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The U.S. Army’s Fort Drum, in upstate New York, is home to about 13,000 soldiers and their families. Derek Distenfield is a soldier stationed at Fort Drum. After eleven years of service, Distenfield will be leaving the Army in September. Distenfield noticed that Fort Drum had a higher divorce rate than most military bases and decided that in his post-military career he would do something to help his fellow soldiers with divorce and other legal problems they face.

In 2012, Distenfield founded Legal Docs By Me, a legal document preparation service. The company uses non-lawyers to help people complete legal documents for matters such as uncontested divorces, wills, and incorporations. The company opened an office in Watertown, near Fort Drum, in May. It offers document preparation for divorce and several other services for a flat rate of $399.

Since most people can’t afford a lawyer at $200 to $300 per hour, the company helps fill a gap in access to justice for people with simple legal needs that don’t require the expertise of a lawyer. Without document preparation services, people who can’t afford to hire a lawyer are left to identify appropriate forms to create a legal document on their own. Books from companies like Nolo and online services such as LegalZoom have helped fill some of these unmet legal needs, but many people prefer to work with somebody face-to-face on these matters, as shown by the large number of satisfied customers visiting the recently-opened Watertown office.

However, businesses that give people access to the legal system without a lawyer are a threat to lawyers’ monopoly, and recently New York Attorney General Eric Schneiderman has been on a mission to shut down Legal Docs by Me. Schneiderman is claiming that the business engaged in the unauthorized practice of law (UPL), and he ran an undercover sting operation to try to find evidence that paralegals at the business were providing legal advice.

Running a sting operation shows the desperation of a prosecutor trying to generate evidence of a crime with no victims. If consumers were being harmed by the alleged UPL at Legal Docs by Me, then the attorney general would have no trouble producing testimony from the victimized consumers. Instead, customers continue to flock to the business, and not a single UPL “victim” has come forward.

Even if a paralegal at Legal Docs by Me accidentally crossed the blurry line between permissible help and practicing law, it’s a misuse of prosecutorial resources to try to shut down the company. Undoubtedly, at law firms across the state, paralegals have crossed this line on multiple occasions. However, the attorney general is not sending undercover investigators into Manhattan law firms to ferret out paralegals who accidentally step into the forbidden territory of legal advice. This is clearly a case of the state’s chief lawyer using his prosecutorial power to protect his professional brethren. The attorney general should focus his office’s resources on real crime rather than trying to shut down a business that is helping to bridge the access to justice gap.

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Responsive Law has long supported the use of competent non-lawyers to assist people who are unable to afford a lawyer. Allan Rodgers, a guest contributor to Richard Zorza’s Access to Justice Blog, has called attention to a possible solution to this problem in his most recent post. Rodgers suggests the implementation of programs to train lay advocates who could represent clients in certain court proceedings. He praises the efforts by some states to start up programs that would train these lay advocates, but he still sees some hesitation and urges the states to make more radical changes. The current high cost of lawyers may force people to attend court hearings without any representation and without full understanding of the legal system. Lay advocates could be a step in the right direction towards fixing this problem without triggering the unauthorized practice of law.

In his blog post, Rodgers suggests that the implementation of lay advocate programs is moving slowly due to two primary concerns. First, some lawyers fear that having trained non-lawyers would threaten the legal industry. Second, some argue that lay advocates would not be able to represent their clients in court as well as a lawyer. However, Rodgers believes that neither of these concerns is well founded. In fact, he suggests that training non-lawyers could help both the legal industry and struggling clients. If more people were represented in hearings, by lay advocates or otherwise, more lawyers might need to be hired to oppose them in court. This would increase the use of lawyers, as well as non-lawyers, in the legal system. As for proper representation of clients, people represented by lay advocates have consistently fared better than those without any representation at all.

To put his ideas into action, Rodgers proposes a temporary experimental system, using volunteers who would be trained by lawyers. As this system gets rolling, a review process could also ensure that these lay advocates are representing their clients well and that everything is running smoothly. A potential group of candidates for lay advocacy work could be college graduates or law students who are looking for valuable work experience, creating a win-win scenario for both the clients and the lay advocates. New York has already taken a step in this direction with its Court Navigator program, which trains lay people to help provide legal information to unrepresented litigants in Housing Court. Other states should follow this lead and implement programs of the type that Rodgers recommends.

 

Mika Bray is a Responsive Law intern.

