The Massachusetts Supreme Judicial Court (SJC) yeserday issued a ruling on whether lawyers are required to be present at real estate closings. In Real Estate Bar Association v. National Estate Information Services, the Court held that, although non-lawyer "conveyancing" companies that provide closing services are not practicing law, they nevertheless are prohibited from providing closing services, because those must be provided by a lawyer. Major media outlets have covered the ruling as the resolution of a turf battle between lawyers and non-lawyers in providing services. That's certainly one aspect of the case, but it also has important implications for legal consumers in Massachusetts, both in real estate transactions and in other legal matters.
Our position is the same as the Federal Trade Commission's: "Permitting competition by lay services allows consumers to consider more relevant factors in selecting a provider of settlement services, such as cost, convenience, and the degree of assurance that the necessary documents and commitments are sufficient." We are encouraged, however, by the Court's recognition that a lawyer's role in a closing is "not only the presence but the substantive participation of an attorney on behalf of the mortgage lender." In other words, lawyers must provide actual legal services at a closing so that consumers who are forced to pay for the lawyer receive something beyond his or her mere presence.
The Court also made some encouraging pronouncements about what activities may be undertaken by non-lawyers. One of the arguments frequently made by lawyers trying to retain their monopoly is that if a service includes even one element that must be performed by a lawyer, then all elements of the service must be performed by a lawyer. When courts interpret definitions of the practice of law, it's important that they recognize that lawyers provide a wide range of services, but that only a subset of those services are exclusive to lawyers The Court applied that principle correctly here, recognizing that many of the activities involved in conveyancing are not considered the practice of law, and that "the talismanic invocation of the word 'conveyancing' is not sufficient to require that all of them be performed by or under the supervision of an attorney."
In sum, while the Massachusetts high court failed to take the large pro-consumer step of forcing Massachusetts to join several other states in allowing non-lawyer closings, it did establish a principle limiting when consumers can be forced to hire a lawyer.
I wrote a few weeks ago about how the high cost of law school is driving prospective lawyers away from the profession. Another recent opinion piece, by the dean of Massachusetts School of Law, raises another reason why we're facing a shortage of lawyers: the ABA's reluctance to accredit new law schools. This reluctance is particularly strong (and often mandated by the ABA's standards for law school accreditation) when schools deviate from tradition by allowing "too much" credit for experiential learning, or by relying too heavily on adjunct faculty who can share ongoing real world experience with their students, or by taking of advantage of virtual facilities that don't meet outdated requirements about the types of volumes required to be physically present in the library or the amount of space required for studying there.
Some people have asked why Responsive Law, which promotes alternatives to the use of lawyers, isn't rejoicing about a decrease in the number of lawyers. The truth is, even in an ideal system with a range of services available to meet the continuum of legal needs, lawyers will play an important role in providing legal services. The most complex legal issues are almost always best resolved by using a lawyer. And for simpler matters, even when alternatives are available, consumers may choose to use a lawyer because the lawyer provides a better set of skills for their particular problem. However, when the supply of lawyers is capped by the limited number of accredited law schools, the price of using a lawyer increases. And when the cost of a legal education increases, the rate that lawyers must charge increases. Allowing more people to become lawyers–and allowing non-lawyers to provide legal assistance–will give consumers of legal services the greatest range of options at the lowest possible price.
Forty states cut their court budgets last year. Some even began to close their courthouses altogether for several days each month – “rolling blackouts” on access to justice. Others eliminated programs designed to help the growing number who cannot afford to hire a lawyer. But those cuts will ultimately cost the courts money because they make them less efficient: Instead of a clerk explaining basic terms and how the process works, now a judge has to.
According to a study by the ABA Task Force on the Preservation of the Justice System, 88 percent of lawyers and judges believe the middle class are at risk of being driven out of the courts altogether. We believe this is already happening. In fact, according to the World Justice Project's 2010 Rule of Law Index, which ranked the 11 wealthiest nations by how well they provided access to civil justice, the United States came in last.
Legislators must be reminded that the rule of law and access to the courts are fundamental to our democracy. Indeed, laws and rights are meaningless without the means to enforce them and take on even greater value in a recession. We often criticize the courts for serving unrepresented litigants poorly, but an imperfect system is clearly better than none at all. It’s time to turn the courthouse lights back on.
Unbundling (also called limited scope representation or à la carte legal services) allows a consumer to hire a lawyer to handle a discrete part of a legal matter. For example, a businesswoman might want to draft a contract and have an attorney review it. Also growing in popularity is paying a lawyer to answer a legal question online. The resultant savings to consumers, and increased access to justice, could be significant.
One of the obstacles to unbundling is that some lawyers are concerned that ethics rules define their duty to their client in such a way that they cannot agree to represent them for only part of a matter. Montana recently adopted rules that would facilitate such services by making it clear that clients can consent to limited representation. They also provide protection to consumers and lawyers by requiring them to sign an unbundling agreement. The Montana rules go far toward implementing two elements of Responsive Law's reform agenda: fostering innovation in the legal industry and requiring all engagement agreements to be in writing. (Our complete Client's Bill of Rights is here.)
