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In the face of opposition from Responsive Law, the Virginia State Bar (VSB) has backed off from a proposed ethics opinion that would have restricted Virginians’ ability to use affordable fixed-fee legal services.

The proposed opinion would have declared that lawyers were acting unethically by participating in programs where a company advertises their services for discrete tasks—such as creating a will, reviewing a lease, or filing for an uncontested divorce—and charges a fixed flat fee for those services. The opinion was clearly directed at Avvo Legal Services, which has begun to roll out such services in markets nationwide.

In the proposed opinion, the VSB’s Standing Committee on Legal Ethics opined that lawyers could be violating legal ethics rules by paying a marketing fee to a company like Avvo, which it considered a violation of the prohibition on lawyers sharing fees with non-lawyers. It also said that it would be unethical for Avvo to maintain possession of client fees while a client waits for the lawyer to complete the work for which they were hired. Instead, the committee claimed, such money should be held in the lawyer’s client trust account.

Responsive Law submitted comments to the committee opposing the proposed opinion. We noted that clients were likely to be better protected against misappropriation of their fees under Avvo’s model than by a client trust fund. A client trust account, we noted, “is not a subterranean vault guarded by a goblin at Gringotts Wizarding Bank; it’s a paper (or electronic) construct to which the lawyer has complete access.” By contrast, under Avvo’s model, it holds the fees until the client indicates that the lawyer has satisfactorily completed the work.

Our comments also noted that a lawyer’s payment of a marketing fee to Avvo is a reasonable business expense, much like a credit card processing fee, and is also a totally reasonable way for lawyers to advertise that causes no harm to consumers. Rather than looking for technical violations of the ethics rules, the VSB should consider whether the increased access to legal services such services provide outweighs a theoretical harm that has not been demonstrated.

Finally, we pointed out that attempts by the VSB to restrict innovative new business models is a potential violation of the U.S. Supreme Court’s recent ruling in North Carolina State Board of Dental Examiners v. Federal Trade Commission. In that case, the Court held that self-regulating professions cannot hide behind “state action” immunity from antitrust law when the regulators are market participants. Several elements of the proposed opinion relied upon bar rules that are anticompetitive, making antitrust liability a strong possibility for the VSB, the Ethics Committee, and their individual members.

Aside from Avvo and one individual lawyer, Responsive Law was the only entity to submit comments opposing the proposed ethics opinion. In response to those comments, the Ethics Committee voted not to submit the proposed opinion to the Bar Council. VSB Ethics Counsel James McCauley told Virginia Lawyers Weekly (sub. req’d) that the committee now plans to “go back and study the affected rules.”

To read Responsive Law’s comments to the VSB, click here.

Published in Blog

The American Bar Association’s Commission on the Future of Legal Services has just released its final report and recommendations. Responsive Law will have a lot to say about this report over the coming weeks and months, but we’d like to make a few important points upon its release.

Responsive Law testified to the Commission numerous times. The Commission, which had among its membership a number of legitimate advocates for a more open, innovative, and accessible legal system. We had great hopes that it would issue recommendations that would make legal help available to the millions of Americans who cannot afford a lawyer.

The first part of the Commission’s report, in which it outlined its findings, lived up to this promise. Unfortunately, the second part of the report, consisting of the Commission’s recommendations, was a disappointment in which the Commission let down the millions of Americans whose problems it had so thoroughly described.

The Commission’s findings run several pages. Among them are the following, perhaps most relevant to a more accessible legal system:

“Most people living in poverty, and the majority of moderate-income individuals, do not receive the legal help they need.“

“The public often does not obtain effective assistance with legal problems, either because of insufficient financial resources or a lack of knowledge about when legal problems exist that require resolution through legal representation.”

“New providers of legal services are proliferating and creating additional choices for consumers and lawyers.”

“Many lawyers, especially recent law graduates, are unemployed or underemployed despite the significant unmet need for legal services.”

“The traditional law practice business model constrains innovations that would provide greater access to, and enhance the delivery of, legal services.”

“The legal profession’s resistance to change hinders additional innovations.”

To summarize, the Commission identified the following premises:

1) People aren’t getting legal help and don’t know where to find it.