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Monday, 17 February 2014 19:00

Guest Post on Legal Innovation for UpCounsel

Recently, we wrote a guest post for our friends over at UpCounsel on Fee Sharing, Innovation, and the Consumer Interest.  You’ll have to click through to read the whole thing, but (briefly) the argument runs as follows:

American Bar Association Model Rule 5.4 prohibits lawyers and law firms from sharing legal fees with non-lawyers, and while this might sound innocuous, in reality Rule 5.4 is hurting everyone who doesn’t have a law degree.  The two justifications often given for the ban on fee sharing (the pernicious influence of non-lawyers and fear about the commercialization of the practice of law) simply don’t stand up to scrutiny.  The most salient impact of Rule 5.4 is that it stifles innovation in the legal services industry – innovation that could provide consumers with more value for their dollar when faced with a legal situation.  Despite successful liberalization of similar rules in other common-law countries like Australia and the UK, here in the US the American Bar Association has refused to even consider relaxing Rule 5.4.  The ray of hope?  An underreported Jacoby & Meyers lawsuit against the states of New York, Connecticut, and New Jersey is still working its way through the court system.  If successful, these cases could overturn the prohibitions on fee sharing and outside investment, giving the American legal services industry a much-needed breath of fresh air - and consumers’ wallets a much-needed break.

 

Danny Foster is a Responsive Law intern.

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Richard Zorza has an excellent blog post this week on a new program announced in New York Chief Judge Lippman’s 2014 State of the Judiciary Speech. The Court Navigator pilot program will provide “trained volunteer non-lawyers” to help unrepresented New Yorkers in Brooklyn and the Bronx navigate Housing Court and consumer debt cases. Here at Responsive Law, we have long argued that providing consumers with non-lawyer options for legal assistance is a core issue for providing real access to justice throughout society. We applaud Chief Judge Lippman’s continued efforts to address the legal needs of the most vulnerable New Yorkers.

But even as we cheer, we must also exhort Chief Judge Lippman, and New York as a whole, to push onward. Programs like the Court Navigators should be embraced and expanded, and policymakers should seek other ways to increase consumer choice and access to legal services. In England, for example, litigants are entitled to the assistance of a “McKenzie friend”—someone who may provide support and advice in navigating the case, and crucially, need not be a licensed attorney.  Likewise, New York Senate Bill 427, which Responsive Law has endorsed, would allow New Yorkers to choose non-lawyer representation in housing court cases.  Both of these would provide much-needed legal assistance to those who, unable to afford the price of a full attorney, today must to stand in court alone.  The Court Navigator program is certainly good news, but if it is truly a “milestone in the development of access to justice,” as Mr. Zorza claims, then we have miles further to go.

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New York State Chief Judge Jonathan Lippman has announced a new rule intended to better supply legal aid to poor New Yorkers. Specifically, in-house corporate attorneys who work in New York but are not members of the New York State Bar will now be permitted to do pro bono work in New York civil and criminal cases. Previously, only attorneys licensed to practice in New York were able to volunteer their expertise without restrictions. The change is intended to widen the volunteer pool that groups like the Legal Aid Society draw on to provide legal assistance to New Yorkers unable to afford a lawyer. The New York Times reported that “the measure has broad support, not only from the state and city bar associations, but from several big businesses seeking to burnish their image.” Responsive Law likewise supports this development, but New Yorkers deserve more.

Responsive Law has long been a supporter of Judge Lippman’s efforts to facilitate poor and middle-class New Yorkers’ access to their legal system.  However, this rule change is minor compared to the scope of the problem. The Legal Aid Society took 48,000 cases last year, but they were forced to turn away eight times that number – over 300,000. Why? Because there are not enough lawyers to meet the demand for legal services.

This rule change is a positive development, but according to Judge Lippman’s own estimate, it will only increase the pool of potential volunteers by a mere 5,000 lawyers. This will barely make a dent in New Yorkers’ unmet need for legal advice.  More profound reforms are needed to give all New Yorkers access to their legal system. Responsive Law has a two-pronged solution to the problem. 

First, competent non-lawyers should be permitted to supply legal services. Currently, social service organizations’ attempts to assist New Yorkers in navigating the courts are stifled by the requirement that only attorneys may provide legal services. These organizations should be able to use people who have expertise, but not a law degree, to provide assistance to those they serve. Non-lawyers are perfectly capable of helping to navigate the court process, a service which in many cases will be more valuable than the full legal analysis offered by attorneys. Imagine how many people Legal Aid could help every year if their volunteers could receive a few weeks or months of training in a specific field, rather than needing to spend years and thousands of dollars to get a general-purpose law degree.

Second, New York should allow outside investment in legal service providers, which is currently prohibited. There may be ways for lawyers in the private sector to deliver their services more efficiently, bringing the cost of a lawyer within the reach of even poor New Yorkers. Services like TurboTax and H&R Block have helped millions of Americans by making accounting expertise cheaper and more widely available. Where is the innovator who will do the same for legal matters? They have been locked out of the industry by these outdated regulations.  New York, and likewise the rest of the United States, should look to the success of liberated legal industries in Australia and the UK, which have lifted the restrictions without harm to consumers. (For more about mass-market legal services, please see our testimony.)

