Upwork's Charges, Legal Fees and the Unlicensed Practice of Law

[Mary W]

I guess it depends on the definition of "fee sharing".  I'm a paralegal who has done okay on Upwork but I am very careful to work only for attorneys.

To me, the Upwork fee is a cost of doing business, much like office rent, telephone charges and the like.  But I understand your concerns and have never seen this addressed.  

Perhaps some attorneys on here will speak to this.

[Reinier B]

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@Mary W wrote:

I guess it depends on the definition of "fee sharing".  I'm a paralegal who has done okay on Upwork but I am very careful to work only for attorneys.

To me, the Upwork fee is a cost of doing business, much like office rent, telephone charges and the like.  But I understand your concerns and have never seen this addressed.  

Perhaps some attorneys on here will speak to this.

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 I can see the OP's problem thanks to his clarification. And you are right Mary, I too would like to see the moderators or failing that, some other attorneys, comment on this even though the issue does not affect me.

[John K]

Rene, I agree Upwork won't likely change its fee structure anytime soon but a fixed upfront fee would be an interesting alternative to the existing percentage fee system so if it's sufficiently high, perhaps management would consider it. 

[Vladimir G]

Hi Gregory,

Note that Upwork has several attorneys from many states that use the site to offer legal services to clients that they locate on the platform. With respect to service fees, you should keep in mind that freelancers collect 100% of the legal fees paid by clients, and then separately make a payment of service fees to Upwork for the use of Upwork and Upwork services.  The purpose of the service fees is to compensate Upwork for the services Upwork provides to you, not to share the fees you receive from your clients.  Services fees are a business expense equally applicable to all users, whether the services are for web development, translation, or legal services.  

Of course, attorneys are ultimately responsible for complying with the rules in their state and we cannot advise you on how specific state rules apply to users.  While we hope you use Upwork to find new clients, we understand that it may not meet the needs of all attorneys in all states.

[Paul J]

I have confirmed with the Utah and Arizona bars that they would consider UpWork's practice to be unauthorized fee splitting for attorneys. It does not matter that the attorney collects the funds and then pays UpWork - what matters is that UpWork requires a percentage of the fee collected.

[Gregory L]

Same goes with Florida.

[Heather S]

Hi Gregory, I'm a (fairly new) attorney in California, and I contacted my State Bar Ethics hotline about this issue. In their eyes, it is considered fee splitting. I tried to have Upwork provide some insight on this, but am told that I need to handle my own compliance matters. I wondered what you decided to do regarding work on UW? Are you taking any legal matters on the site, and if so, are you doing anything to get around the fee splitting issue? I like working on Upwork, but I do not want to risk my law license for it if I can't get around the issue. Thanks for any insights you can provide. Regards, Heather

[Gregory L]

Good Evening Heather,

Short answer: I decided not to use Upwork.

I’ve received a number of replies from a number of attorneys in different states, and not a single state bar has said the Upwork fee arrangement is permissible.

[Heather S]

Thank you so much for your reply. I’ve reached the same conclusion, unfortunately. I really appreciate you responding to this old thread. Let’s hope it helps others in a similar situation.

Heather

[Tiffany S]

I believe that Gregory is correct. I hope that some attorneys who have determined that use of Upwork does not violate the disciplinary rules of their states will weigh in.

This is not legal advice. My license to practice law has been inactive since 1995. That said, I suspect that I have more knowledge and experience of this particular issue than anyone else who might become involved in this discussion, including Upwork's attorneys.

In his initial post, Gregory mentions that purchasing leads is legal so long as the fee is fixed and not a percentage of legal fees. Ten years ago, that question had not been answered, and most in the legal field believed that purchasing leads violated the provisions Gregory posted here. I was the primary B2B writer and thought leadership advocate for the company that established the right of attorneys to pay for leads, in a 2-year, 47-state legal battle.

Many non-attorneys have weighed in in this thread and don't see the problem. That's because it is a regulation unique to the legal profession, and prohibits a practice that is fairly common in most other industries. If a roofing company refers a client to a painter, the painter might well offer the roofing company a 10% kickback on the job and no one cares. If an attorney does the same, he or she is subject to disciplinary action, including suspension or even disbarment.

There is a strong argument that Upwork isn't making referrals. The platform isn't steering clients toward any particular provider, and does provide other services for which it is compensated (marketing, escrow, invoicing, maintaining ratings, etc.). However, I'm not at all sure that matters, since attorneys aren't allowed to pay other service providers on a percentage basis, either. For example, an attorney cannot hire a paralegal and compensate her by paying that paralegal a percentage of the fees generated from a case she works on.

Similarly, Vlad's technical distinction regarding the freelancer being paid 100% and then paying Upwork makes no difference at all. In fact, that is exactly how it would work in most prohibited fee-splitting scenarios.

I believe that this, like the former perceived lead generation prohibition, is an issue that simply wasn't considered at the time the rules were written (in most states, 50 or more years ago) and that this is also an area ripe for evolution. But, as written today, I agree with the OP that use of Upwork would constitute prohibited fee splitting in most states. 

I do not believe that UPL comes into play in this situation at all.

Were I in Gregory's shoes (a licensed attorney wishing to use Upwork's services), I would request an opinion from my state's attorney regulatory body. In addition to providing a clear answer, this would help to get an issue before regulatory bodies that represents an area in which the rules may be out of step with the workings of modern business and creating a prohibition that in no way serves to protect clients or society.