2) There are many innovative legal service providers—both lawyers and non-lawyers—who would be able to help the public if they weren’t constrained by traditional business models and the legal profession’s resistance to change.

The obvious conclusion from these premises is that the ABA should act to remove the barriers that prevent innovative service providers from helping the public. However, the Commission failed to do so.

Where the commission could have made strong recommendation that the ABA remove regulatory barriers, it instead bowed to bar pressure and made a series of milquetoast pronouncements urging further study and consideration.

Rather than saying, “Lawyer-regulators, tear down these walls!” the Commission has engaged in a policy of appeasement toward the ABA, leaving consumers to face the profession’s continued indifference toward their exclusion from the legal system.

 

The Commission Calls For Further Study of the Issues It Has Spent Two Years Studying

The Commission’s overarching recommendation regarding regulation is that “Courts should consider regulatory innovations in the area of legal services delivery.” After spending two years considering regulatory innovations itself, the Commission needed to do better than telling courts to merely consider them.

The Commission is just as passive in how it addresses specific areas of regulation.  Recommendation 2.1 states “Courts should consider adopting the ABA Model Regulatory Objectives for the Provision of Legal Services.”

Here the Commission encourages multiple layers of bureaucracy between its recommendation and any actual regulatory change. The Model Regulatory Objectives, while important, are not themselves new regulations, but merely a framework to use when adopting regulations. And the Commission doesn’t even recommend that courts adopt the Model Regulatory Objectives, only that they consider doing so!

The next recommendation from the Commission is equally obsequious. Recommendation 2.2 states: “Courts should examine, and if they deem appropriate and beneficial to providing greater access to competent legal services, adopt rules and procedures for judicially-authorized-and-regulated legal services providers.”

Putting aside whether non-lawyer legal service providers (LSPs) should be regulated by the courts, this recommendation asks the courts only to examine such regulation, not necessarily to adopt it. In fact, the Commission makes clear that (after two years of study) it “does not endorse the authorization of LSPs in any particular situation or any particular category of these LSPs.”

The Commission is at its most timid in addressing alternative business structures (ABS), which would allow non-lawyer ownership and investment in law firms. As we’ve emphasized in comments to the Committee and elsewhere, ABS could foster the creation of mass consumer law firms, which could provide consumers with access to an affordable lawyer for everyday legal matters such as family law, wills, housing, and employment, in the same way that H&R Block provides affordable tax help.

The Commission’s Recommendation 2.4 reads, “Continued exploration of alternative business structures (ABS) will be useful, and where ABS is allowed, evidence and data regarding the risks and benefits associated with these entities should be developed and assessed.”

The Commission notes that it “undertook a robust examination” of ABS. It released an Issues Paper on the subject, which included reference to eight major studies of actual and prospective ABS models published in the last two years. The Issues Paper generated comments from 33 organizations and dozens of individuals. Yet, after all of this, the Commission can only conclude that “continued exploration…will be useful”!

The Commission has already undertaken this useful exploration, and the evidence it has gathered weighed heavily in favor of allowing ABS. Furthermore, recommending repeal of the ABA position against ABS would not have mandated that any state allow ABS, let alone that any firm become one. Unfortunately, though, the Commission was unable to take even that small step.

Giving credit where it is due, the Commission did actually make a wise recommendation with regard to regulation of online service providers. Recommendation 2.3 urges states to use caution in regulating these new service providers, lest they stifle innovation that is bringing legal access to millions of Americans. This is a situation where the generally applicable consumer fraud laws provide adequate protection to the public, and additional regulation could stifle an industry that is just beginning to realize its potential in bridging the access to justice gap.

In most cases, though, the extreme caution exercised by the Commission is not indicative of considered restraint, but of deference to the prevailing wishes of the most hidebound parts of the bar, as embodied by the ABA. What makes this particularly disappointing is that the Commission has many members who are passionate about innovation in the delivery of legal services and who realize the necessity of moving away from the status quo if legal services are ever to be within reach of the average American. In fact, the Commission’s finding of fact make this point exceptionally well.

 

Why Was The Commission So Deferential To The Bar’s Status Quo?

Why, then, did the Commission act so timidly in failing to make what it had to know were the logical policy recommendations based on its findings? I have no inside knowledge of the Commission’s thoughts or processes, but I have a couple of theories to share.

