The State Bar of California is seeking public comment with respect to proposed regulatory “reform options” developed by the Task Force on Access Through Innovation of Legal Services. The due date is Monday, September 23, 2019.
If adopted, the most significant elements of the proposals would allow:
- Nonlawyers to provide some legal services, subject to regulation,
- Entities that provide legal services to include lawyers, nonlawyers or a combination, again subject to regulations, and
- Nonlawyers to hold a financial interest in law firms and other structures that provide legal services.
I’ve just submitted comments. (Comments received to date have been made available at this link).
I’m not under any illusions that anyone who matters will give my submission anything more than a passing glance, if that. Few people will read it and even fewer (anyone?) will care about it. But for entirely inexplicable reasons I wasn’t comfortable with allowing the period for public comment to pass without making a submission of some kind.
I organized my comments in two parts, one addressing the substance of the proposals and the other addressing the Task Force’s approach with respect to public engagement.
There are a multitude of other topics that could and should be addressed, but I didn’t have time to develop them in any meaningful way. If I had had the time, I would have focused on some of the many issues that California regulators will need to address in the event the Task Force’s proposals are implemented in any significant manner.
I would have prioritized these two issues in particular:
(1) The assurance of effective enforcement of anti-trust (competition) laws to prevent the development and abuse of monopoly power in the legal services market; and
(2) The recognition that regulation is a public service – that it is something that we as a society need and value because it brings economic and social value to everyone. Further, the proper regulation of legal services is necessary to assure access to justice and rule of law. For these reasons, new regulations for legal services must not be developed or financed privately; to the contrary, they must be developed by public, democratic processes and they must be financed publicly through equitable, progressive revenue sources.
But, as I just mentioned, I didn’t have time to get into those issues. They are highly complex. Or, perhaps it would be more accurate to say that I wasn’t motivated to find the time given that those comments also would be unlikely to garner even a passing glance.
In this and in the immediately following blog post I will show what I did have time to get into. Namely, this post contains the first half of the comments I submitted, which addresses the substance of the proposals. The next post will contain the second half of my submission, which addresses the Task Force’s approach with respect to public engagement.
STATE BAR OF CALIFORNIA
ACCESS THROUGH INNOVATION OF LEGAL SERVICES (ATILS)
Dr. Laura Snyder
Part I: The Substance of the Proposals
A multitude of articles and books have been written on these topics. Of course I can’t help but mention the two books that I’ve written: Democratizing Legal Services: Obstacles and Opportunities (“Democratizing”), and Modernizing Legal Services in Common Law Countries: Will the US Be Left Behind? (“Modernizing”). Nor can I help but mention my website which contains excerpts of the books as well as supplemental materials: http://notjustforlawyers.com/. I would, of course, be among the first to admit that my books and website are among the least read on these topics, and perhaps even the very least read.
Because hope springs eternal, just in case someone might be interested in Democratizing and Modernizing, links to more information about them are provided at the end of this commentary.
(A) The Objections Raised in this Consultation Process Have Been Long Anticipated and Addressed
In reading the comments submitted to date in this consultation process one could be forgiven for thinking that the objections they raise are new—that no one has yet made those objections, and certainly no one has yet fully considered them. But nothing could be further from the truth. Such objections have been raised repeatedly over a number of decades and they have been addressed extensively by a number of persons. Most if not all of what they have written has been much more widely read and respected (dare I say even revered?) than my own material.