The public’s need is too vast to be serviced by the small number of lawyers who work or volunteer in low-income legal assistance. Increasing the number of lawyers who are allowed to volunteer their services is a step in the right direction, but we must make great strides to provide justice to all New Yorkers.

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Groupon and Living Social are two companies which represent one of the most popular business models of the internet age. These companies offer discount certificates through online daily deal (“daily deal”) emails usable for products or services at local or national companies. These deals have restrictions on when you can use them, what locations will honor them, and what exactly the deal entitles the owner to. The deal company gives approximately 50% of the proceeds to the participating business and retains the other half. For example, a common deal is to pay $10 for $25 worth of food at a local restaurant or $10 for two movie tickets. The restaurant or movie theatre would get half of the amount paid and the company advertising the daily deal would receive the other half.

While restaurants have played a lead role in taking advantage of daily deal advertising, other industries have quickly followed suit, including personal care, home services, health services, and most recently the legal industry. However, while some legal practitioners are pushing for this consumer savings innovation, some bar associations are reluctant to allow it.

Currently New YorkNorth Carolina, and South Carolina have passed ethics rules allowing lawyers to offer online daily deals to potential clients. However, Alabama and Indiana have rejected such forms of advertising at the expense of legal consumers. 

Lawyers’ rules of ethics are the central issues involved in these states’ decisions to allow or disallow daily deals. These issues include excessive advertising costs, sharing legal fees with a non-lawyerclient trust accounts for unearned fees, an inability to perform conflict checks, and an inability of a lawyer to competently and diligently represent a client in their specific legal matter. However, while legal ethics rules about these subjects generally help protect consumers of legal services, the strict application of these rules to online daily deals harms consumers rather than protects them. 

The legal ethics concerns of states such as Indiana and Alabama are not valid in this situation. While it is important to lawyers to observe the highest standards of ethics, prohibitive regulations should not be put in place at the expense of consumers when far less restrictive measures are just as effective, and can allow greater access to affordable legal services.

The question of whether or not the cost of daily deals equal excessive advertising has become a contentious point. As stated previously, daily deal companies usually retain approximately 50% of the profits, and some critics consider that a violation of the cost allowed to advertise for legal services. However, lawyers should be free to choose this form of advertisement if they think it will be advantageous, and excessive advertising does not hurt a consumer.

States’ opinions are also split on whether daily deals violate the prohibition on sharing legal fees with a non-lawyer. These limitations are intended to protect the lawyer’s professional independence of judgment. Courts and bar associations are concerned that if someone other than the lawyer receives the lawyer’s fee or salary, the lawyer might place the interests of that third party over the client’s. In the case of daily deals, the third party merely disseminates the advertisement information the lawyer asked to be disseminated. The lawyers making use of these types of advertising owes no more allegiance to them than other lawyers who advertise in phone books or billboard owe to those companies. 

Responsive Law believes that since daily deal companies do not have the ability to exercise any control over the services that will eventually be rendered to the consumer, their use should not be considered prohibited fee sharing. South Carolina’s Ethics Advisory Committee agreed with this stance in a recent Advisory Opinion.

Another object that bar associations have to daily deals concerns the obligation of lawyers to have client trust accounts for unearned fees. Client trust accounts are set up by lawyers to keep clients’ funds segregated from the lawyer’s general funds. The purpose behind requiring client trust accounts for unearned fees is to protect the funds from the lawyers’ own finances. ABA Model Rule 1.15 (c) provides that “a lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred.” This assures the client that they will receive any remaining amount that the lawyer does not use or earn. According to ABA Model Rule 1.16(d), when the representation terminates, unearned fees and costs must be refunded to the client.

If a lawyer chooses to engage in daily deal advertising, they should take on the responsibility that if there is an issue with representation, the lawyer will refund the consumer the entire amount the consumer paid to the daily deal company, including any amount that the company kept for profit. Therefore, if the lawyer chooses to offer $400 of legal services on a daily deal website for $200 will only receive $120 due to advertising costs, the lawyer should be required to not only put that $120 in a client trust account but also match it with $80 in order to protect the consumer if no services are provided.