One possibility is that the Commission, fully aware of the difficulty that any reform proposal faces from the ABA House of Delegates, decided that it would be more prudent to push for incremental reform. Every reform movement has to make the decision between the ideal and the possible. However, if the Commission purposely decided to advocate only incremental reform, then it wasted an opportunity.

The Commission’s recommendations are not legislative proposals to be voted up or down, but the results of the collective wisdom of two years of study. It’s not important in this case whether the recommendations would be approved; it’s important that they solve the problems the Commission was charged with studying. Rather than pulling its punches, the Commission could have played a role as the ABA’s conscience by reminding it of the real access to justice concerns that the bar has created by supporting lawyer-focused, rather than consumer-focused, regulation.

A second possibility is that the Commission was unduly influenced by the lawyer establishment. I don’t mean to suggest any sort of corruption, but rather that the overwhelming majority of voices that the Commission heard were from lawyers and bar groups. Of the hundreds of comments received by the Commission, nearly all were from ABA entities, state courts, state bar associations, lawyers, and businesses providing legal services. At the Commission’s invitation-only National Summit on Innovation in Legal Services, Responsive Law was the only consumer group in attendance. And, the members of the Commission, while often dedicated to reforming the legal system and increasing access to legal services, are all lawyers themselves.

In its findings of fact, the Commission noted,

“The legal profession continues to resist change, not only to the public’s detriment but also its own. During the Commission’s public hearings and the ABA House of Delegates floor debate on Model Regulatory Objectives for the Provision of Legal Services, as well as breakout sessions at the National Summit on Innovation in Legal Services and grassroots legal futures meetings across the country, the Commission repeatedly heard similar remarks about the profession’s delayed adoption of, if not outright resistance to, innovations in technology, systems process improvement, and other developments that could benefit consumers of legal service but would affect traditional ways of delivering legal services.”

It is unfortunate that the Commission may have succumbed to the same resistance to change that it lamented in the rest of the profession. However, such a result may have been inevitable. After all, when a Commission publicizes its activity through the ABA website, holds its hearings at ABA meetings, and gives over 70 presentations with nearly all taking place at bench or bar meetings, it’s not surprising that the process will be dominated by lawyers. Given the predominance of lawyers in this process, it’s a credit to the Commission that its findings of fact were not slanted toward the bar’s status quo.

 

A Clear Sign That Lawyer Self-Regulation Cannot Work

If this second theory about undue influence is correct, then it provides strong support for Responsive Law’s position (as recently articulated in our testimony to the California Task Force on Governance in the Public Interest and the California Assembly) that ultimate regulatory oversight of the legal profession needs to be vested in a publicly responsive body that does not consist predominantly of members of the profession. In making the rules governing the legal profession, state bars and supreme courts follow much the same process as the Commission did, only on a smaller scale. They issue proposals for public comment that appear where only lawyers are likely to see them, and then hold hearings where they hear only from lawyers about how lawyers should be regulated.

If a commission consisting largely of people sympathetic to the access to justice problems faced by people in this country spent two years studying those problems only to issue recommendations consisting largely of platitudes, aspirations, and calls for further study, then there’s no chance that bar associations or state supreme courts, no matter how noble their motives, can fairly assess regulation of the their own profession. Regulation of the lawyers, by the lawyers, inevitably becomes regulation for the lawyers. The American public, whose interests the bar claims to be protecting, deserves better.

Published in Blog

Responsive Law has just released its Report Card on Barriers to Affordable Legal Help. The report card grades all 50 states and the District of Columbia on how their regulations regarding the practice of law restrict consumer access to the legal system. Unfortunately, the news is not good, with no state receiving a grade higher than a C.

The report card graded three areas:

  1. barriers to affordable help from lawyers (45% of total grade),
  2. barriers to affordable help from non-lawyers (40%), and
  3. support for self-represented litigants (15%).

 

Barriers to Affordable Lawyer Help

The first area the report card graded was Barriers to Affordable Lawyer Help.

 

Non-Lawyer Ownership of Law Firms

Most of this grade was determined by whether the state allows non-lawyer ownership. Non-lawyer ownership of law practices would allow innovation and economies of scale that don't exist in the current law firm model. Nearly all consumer law firms—those that offer services in areas such as estate planning, family law, housing, employment, and consumer disputes—consist of fewer than ten lawyers. At this scale, legal services are still very individualized. Furthermore, lawyers in such a small firm have to spend much of their time on marketing and management, rather than on the practice of law.

