To paraphrase the old joke about communism: all professions are equal, but some are more equal than others. Once again, lawyers have carved themselves an exemption from Federal regulations. In response to the growing trend of predatory mortgage relief services, the Federal Trade Commission created a rule to protect homeowners facing foreclosure by preventing debt relief companies from collecting fees upfront and from making false or misleading claims about their services. Most lawyers are exempt from these new requirements.

Having successfully lobbied to gain the exemption, ABA President Stephen Zack applauded the FTC's decision, saying that "[b]y exempting most practicing lawyers who help consumer clients to renegotiate their mortgages or avoid foreclosure, the final FTC rule...will allow lawyers to continue to provide the critical legal services and expertise homeowners in crisis need." This statement raises more questions than it answers. Are lawyers unable to provide legal services without charging fees upfront or making false or misleading statements to their clients? Of course not. Why then should lawyers be exempt from rules intended to protect the public?

Lawyers claim that they need not be subject to such regulations because they are held accountable by various state Bar rules governing attorney conduct. While there are rules of professional conduct that, for example, prohibit lawyers from making false or misleading statements or control how lawyers may charge fees, such rules are often far less stringent than similar state or federal consumer protection laws. Worse, according to the ABA's own statistics, less than 5% of all disciplinary complaints made against lawyers nationwide result in any formal charges. Even when charges are filed, disciplinary proceedings are often conducted privately and in the rare instances when lawyers were subjected to formal sanction, nearly half received only private reprimands.

Under the current system, the hallmarks of lawyer regulation are leniency and secrecy. Lawyers should be regulated like any other profession. If charging fees upfront to homeowners facing foreclosure is a bad thing for mortgage relief services to do, it is equally a bad thing for lawyers to do. Lawyers have the same capacity for misconduct as any other professionals and can hardly claim to have the best interests of consumers in mind if they repeatedly seek to be exempt from rules and laws designed to protect them.

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Michael Frisch of Georgetown Law Center has just written an outstanding and frightening post about an attempt by the District of Columbia Bar to quietly takeover control of the budget for the District's bar discipline office from the D.C. Court of Appeals. Taking over the budget for discipline would mean that lawyers would exercise financial control over its own prosecution for disciplinary violations. Professor Frisch calls this "the most dangerous idea in the history of the D.C. Bar." From a consumer perspective, it's hard to disagree.

An inherent problem of self-regulation of any profession, including law, is that practitioners may act in the best interests of their guild, rather than in the best interests of the public. There are many areas where this takes place in the regulation of the legal profession. For example, restrictions on who may provide law-related services, such as document preparation, are justified by the bar as consumer protection measures, but act primarily to prevent consumers from having access to low-cost, non-lawyer service providers who, not surprisingly, might be in direct competition with lawyers.

In disciplinary matters, the bar generally argues that outside regulation is unnecessary because it can act on its own to protect consumers from lawyers who act against their clients' interests. The problem with this argument is that most lawyer disciplinary systems are already weak, administering meaningful discipline in less than two percent of all complaints they receive. Taking away budgetary independence of bar counsel's office will further handcuff the many dedicated lawyers who are trying to police the profession on an already limited budget. Furthermore, it completely undermines the argument that the bar is capable of regulating itself.

I've only been a D.C. bar member for about half as long as Professor Frisch, so I don't have the historical knowledge to confirm his claim that this is "the most dangerous idea in the history of the D.C. Bar," but it would take a remarkably bad idea to top it.

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The law firm DLA Piper is being sued for overbilling, which has led to increased discussion of the intersection between legal ethics and the economics of law practice. Many people are taking this oppportunity to decry lawyers' lack of ethics. It will come as a shock to many people that lawyers are not any less ethical than the rest of the population. However, it will come as a shock to many lawyers that the rules governing lawyer ethics do not make them any more ethical than the rest of the population.
This case is illustrative of the problems with the system of self-regulation governing the legal profession. Consumers have little recourse against lawyers who have ripped them off. In many states, lawyers are exempt from generally applicable consumer fraud laws, whether by statute or by court ruling. These exemptions are based on the theory that the legal profession will enforce its own rules against lawyers who engage in misconduct. However, the bar's record of enforcing its own rules is abysmal. According to American Bar Association surveys, fewer than 5% of formal complaints to state disciplinary authorities result in public sanctions against a lawyer. (Some complaints lead to private reprimands, which is analogous to a judge whispering in a gulity defendant's ear that he has been very naughty and shouldn't commit any more crimes.)
Overbilling by lawyers also rips a hole in the profession's most common argument against allowing outside investment in law practices. As we've noted many times, outside investment could spur desperately-needed innovation in the delivery of legal services that would increase access and lower prices. The bar has countered that outside investors would pressure lawyers to put profits ahead of their obligations to their clients. Overbilling like that alleged in the DLA Piper suit makes it clear that lawyers already face pressure to increase profits from inside their practice. Allowing outside investment would not create an incentive to put money ahead of clients, since that incentive already exists.
The legal profession often envisions itself as somehow above the reach of ordinary laws due to its adherence to its own codes of ethical conduct. However, this self-regulation is often equivalent to having no regulation at all. The profession needs to remove its blinders and recognize that its members are subject to the same human frailties and temptations as everyone else. If they're not subject to the same laws as everyone else, then it should come as no surprise when lawyers take advantage of a system that shields them from accountability.
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