Tom Gordon

The ABA's Ethics 20/20 Commission has released its preliminary recommendations on alternative business structures for legal practices. Regrettably, as they promised in their earlier issue paper on this topic, they have not considered meaningful reforms such as allowing outside investment, which would allow innovation in the delivery of legal services that could benefit consumers. Instead, they have recommended  merely a modified version of the District of Columbia's existing rule on this issue.

The panel's recommendation would only allow minority investment from other professionals who take an active role in a law practice. The proposal does not even allow true multidisciplinary practice, where lawyers and other professionals work side-by-side to serve customers with a range of legal and non-legal needs.

American Lawyer has an article on the new recommendations, quoting Responsive Law's Tom Gordon. To see our original comments to the ABA, click here.

Tuesday, 25 October 2011 10:14

NYT Op-Ed: Lower Barriers to Legal System's New York Times features an op-ed by Clifford Winston, an economist and senior fellow at the Brookings Institution, and co-author of First Thing We Do, Let's Deregulate All the Lawyers. Winston focuses on reducing barriers to entry for those who wish to provide legal services, including the elimination of legal licensing and allowing non-lawyers to invest in law firms. These changes, Winston argues, would promote innovation and lower the price of legal services. We commented on these proposals in an earlier post.

Winston is absolutely right: Licensing laws must be adjusted to allow greater competition in the provision of legal services across the spectrum of legal needs and ability to pay. Responsive Law has commented at length to the American Bar Association about the need to promote innovation by allowing outside investment in law firms. Consumers are not well-served by the current one-size-fits-all system that assumes that every legal need must be met by someone who has attended law school, passed the bar exam, and practices law in a solo practice or partnership.

The Georgia Supreme Court has ratified a decision by the state bar's Standing Committee on the Unauthorized Practice of Law that bans non-lawyers from answering garnishments, unless they are doing so for themselves. Since most garnishments are made against corporations (such as employers and banks) rather than against individuals, this effectively requires hiring a lawyer to answer a garnishment.

Answering a garnishment in Georgia is a fairly simple task, requiring the garnishee (in most cases, the business that is required to withhold wages from a worker) to state how much the worker gets paid, how often he is paid, and what part of the wages, if any, are exempt from garnishment. These are numbers that any bookkeeper or sole proprietor for a small business would have readily available. All a lawyer will do in these cases is fill out a form like the one provided by a Georgia court here (on the second page).

Actually, lawyers will do a second thing for garnishees: send them a bill for their "services." The Georgia garnishment statute allows a garnishee to withhold up to $50 to pay for legal services related to the garnishment, but $50 doesn't cover a lawyer's bill the way it used to in the 1920s. The statute allows garnishees to have a court hearing to ask for higher lawyer's fees, but of course that hearing would also require hiring a lawyer. Whoever pays for the lawyer, it's a waste of resources to pay someone else to fill out such a simple form. However, since engaging in UPL in Georgia is a misdemeanor, any business owner attempting to respond to a garnishment without a lawyer could face a fine of $1,000 or imprisonment for up to a year.

The Georgia Supreme Court and the UPL Committee are ultimately only doing what they are supposed to do in this situation, which is to apply the law as written to facts before them. However, in this case, the law is one that imposes unnecessary costs on small businesses that are already threatened by the economic downturn. The Georgia legislature should change the state's definition of UPL to allow the answering of garnishments without a lawyer.

Friday, 02 September 2011 10:09

ABA List of Legal Rebels Not Very Rebellious

In the 1990's, Canon aired a series of commercials for its Rebel line of cameras featuring Andre Agassi. The implication was that Agassi was a rebel since he had (at the time) long hair and occasionally wore a splash of color on traditionally white tennis apparel. After viewing these commercials, I coined the term "tennis rebel" to describe someone who is completely mainstream, but who is deemed a rebel for ever-so-slightly pushing the boundaries of a staid subculture.