Allowing non-lawyer ownership would permit the creation of mass-market consumer law firms that could use their scale to mechanize much of the most common legal work. They could also keep lawyers out of both rote legal matters and management and marketing, reserving their high-cost labor for legal oversight and review and for thornier legal questions. All of this would significantly reduce the price of a lawyer.

Unfortunately, with only a couple of very minor exceptions, non-lawyers are not allowed to have an ownership interest in a law firm in the U.S. On the other hand, in England and Australia, non-lawyer ownership is permitted and regulated to protect consumers from any potentially adverse impact on clients. As a result, people in those countries have access to a wider range of reasonably-priced consumer legal services, on Main Street or in the mall.

 

Other Regulations Affecting Affordable Lawyer Help

The other areas making up the Barriers to Affordable Lawyer Help grade were what type of advertising restrictions are placed on lawyers, whether consumers can hire lawyers from other states, and whether consumers are allowed to use "unbundled" legal services (hiring a lawyer for just part of their legal matter).

Restrictions on lawyer advertising often leave consumers with limited ways to find out about lawyer services. In a Yelp economy, they leave consumers stuck with an archaic model where the bar's recommended way to find a lawyer was to ask for a referral from a friend at the country club.

Restrictions on multijurisdictional practice unnecessarily restrict consumers' options based on an outdated notion that being admitted to the bar in a state has a high correlation with knowledge of that state's law. In a national economy where much of the law is identical from state to state—and where lawyers' skill is as much in finding the law as in knowing it off the top of their heads—it's irrational to prevent a Tennessee lawyer from handling a legal matter in New Jersey, particularly if the Tennessee lawyer is an expert in the particular area of law at issue. Canada has taken a much more progressive approach to multijurisdictional practice by adopting a National Mobility Compact, which allows a lawyer admitted to practice in one province to practice fairly easily in another province.

One area that most states do fairly well in is in allowing limited scope, or "unbundled" legal services. For example, in most states, a person can prepare their own documents for a court appearance while hiring a lawyer just to represent them in court. Our report card analyzed whether states provided enough assurance to lawyers that they could offer these unbundled services without getting dragged into representing the client on a wider basis. Fear of getting dragged beyond the agreed-upon scope of representation is one of the reasons lawyers don't offer unbundled services more frequently.

 

Grades

Because of the great weight given to whether states allow non-lawyer ownership of law firms, almost every jurisdiction received a grade of D. (The lone exception was the District of Columbia, which allows non-lawyer ownership under extremely limited circumstances, and which received a C.) If England and Australia were states, they would have received grades of A due to their more progressive approach to non-lawyer ownership.

 

Barriers to Affordable Non-Lawyer Help

The second area the report card graded was Barriers to Affordable Non-Lawyer Help. In other words, does the state allow consumers to use service providers other than lawyers to help them with matters that may be considered legal in nature?

 

Laws Restricting Non-Lawyer Help and Enforcement of Those Laws

First, we analyzed what the state's law says about the types of services that require a lawyer. Specifically, we looked at various ways in which competent non-lawyers could provide help (such as document preparation, financial advice, real estate closings, contract negotiations, and free advice from friends and family) and researched whether state law allowed or prohibited people from getting non-lawyer help for such activities. State laws range from draconian prohibitions to ambiguity, with few laws specifically allowing non-lawyer activity. The ambiguity in these laws is almost as bad as a prohibition, as a service provider is unlikely to offer a service that exists in a legal gray area.

Second, we analyzed the level of enforcement of unauthorized practice of law (UPL) restrictions. In other words, how often does the state prosecute this offense, what resources do they put towards prosecutions, and who is doing the prosecuting? States in which the attorney general has sole responsibility for prosecuting UPL were graded more harshly than those in which the state bar plays a significant role. In the former situation, UPL prosecutions are more likely to be undertaken in the public interest; in the latter they are more likely to be undertaken for anticompetitive reasons.