A lawyer’s inability to perform conflict checks prior to the consumer purchasing the deal raises additional ethical concerns. Lawyers perform conflict checks regarding a client’s legal matter prior to creating an attorney-client relationship with the potential client to make sure that they do not currently have cases whose legal interests are adverse to the new client’s interest. While this rule does protect consumers’ interests, online daily deals can still operate within this framework. Disclaimers and restrictions are common in these deals. Lawyers who wish to offer these deals to potential new clients can add disclaimers to the offered deal which explains what conflict checks are, and explain that if a conflict of interest is discovered, the consumer will be refunded any amount paid for the services. As mentioned earlier, this will have to be a cost that the lawyer takes on if they choose to advertise in this way.  

States have also discussed the potential inability of a lawyer who receives clients through this method to competently and diligently represent those clients. Lawyers are ethically required to competently and diligently represent a client and to immediately inform the client if they are unable to do so. Normally, clients seek lawyers who claim to have knowledge in a specific legal area which concerns the client.  After an initial discussion, the lawyer informs the client whether or not they possess the knowledge and the time to accept the offer to represent. However, with daily deals it is possible that a lawyer who advertises in this fashion may receive clients whom they are unable to represent due to lack of competence or time. However, there are ways in which to prevent any issues regarding competence and diligence with daily deals. Lawyers can specifically list the services which will be included as well as limit the amount of daily deals that they offer or state in the daily deal that it is only valid for certain types of work.

New York, North Carolina, and South Carolina are all heading in the right direction by allowing the legal profession to take advantage of new innovations that benefit consumers without harming the profession. While the issues raised by states that have rejected these innovations represent valid client protection principles when applied to traditional practice, the strict application of traditional rules to new innovations is not always appropriate. Appropriate regulations can be placed on online daily deals that achieve both the goals of increasing affordable legal services to consumers as well as protecting them from misuse of client funds and other lawyer misconduct.

 

Jen Roy, a law student at the University of the District of Columbia, is a Responsive Law intern.

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At a recent hearing of the Task Force to Expand Access to Civil Legal Services in New York, Professor Gillian Hadfield of the University of Southern California brilliantly outlined the mathematical impossibility of relying on more legal aid lawyers and more pro bono lawyers to bridge the enormous gap in legal access for New York's poor. Her entire testimony is worth reading. (Thanks to our friend Richard Zorza for providing the link.)

Professor Hadfield calculated the number of critical legal needs faced by poor people in the state of New York, then determined how much it would cost for each of those people to receive one hour of help from a lawyer. The result was staggering: The cost of just one hour of help for each of these people would be $300 million, which is approximately one-seventh of the entire budget of the New York state judiciary. If we were to rely on pro bono lawyers to help these people, each member of the New York bar would have to provide 10 hours of free legal help just to provide one hour of service for each poor person with a legal problem. Of course, one hour of a lawyer's time isn't nearly enough to solve a person's problem with eviction, foreclosure, or loss of a job. To provide the dozens of hours of lawyer time per case that would be needed to help these people would require billions of dollars or hundreds of hours of donated service for each lawyer in the state.

Of course, the critical legal issues of the poor are only the tip of the iceberg. Not every legal matter is as immediate a crisis as the loss of a roof over one's head. Professor Hadfield points out that many ordinary legal matters, such as setting custody arrangements, or deciding whether to sign a mortgage or rental agreement, only ever come to the attention of courts and legal aid agencies once they have "erupted" into a crisis. Preventive legal care would help people with these matters, but using lawyers to provide such care would add another order of magnitude to the costs above.

Professor Hadfield's conclusion is that since there simply are not enough lawyers to handle all the legal problems of the poor, we need to make alternatives to lawyers available to people with legal problems. Professionals with training far less than a three-year law degree could provide assistance to people representing themselves in landlord-tenant matters or custody matters. After all, not every person facing one of these situations needs to engage in full-scale litigation; many just need to be told how to fill out a form, or need to have an agency's procedure explained to them. Providing affordable non-lawyer resources can prevent these problems from "erupting," and thus provides additional relief to overburdened courts and legal aid lawyers.

One area that Professor Hadfield did not address, possibly because it was the beyond the scope of the hearing, was how these calculations would apply to the middle class. With the average hour of a lawyer's time costing $200-$300, hiring a lawyer for anything more than a short representation is beyond the means of most middle-class Americans. Therefore, the systemic problems that prevent the poor from accessing the legal system apply to the middle class as well, adding an order of magnitude to the shortage of affordable legal help. Like the poor, the middle class could be helped by non-lawyer assistance. In many cases, this would not even require an expenditure of taxpayer money, since the middle class could afford to pay a reasonable amount for such assistance in the private market. All that is required is for the courts and bar associations to loosen restrictions on the unauthorized practice of law that prevent such service providers from operating. Of course, it's not easy to convince the legal cartel to release its grip, which is why Responsive Law exists in the first place.

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