and addressing those issues will be critical to the Metaverse’s successful adoption by the legal profession. Notwithstanding the excitement the Metaverse offers, the legal profession needs to be mindful that the Rules of Professional Conduct apply and may need to be modified further to provide the roadmap for this new virtual world.

Abraham C. Reich is chair emeritus at Fox Rothschild and an adjunct legal ethics instructor at the University of Pennsylvania Carey Law School. Hala Zawil was a summer associate at the firm and is a 2L at Rutgers Camden School of Law. Contact Reich at [email protected].

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