 

Grades

Grades in this area ranged from a B for Washington and 16 other states to an F for Florida, North Carolina, and Ohio. Washington is noteworthy in that it has just issued the first licenses for limited license legal technicians, or LLLTs. LLLTs are individuals with paralegal training who are licensed by the state to provide information and advice in family law matters, akin to the role of a nurse practitioner in medicine.

The states with the lowest grades earned them on the basis of overly aggressive UPL enforcement by the bar. For example, Florida has a $1.8 million budget for UPL enforcement that it has used for activities such as pursuing charges against a senior citizen who helped a fellow parishioner complete workers compensation forms.

Again, the low grades that most states received stand in stark comparison to more consumer-friendly countries. England, which licenses a wide range of non-lawyer service providers, would have received an A in this category. Australia would have ranked behind only Washington.

 

Treatment of Self-Represented Litigants

The third area the report card graded was court treatment of self-represented litigants. In other words, we wanted to know how easy it was for people to resolve disputes without a lawyer. We based grades in this area on the Justice Index, published by the National Center for Access to Justice at Cardozo Law School.

This grade took into account whether court forms and procedures are understandable to the average person, whether judges and court staff are trained to assist self-represented litigants, and whether courts have internal processes to monitor and review their treatment of such litigants. Hawaii was first in this category with an A grade; Mississippi was last with an F.

 

State Bars Have Yet To Comply with the Supreme Court's Dental Examiners Decision

Most of the obstacles to better access to the legal system stem from the fact that state bars frequently create rules governing the delivery of legal services without adequate oversight from the elected branches of government. When any group of professionals sets its own governing rules for the profession, its tendency is to favor itself at the expense of outsiders. Thus, established lawyers are likely to set rules that favor lawyers operating according to the status quo over outsider lawyers who may have revolutionary ideas about how to innovate the profession. And lawyers are likely to set rules that block competition from non-lawyers, no matter how competent their services and how much the public needs them.

The U.S. Supreme Court ruled earlier this year in North Carolina State Board of Dental Examiners v. FTC that professionals are not exempt from antitrust laws when they act without adequate oversight to limit competition. We hope that our report card will shine some light on state bars' continued reluctance to adhere to this principle. We also hope that it will demonstrate the desperate need of most Americans for affordable legal help and the failure of the organized bar to allow them to receive it.

 

Published in Blog

Friday, November 6 is Love Your Lawyer Day. On this day, according to the American Lawyer Public Image Association (ALPIA), we should refrain from telling lawyer jokes and from “lawyer bashing.”

Responsive Law has never told lawyer jokes (although, speaking as a lawyer myself, the profession could certainly have a thicker skin about them), but we’ve probably been accused of lawyer bashing a few times. However, our disdain is not for lawyers as a profession, but for the system of unchecked self-regulation that allows lawyers to prevent competition and innovation that could benefit consumers.

So, on Love Your Lawyer Day, if you’ve used a lawyer and were happy with their services, feel free (as ALPIA suggests) to send your lawyer flowers, or make a donation to charity in their name. (Responsive Law would be an appropriate recipient!) But also ask your lawyer a couple of questions:

  1. Do you feel that you, as a lawyer, are the only professional who is competent to help me with legal matters?
  2. Do you believe that lawyers should only work under the supervision of other lawyers, and should not provide services to the public through a company with non-lawyer ownership.

If the answer to the first question is yes, you may want to hold off on that floral arrangement. Your lawyer wants to prevent you from using paralegals, financial planners, and a host of other less expensive professionals to address problems that the bar considers the exclusive domain of lawyers.

And if the answer to the second question is yes, you may want to make that charitable donation in someone else’s name. Your lawyer is standing in the way of innovation that could allow companies like Walgreens, Costco, or Sam’s Club (not to mention startups that are currently a glimmer in someone’s eye) to use economies of scale and better business practices to provide you a lawyer at a fraction of the $200/hour it costs you now.

After taking back your flowers and rededicating your charitable gift, ask your lawyer what he thinks of the Supreme Court’s February 2015 decision in North Carolina Board of Dental Examiners v. FTC. In this case, the Court held that a profession may not use its regulatory power to prevent competition unless the profession is adequately supervised by the state. Responsive Law field a brief in this case telling the court about how state bar associations do exactly this, filing complaints against non-lawyer competitors for the unauthorized practice of law.