The American Bar Association's annual list of Legal Rebels perfectly fits the tennis rebel definition. This year's list focuses on large law firms. The acts of "rebellion" include asking legal hypotheticals in hiring interviews, engineering a law firm merger and expansion, creating a wiki to guide paralegals' work, and sending lawyers to Harvard for training. There are also "rebels" whose acts of rebellion are non-specific, but seem to involve social media and the use of technology.

To be sure, all of those are worthy accomplishments. But, of this year's crop of rebels, only two are doing anything that matter to the average person. Paul Sweeney, of Foley Hoag, has marketed his firm's services on the online deal site LevelUp. The firm offered a $250 incorporation package to startup businesses, which qualified buyers for additional discounted services from the firm. The other true rebel, David Perla, founded Pangea3, a business that facilitates outsourcing of legal services to India. Perla's project would have been impossible to implement through a law firm because it relied on venture capital and the legal industry's rules prohibit firms from having outside investors. Now, if a lawyer were to work to challenge those rules, that lawyer would be a true legal rebel.

In other news, the sun rose in the east today.

The results of this year's Gallup poll of Americans' views of various industries shouldn't surprise anyone, at least with regard to people's opinions of lawyers. Only 29 percent had a favorable view of lawyers, placing the legal field 20th out of 25 industries surveyed. Lawyers have had the same low approval rating fairly consistently over the ten years of the survey's existence.

Although the poll doesn't address people's reasons for their opinions, anecdotal evidence suggests people dislike the legal profession for the wrong reasons. Most people I've heard voicing complaints about lawyers make claims that there are too many of them or that they are greedy, dishonest, or untrustworthy. In fact, as we've discussed on this blog before, there aren't enough lawyers to handle everyone's legal problems. Moreover, lawyers are not inherently any more or less ethical than the members of any other profession. However, self-regulation, when combined with a monopoly over legal services, gives lawyers fewer incentives not to behave badly.

So, America, although we agree with your dissatisfaction with the legal profession, we wish you were dissatisfied for the right reasons.

In an ongoing battle over whether LegalZoom is engaged in the unauthorized practice of law in Missouri, a federal district court has rejected a motion by LegalZoom to declare that it is not engaged in UPL. This means that it will be up to a jury to decide whether consumers in Missouri will have access to LegalZoom's services.

This decision is troubling on several counts. First, part of the basis for the court's decision is the fact that the programmer of LegalZoom's software is not a licensed Missouri lawyer. If this is relevant to a finding of UPL, then publishers of self-help books could face similar lawsuits for UPL. LegalZoom's software behaves very much like a self-help book that includes forms with instructions to complete them. It merely automates what would be a lengthy series of written steps for a person without computer assistance to follow. Theoretically, a person using the software could complete forms by following each of the steps in the computer program without the assistance of software. If the definition of practice of law is predicated upon whether the self-help process is accelerated--without otherwise being changed--through computer automation, then consumers will have access only to slower, clunkier self-help assistance.

Another troubling element of the court's decision is its reliance on the human element in LegalZoom's services as part of its analysis of whether LegalZoom engaged in UPL. Specifically, the court calls out human-delivered services such as "review[ing] the data file for for completeness, spelling and grammatical errors" and "correcting word processing 'widows,' 'orphans,' page breaks, and the like." When I was in law school, my legal writing classes never included a lesson entitled "Widow and Orphan Control, Page Breaks, and the Law." Providing these services is the practice of copyediting, not the practice of law.

Of course, the most troubling aspect of this whole case is that, as the court acknowledges, the plaintiffs have neither asserted that they believed LegalZoom was acting as a lawyer, nor that the forms they created using LegalZoom were deficient in any way. If UPL restrictions exist to protect consumers, and not to protect the bar from competition, then consumer harm should be a necessary element of any UPL complaints. We hope that the twelve men and women who will now decide this case will apply a "no harm, no foul" standard to preserve affordable access to self-help assistance for Missourians.