Nevertheless, I can’t help but again mention my book Democratizing. It anticipates, categorizes, and addresses in-depth many of the objections that have been made in the comments submitted to the Task Force. These objections, and detailed responses to them, include:
- Alternative structures will undermine professionalism and ethics
- There is no way to regulate alternative structures
- The adoption of alternative structures will jeopardize self-regulation of the profession
- There is no demonstrated need, demand, or problem
- New delivery models can be developed without changing the rules
- The payment of salary is adequate compensation for nonlawyers
- No one in their right mind would want to invest in a law firm
- Alternative structures will lead to a consolidated market controlled by large firms
- Alternative structures cannot help those who cannot pay for legal services
- Alternative structures will make things harder for un- and underemployed lawyers
- The burden of proof has not been met
(Democratizing, pages 1-93, 217-22; also in part available online at http://notjustforlawyers.com/chapter-1/; http://notjustforlawyers.com/chapter-3/; http://notjustforlawyers.com/chapter-5/; http://notjustforlawyers.com/chapter-6/; http://notjustforlawyers.com/chapter-9/; http://notjustforlawyers.com/chapter-23/)
Via the link http://notjustforlawyers.com/stories/ you can read the stories and experiences told firsthand by 65 people who have created, are managing, are employees of, and/or have invested in alternative legal structures, as well with persons who regulate them. (And, in one case, by a person who has closely studied alternative legal structures that existed in the United States a century ago: http://notjustforlawyers.com/felice-batlan/). The stories offer unique, direct perspectives on the objections that this consultation process has collected.
Many people think that alternative structures are only about allowing investment-fueled, technology-focused companies to deliver legal services in the manner of LegalZoom, or about large corporations establishing “law factories” in the manner of Slater & Gordon. Certainly they are about that, but they are also about much more. There is huge variety in the structures that have been created in England & Wales and Australia, as regards both size and substance, that many people overlook. Here are just a few examples of the structures profiled at http://notjustforlawyers.com/stories/ and discussed in Democratizing, which expose this variety—three of the four are small structures, none are technology-based, none have outside investors, each would violate current California rules:
Salvos Legal is a not-for-profit law firm with five “partners” that provides commercial and property services to corporations, government agencies and not-for-profits. The fees collected by Salvos Legal, less expenses, are used to fund Salvos Legal Humanitarian. Salvos Legal Humanitarian is a full-service law firm that provides services to the “disadvantaged and marginalized” in family law, housing, social security, migration and refugee matters, debt, criminal law and other areas. The services of Salvos Legal Humanitarian are offered free of charge; the firm has a staff of lawyers whose salaries are paid from the funding of Salvos. As Luke Geary, Managing Partner of both Salvos Legal and Salvos Legal Humanitarian, explained:
Salvos Legal Humanitarian, to date, has provided free legal assistance on [many thousands of] matters, at no cost either to the government or to The Salvation Army. That’s [many thousands of] cases of access to justice that otherwise would not exist. And that number goes up with each passing day.
BPIF Legal offers legal support and advice to members of The British Printing Industries Federation (BPIF), a trade association representing the UK’s print, printed packaging and graphic communications industry. Their services are offered holistically with the other services that BPIF also offers to its members, in the areas of human resources, health, safety and environment, quality, marketing, sales and finance. As Anne Copley, Head of Legal, BPIF Legal, explained:
Our members come to us because of our expertise in the industry. They do not have to explain to us how the industry works… We know what our members are and we can ask questions that other lawyers might not know to ask because we know frontwards and backwards what goes on in a printing company. In addition, the relationship we have with our members is different than the one a traditional law firm would have with them. For lack of a better word, the relationship is more intimate. Since they are members, they consider that they have some ownership of us, rather than coming to us cap in hand. And since we liaise with the other services in our organization, we have a much more rounded view of their businesses.
Counterculture Partnership offers to cultural and creative not-for-profit organizations holistic services in the areas of strategic planning, funding, financial and project management, legal and governance advice, capital projects, training and advocacy. Counterculture has thirteen partners of which five are lawyers. In 2019 The Legal 500 recommended Counterculture as a Leading Firm in the North West of England. As Keith Arrowsmith, Partner, Counterculture Partnership LLP, explained:
There are clients who talk to me now because I am sitting with them wearing a Counterculture badge that wouldn’t dream of walking through the door of what they see as a law firm. There is something about the perception of being in this more comprehensive structure that allows them to be more comfortable in engaging with me. Some of it might be related to concerns about cost, but I think that the real reason is that because I am wearing a Counterculture badge, I can begin conversations that otherwise I never would have been able to have. Many people in the arts start with the premise that their world and the legal world are so far apart, a lawyer could never understand them. With Counterculture, I am able to communicate with clients in a much more open way because they don’t see us as a traditional law firm. We’ve had real success in that way, and it has been helpful for the arts sector.