Some would call our Supreme Court brief lawyer bashing. But we’d prefer to think of it as supporting consumers. Lawyers are no worse (and no better) in their ethics than any other profession. But they participate in a system that allows them to set their own rules, without public input.

So, on this Love Your Lawyer Day, ask your lawyer one more question:

3. Will you tell your state bar to abolish rules that solely protect lawyers’ interests, and to instead make rules that increase public access to legal help?

To be fair, some of the lawyers out there already are doing this. We’d like to send virtual bouquets to all the lawyers who have spoken out against the lawyer monopoly and in favor of innovation in the delivery of legal services. Thank you for being part of the solution, not part of the problem!

Unfortunately, many state bar associations are dominated by old-school lawyers who don’t want to change a system that has benefited them for decades, even if it’s at the expense of the public. Not only are those lawyers not going to get flowers from us, but we will continue to fight them until the public gets the affordable, accessible legal system it deserves.

If that’s lawyer-bashing, then Responsive Law is certainly guilty of it. But removing an entrenched monopoly from its anti-consumer perch is more important than the hurt feelings of a few lawyers.

Published in Blog

In November 2014, the California State Bar Board of Trustees approved the creation and appointment of the Civil Justice Strategies Task Force. The charge of the task force was to analyze the reasons for the state’s justice gap: the conundrum of how there are so many lawyers yet so many Americans have unmet legal needs and cannot afford or access legal help. Specifically, the task force intended to study creative solutions and innovative strategies in use by other states and other countries that have the potential to greatly improve access to justice in California.

Responsive Law sent an array of innovative and creative solutions to the Civil Justice Strategies Task Force. We advised the task force to allow for alternative business structures to address the justice gap. Alternative business structures entail permitting outside investors to provide capital to legal service companies or allowing non-legal companies to partner and share fees with a legal organization. Both the United Kingdom and Australia have allowed legal entities to accept outside investment from non-lawyers; yet no state in the U.S has done so due to unfounded concerns that outside investment will lead to an increase in unethical violations by lawyers. 

We specifically recommended that California allow outside investments in the growing number of legal startups that already exist in their state. We highlighted the fact that pro-bono services and legal aid literally do not have the capacity to provide even half of the unmet need for legal services. Thus, California needs to invest in creating a larger array of affordable legal services via outside investment in legal startups.

We also recommended allowing more non-lawyers to provide legal help to consumers. We cited the launch of limited license legal technicians (a regulated profession of non-lawyers who provide document preparation and other legal assistance) in Washington state. We also recommended the proven strategy of limiting the breadth of unauthorized practice of law claims (UPL). Research has shown that UPL cases are brought mostly by lawyers, for anti-competitive reasons, as opposed to a dissatisfied customer. As Responsive Law has noted before, such aggressive UPL enforcement chills legal innovation. Specifically we proposed that the task force create a safe harbor provision for document preparation similar to the one in Texas that has helped to provide many Texans with access to self-help tools. We also encouraged the task force to again look to the United Kingdom where non-lawyers referred to as McKenzie friends have operated for the past 50 years providing court navigation help, moral support, case paper management and advice on courtroom conduct for free or for a small fee.

Lastly, we encouraged the task force to take the lead (as opposed to waiting for other states) by launching a compact with other states to allow for multi-jurisdictional practice similar to what exists in Canada. In Canada, a lawyer can practice in any province; allowing multi-jurisdictional practice allows for greater competition in the provision legal services and more lawyers and law firms to reach economies of scale. Thus the strategy of multi-jurisdictional practice could provide Californians with unprecedented access to lawyers. We believe California is off to a good start of addressing their growing access to justice gap; the strategies and solutions we have recommended will supercharge California’s potential to actually close the justice gap.

You can read our comments to the California Bar here.

Published in Blog

A recent article in National magazine by Mitch Kowalski, How to Make a Law Firm Float, provides an in-depth look at the Australian law firm Slater & Gordon Limited. This firm has paved the way for other flourishing law firms around the world by showing them how to run a law firm that provides excellent customer service as well as excellent legal services.