Monday, 25 July 2011 09:52

Forbes Writes About UPL Restrictions

Daniel Fisher of spoke with us recently about the problems with unauthorized practice of law restrictions. He went on to write this column about how the vagueness of UPL laws makes it impossible for service providers to know whether they are providing services legally if those services are even tangentially related to law. The column gives some excellent examples of the legal challenges businesses have faced as they provide services in estate planning, finance, and traffic violation resolution, among others areas. One point we'd like to add to Fisher's analysis is that the challenges faced by businesses become challenges faced by consumers. When businesses cannot provide these services, consumers are stuck with two options: hire an expensive lawyer to help them with writing a will or fighting a traffic ticket, or take on the matter without assistance of any kind. Consumers deserve the choice to hire expert assistance for important life decisions, regardless of whether the expertise comes from a lawyer, financial planner, online software designers, or any other service provider.

In Alabama, the 90,000 people whose lives were ripped apart by tornadoes in April are being told that they cannot use public insurance adjusters to help them settle their insurance claims. Public adjusters work for (and are paid by) the policyholder, rather than the insurance company. They prepare a separate estimate of the cost of property damage and negotiate with the insurance company to maximize the policyholder's settlement.

The Alabama State Bar has issued a statement that public adjusters are committing the crime of unauthorized practice of law and warning that anyone assisting them could be charged with aiding and abetting. While Alabama's law regarding UPL may be broad enough to encompass this activity, at least 44 other states allow consumers to use public adjusters. Those states have recognized that, as with most services, consumers should have a choice of service providers. Those who have already lost everything they had should not be forced to either hire a lawyer or go it alone against the insurance companies.

Regardless of the legality of public adjusters in Alabama, the bar's implicit threat to consumers that they could be charged with aiding and abetting for using a public adjuster is uncalled for. The bar should use its authority over unauthorized practice of law to protect consumers. The threat of criminal prosecution for using a public adjuster is worse than any harm that the adjuster might cause. Most consumers would gladly forego this type of "protection" from the bar and exercise an educated choice about who provides services to them.

Mark Childress was sworn in yesterday as the White House's Access to Justice Advisor, succeeding Laurence Tribe, who left last fall due to health problems. The Washington Post describes Childress as a "savvy Washington operator" who played a major behind-the-scenes role in the enactment of health-care reform and in handling federal judicial nominations. While Professor Tribe has left some large shoes to fill, we are pleased that the administration has chosen a serious political player as his replacement. We hope that Childress will quickly put those skills to use on behalf of the majority of Americans who lack meaningful access to the legal system.

A Kentucky woman convicted of unauthorized practice of law will be appealing (subscription required) the $5,000 fine handed down by the Kentucky Supreme Court for her actions. Della Tarpinian operates what she describes as a scrivener service. Her customers, who need someone to prepare simple legal documents for them, fill out questionnaires which Tarpinian uses to complete fill-in-the-blank legal forms. Document preparation services are licensed and regulated in states such as California and Arizona, providing clear guidelines as to what services non-lawyers may provide. In other states, however, vague definitions of the practice of law leave the legality of these services in a gray area. As a result, consumers do not have the benefit of a robust marketplace providing document preparation services.

Tarpinian has been prosecuted for UPL once before. In 2004, a jury took 15 minutes to acquit her of UPL charges. However, her current conviction did not come as the result of a jury trial, but as the result of findings made by a special commissioner appointed by the Kentucky Supreme Court. However, one thing missing from both the opinion of the Supreme Court and the findings of the special commissioner is a finding that any consumers were harmed as a result of Tarpinian's services. We would venture that the jury in her 2004 case similarly failed to find that Tarpinian caused any harm to her customers, resulting in her rapid acquittal. Unfortunately, in the current case, the bar has made the assumption that provision by non-lawyers of services related to law is by its nature harmful to consumers. This assumption is clearly incorrect, as proven by Tarpinian and the hundreds of licensed document preparers in other states. Whatever the letter of the law may say about whether someone is engaging in UPL, prosecutors and bar associations should decline to bring charges without a showing of consumer harm. To do otherwise is a waste of prosecutorial resources, a miscarriage of justice, and a blow to consumers.

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