Clarifying what types of unbundled services lawyers may provide benefit consumers even more. States also need to adopt clearer rules and definitions regarding the unauthorized practice of law, which would allow non-lawyer legal services providers to innovate as well.
We encourage other states to follow Montana's lead in improving access to justice and accountability in the legal system.
A member of the North Carolina Senate has introduced a bill that would promote the delivery of innovative legal services. Senate Bill 254 would allow non-lawyers to own a minority stake in law firms. As we mentioned in our previous post, outside investment in law firms could provide them the capital they need to innovate and find ways to serve consumers better. Some lawyers have claimed that non-lawyer ownership could compromise their ethical duties to their clients or to the courts. However, the bill would protect consumers by warning non-lawyer owners that duties between shareholders do not trump duties to clients. If passed, the bill would be a first step toward helping the legal profession join the rest of the economy in providing integrated and innovative services. We urge the North Carolina legislature to pass SB 254 and encourage other states to introduce similar legislation.
The Georgia Bar's Standing Committee on Unlicensed Practice of Law is holding a hearing on June 1 to determine whether forestry consultants using form contracts are engaging in UPL. Responsive Law has submitted testimony on this issue. While we left the specifics of how this decision might impact the timber industry to the Georgia Forestry Association, our testimony focused on the effect that the committee's decision could have on the everyday legal needs of Georgians.
Specifically, we pointed out that most Georgians cannot afford a lawyer, and that they often seek free help from family, friends, and colleagues with legal matters, including filling out forms. If the UPL Committee rules that forestry consultants, who do not charge for the completion of contract forms, are engaged in UPL, then so is the person with a better grasp of English (or of legalese) who assists her friend with completing a legal form relating to a divorce or a foreclosure. This help may not be as valuable as that provided by a lawyer, but it is often all that people can afford. Unless the Georgia Bar plans to offer tens of thousands of additional hours of pro bono service to poor and middle-class Georgians, it should not take away the limited help that they have. That, more than forestry consultants, is what is at stake here.
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.
The American Bar Association (“ABA”) Commission on Ethics 20/20 recently requested comments regarding the rules governing lawyers practicing across state lines via internet. Responsive Law suggested to the ABA that opening up the internet for legal services is highly beneficial to consumers and will make the legal system more affordable without sacrificing the accountability that is already present.
Allowing lawyers to practice across state lines via internet is extremely beneficial to consumers. Although it is a relatively new practice, it is one that has great potential for increasing affordable access to the legal system. Online commerce has expanded the availability of goods and services in nearly every industry, particularly for those located far from major cities. People currently use companies such as eBay and Amazon to order products and the availability, convenience, price and safeguards of these companies continuously drive customers to use and reuse their services. Similarly, the legal profession, with its duty to protect access to justice, should support any effort to make the legal industry friendlier to online commerce in the way that successful internet companies already have.
Virtual law practices will improve communication between lawyers and clients. Many computer-savvy people may be more comfortable interacting with a lawyer online than through postal mail or in person. Since the internet does not require simultaneous communication, virtual practices can also expand the number of hours during which lawyers and clients can communicate thus increasing access.
Although there are many positive aspects of practicing via internet, some states are moving towards prohibiting licensed lawyers from practicing law in the state unless they hold a physical office in that state. This is extremely inconvenient for the person seeking legal assistance. For example, a New York resident who moves to Tennessee to take care of aging parents will not be able to hire an attorney licensed in New York unless that attorney has a physical office in New York. For this consumer, whether they are dealing with a lawyer physically located in New York or New Jersey, or even California is irrelevant. What is relevant is that the lawyer is competent to deal with the client’s issues relating to New York law. Unfortunately, on top of the burden of caring for aging parents, this person will now have to travel back and forth to New York rather than handle their legal matters online.
Even though we currently live in a mobile society, there are an increasing number of situations, like the New-York-to-Tennessee move, where restrictions on practice based on physical location of the lawyer hinder one’s ability to receive legal services. These anticompetitive restrictions reduce access to the law, yet provide no additional protection to consumers.
While some of the criticisms regarding lawyers practicing across state lines via internet involve a decrease in quality and accountability of legal service, most of those criticisms are largely unfounded. In the same way that eBay and Amazon are held accountable for dissatisfied customers, lawyers practicing across state lines via-internet can be held accountable for any bad legal practices. If one is dissatisfied with the services of their virtual lawyer, they can hold that lawyer accountable in the same ways in which they can hold an attorney accountable who lives down the street. Lawyers, regardless of whether they are engaging in physical or internet practice can be held accountable through civil lawsuits, or action by bar disciplinary committees in the state where they are licensed. Moreover, while consumers can hold lawyers equally accountable whether the lawyer is working in person or virtually, choosing virtual lawyering can result in lower cost and more options when choosing a lawyer.
Virtual law practice has great potential for increasing affordable access to the legal system. It enables consumers to have greater access to affordable and competent legal work while keeping it accountable and cost-effective. You can read our full comments to the ABA, urging them to allow this practice to grow.