The article emphasizes the focus the firm places on bringing satisfaction to its clients. Potential clients start off their experience at Slaters by calling the firm, where specially trained call center staff will triage their legal problems and decide which of the lawyers in the firm’s 30 practice areas the client should be directed to. This alone is a major improvement over the process for finding legal help in the US. Most firms that handle legal matters for individuals and small businesses consist of a fewer than a dozen lawyers and specialize in only a handful of areas of law. For most Americans, finding a lawyer involves phone calls or in-person visits to multiple law firms. And in each of those calls or visits, the customer has to get in touch with the lawyer who might handle her case to decide whether the lawyer is the right one for her.

When it comes to fees, Kowalski praises the firm on its fixed prices that are laid out based off of the influence of the demography of their clients. Because of the large scale on which Slaters practices—70,000-80,000 inquiries a year—the firm is able to collect enough data about the cost of providing its services to determine flat fees which are low enough to be attractive to consumers while still allowing the firm to turn a profit.

Kowalski emphasizes that “at Slaters the focus is on making the business of law run better. There’s an implicit understanding that quality legal service is a given—and expected.”

How does Slater’s manage to provide quality legal services and quality customer service simultaneously? There are two factors that help it to do so. First, the firm uses non-lawyer expertise for the business side of its operations. Lawyers don’t know how to run a call center, or how to examine customer data to set appropriate fees, but business experts do. Second, the economies of scale from running a large enterprise—Slater’s employs about 1600 people—allow it to provide lower fees than the typical consumer law firm that’s about one percent of its size.

Both of these factors are enabled by Australia’s policy of allowing outside investment in law firms, which the US prohibits. American restrictions on outside investment not only make it harder for lawyers to implement innovative business models, and thus remove the benefits that American clients could see from a firm modeled after Slaters. In a previous blog post, we wrote at length about how outside investment can improve client access. Without outside investment, however, it’s impossible for US lawyers or businesspeople to raise the capital to create a mass-market law firm.

Slater is leading the way for other law firms in the future by implementing the fundamental changes necessary to provide appropriate, helpful services for their clients. By running the law firm as if it’s providing a service (which, after all, it is!), it’s able to better fit those services to the needs of its clients. If American law firms were able to adopted this business model, then the entire legal sector would be brought to a whole new level.  The ABA and state policy makers need to reconsider their long-standing ban on outside investment, for the benefit of all Americans seeking legal help.

 

Saron Berhe is a Responsive Law intern.

Published in Blog

A new book published by the Brookings Institution is calling for massive deregulation of the legal system. The book, First Thing We Do, Let's Deregulate All the Lawyers, uses statistical analysis to prove that the cost of legal services is made artificially high by monopolistic practices. These practices include restrictions on who may practice law (and the broad definition of the practice of law), unnecessary restrictions on the number of graduates from accredited law schools, and a legal system that is often impossible to navigate without professional help.

The authors spend a good portion of the book providing the statistical proof for what many of us would take as a given: The lawyer monopoly allows lawyers to charge more for their services than they would in a free market. Their proposed policy solutions include eliminating mandatory licensing of lawyers, and allowing non-lawyers to own or invest in law firms. Responsive Law has advocated steps toward both of these solutions.

While it's not clear that completely eliminating mandatory licensing would provide consumers sufficient protection against unqualified service providers, it is clear that the current level of licensing requirements exist only to protect lawyers, not consumers. The oft-cited parallel to medical licensure applies here. It's certainly reasonable to require neurosurgeons to go through several years of education and training and to pass a test before they are allowed to cut you open. On the other hand, the cashier at Walgreen's doesn't need any medical training to sell you a bottle of aspirin. Other medical service providers—such as nurse-practitioners, physician's assistants, pharmacists, and physical therapists—have licensing requirements that are less burdensome than those of doctors. In law, the licensing structure treats every legal issue as if it's brain surgery. As a result, consumers have minimal access to the "in-between" levels of service that they do in medical services. Anyone wishing to obtain an uncontested divorce or a simple will must either go to a full-service lawyer or fill out legal forms without personal assistance. As we've pointed out numerous times, the legal profession needs to loosen its restrictions on who can provide legal services so that people can obtain affordable legal assistance at a level of expertise appropriate to their needs.