Stephens Scown provides legal services to companies and high net worth individuals. The firm specializes in areas important to the South West region of England, such as mining & minerals, renewable energy and tourism. Inspired by the share ownership scheme of John Lewis, Stephens Scown is one of the first large law firms in the UK to implement a limited employee share ownership scheme in which not just lawyers but all eligible employees may participate. In 2019 Stephens Scown was included in the Sunday Times 100 Best Companies list for the fifth consecutive year. As Robert Camp, Managing Partner, Stephens Scown LLP, explained:
For the past five years, we’ve been focused on client service, and we’ve won several awards for client service. We’ve recognized that client service is dependent upon staff engagement, and we want our staff to feel part of our firm, and not just a cog in a bigger wheel. This is the context in which we decided to become an ABS [alternative business structure]—in order to increase staff engagement. Research shows that if you can engage your entire staff so that they are all working for the same common goal and not just for rewards for those at the top, then the quality of service will go up. So you get happy clients who recommend you to others, and you get a virtuous circle.
(C) Bottom Line: The Lawyer Monopoly on Legal Services Can No Longer Be Justified
If the laws of California accord to the legal profession the exclusive privilege to serve the entire market for legal services in California then shouldn’t the counterpart to that exclusive privilege be the corresponding obligation to serve the entire market? If it is the legal profession—and the legal profession only—that has the right, by law, to serve the California legal services market, then shouldn’t the legal profession have the obligation, by law, to develop and implement solutions that do effectively serve the entire market? By what right can California lawyers exclude other kinds of service providers from a market that the lawyers either cannot or will not serve in its entirety?
And if the legal profession in California is either unable or unwilling to serve the entire market then doesn’t the State of California have the obligation to change its laws in order to open the market to others—including nonlawyers and alternative structures? Isn’t this even more of an imperative given that England & Wales and Australia demonstrate that this can be done safely? More specifically, these two jurisdictions are evidence that it is possible to open the market for legal services to a wider range of service providers without harming those who need legal services or the public more generally. They have done this by respecting these two essential conditions: (1) the implementation of entity regulation alongside the regulation of individual lawyers, and (2) moving away from prescriptive, rules-based regulation in favor of compliance-based regulation (also termed “proactive, management based regulation,” or “outcomes focused regulation”). (I discuss how important both these conditions are in Democratizing pages 11-17 and in Modernizing pages 206-208; also in part available online at http://notjustforlawyers.com/ch-21-two-commissions/).
Many assert that there is no proof that opening the market for legal services in England & Wales and in Australia increased access to justice in those countries. While I disagree with that assertion (Democratizing pages 167-84, also in part available online at http://notjustforlawyers.com/chapter-19/), my first response is to ask: why should such proof be necessary? Certainly there is proof that the current restrictions on who may provide legal services have not solved the access to justice problem. To the contrary, the problem is so severe in California and around the country that it has been described as a human rights crisis (see Democratizing, pages 185-94, also available online at http://notjustforlawyers.com/chapter-20/). Further, appeals to the federal and well as to state and local governments for funding for legal aid demonstrate that the provision of legal services to those who cannot afford it is considered to be a public responsibility. In that case, why is the public allowed to fulfill that responsibility only with (taxpayer) money? Why can they not be allowed other means—notably by doing it themselves—given that, again, England & Wales and Australia evidence that it can be done safely and demonstrate how. (For a more detailed discussion in this regard, see Democratizing, pages 222-24, also available online at http://notjustforlawyers.com/chapter-23/).
Over two decades and more these topics have been discussed and written about ad nauseum—those discussions and writings are readily available online and in-print. Naturally, in my entirely unbiased opinion, my books are the best place to start. There is little point in entering into more detail here.
The next post (2 of 2) will contain the second part of the comments I submitted, which addresses the Task Force’s approach towards public engagement.
More information about Democratizing is available at http://notjustforlawyers.com/democratizing-legal-services/.
More information about Modernizing is available at http://notjustforlawyers.com/modernizing-legal-services/.
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