Permitting outside investment in law firms is also necessary to facilitate the innovation required to create new models for delivery of legal services which will benefit consumers. Currently, with only minor exceptions, US law firms may not have non-lawyer ownership. The American Bar Association is considering this issue right now in its Ethics 20/20 Commission. However, the Commission has already said that it will consider only active outside investment in firms. Responsive Law's comments to the Commission made it clear that if consumers want to benefit from the innovation that has occurred in other industries, then lawyers will need access to capital beyond their own pockets.

The authors of this book provide important statistical support for arguments that Responsive Law and other advocates for greater legal access have been making for decades. We hope that this book will shine greater light on this important issue and create greater awareness of how the lawyer monopoly cripples access to justice.

Published in Blog
Tuesday, 30 March 2010 20:00

Popularity of online law rising

In a recent commentary on the Wisconsin Law Journal's Blog, Karl Robe noted the increasing popularity of online legal services like LegalZoom, warning that such sites pointed to a trend toward the commoditization legal services. Robe notes that this potential trend toward commoditization "means the profession and its ability to maintain profit margins is in jeopardy of value erosion. Unless more traditional practices and firms enhance their online status to rise above the din, they risk being drowned out of the conversation."

Perhaps things aren't quite as desperate as Robe makes it seem, neither for lawyers or consumers. It is understandable that the legal profession has concerns about its services becoming commoditized; legal advice can be one the most important services a consumer pays for. But just because someone purchases a will online, for example, doesn't make a will a "commodity." There may be a great many people for whom an online will is more than enough to suit their needs. But not everyone will buy their law off the rack, so to speak. And for those individuals, establishing a traditional attorney/client relationship might be the best choice.

While I doubt that traditional law will ever be "drowned out of the conversation," Robe does offer good advice to attorneys in the sense that traditional lawyers need to reconsider how they make their services available to consumers. Far from deflating the value of traditional legal services, alternative providers may well open new markets to attorneys by allowing entry into the market for legal services to people normally excluded.

That consumers seem to be embracing new ways of receiving legal services merely reveals that the market for legal services may be broader than attorneys may realize. Sound legal advice is just as in demand and just as essential now as it ever was and that advice is has the same value whether it is provided online on an as-need basis or across a desk in a law office conference room. The important thing is that the advice finds its way to the consumer who need it.

Published in Blog
Friday, 30 July 2010 11:04

Don't Sue Them; Join Them

Online document preparation has been around for years, and will hopefully continue to thrive, despite the efforts of the organized bar to restrict consumers' access to this low-cost avenue for legal help.

While some lawyers use accusations of the unauthorized practice of law to try to shut down online providers using lawsuits, others have decided that competition is the best way to challenge these providers.

This article features John Gerber, a lawyer who has created an online portal, UpstartLegal.com, to provide self-help document preparation services to startup companies. In addition to self-serve document preparation, the site offers additional services that a lawyer can perform, distinguishing Gerber's service from other online providers and showcasing the unique value that a lawyer can provide. By adding his own innovation to the model for legal service delivery, Gerber is doing good business while expanding the range of choices available to the public.

Published in Blog
Monday, 05 April 2010 20:00

New Jersey bans virtual law offices

The New Jersey State Bar Association's Advisory Committees on Professional Ethics and Attorney Advertising issued a joint opinion on March 26th effectively banning lawyers from creating virtual law offices. The decision requires every attorney to maintain a permanent address. This comes as virtual law offices, in which the attorney maintains an online or "virtual" law office and rents office space as needed, are growing in popularity. According to New Jersey State Bar Chief Allen Etish, "[t]he need for a bona fide office is necessary," while acknowledging "that the idea of a virtual office needs more study," noting that virtual law offices are "not totally wild-eyed or preposterous."

It is very good to hear that the New Jersey State Bar is interesting in further examining the use of virtual offices, but in rendering its opinion has shown a reluctance to embrace current trends in legal practice that might help make the law more affordable for consumers. The decision effectively requires an attorney to either maintain a permanent office or to create one in their home, which creates problems for attorneys who'd like to keep a home office, but do not want to use it to meet with clients or to list the address for privacy and security reasons. For consumers, office space contributes to the attorney's overhead, which can increase the costs for that attorney's services. Allowing attorneys to maintain virtual offices would help them provide consumers with lower cost alternatives to a traditional law office.

Published in Blog
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