Ch 3 Alternative Structures Will Jeopardize Self-Regulation

The Adoption of Alternative Structures Will Jeopardize Self-Regulation of the Profession

Is the ABA…the right organization to determine what is in the public interest? What is appropriate for open competition? Does the ABA…have the objectivity, the expertise and the resources to make these determinations, in the absence of effective oversight of any governmental body that has political accountability to the public at large?

Many have argued that allowing for alternative structures will jeopardize the self-regulation of the profession: “there is a very real concern that legislatures or non-judicial entities might claim a right to regulate this new form of practice.”[1] Going further, many argue that the Australian and the English and Welsh experiences suggest that “allowing nonlawyers control over law firms — even if only in small measure — will pave the way for a fundamental reworking of the profession.”[2] For this reason, some have argued, the door to nonlawyer ownership should not be opened “even a crack.”[3]

In a number of countries, and notably in England and Wales and Australia, the legislature plays a significant if not principal role in the regulation of legal services. Indeed, the changes in those two countries that brought in new regulatory frameworks were the direct result of parliamentary acts. And, in England and Wales the reforms go even further: they decisively ended self-regulation of the legal profession by providing that neither the Chair of Legal Services Board (LSB, the oversight regulator in England and Wales), nor the majority of the governing board of the LSB may be lawyers.[4]

In the United States, the legal profession is often described as being self-regulated. However, the extent to which that is, in fact, the case has been a subject of dispute among academics and legal commentators.[5] Those that see a self-regulated profession point to the facts that:

  • State supreme courts, who have the authority to adopt rules of professional conduct and the responsibility to enforce discipline, are made up of lawyers,[6]
  • Most state supreme courts adopt the Model Rules of Professional Conduct promulgated and amended from time to time by the ABA with limited and, in many cases, no modifications. In this manner, the ABA, a voluntary association of practicing lawyers, plays a key role in the regulation of the legal profession. (Further, to the extent the rules are adopted with modifications, those modifications are generated by the state and local bar associations and other groups of practicing attorneys rather than by the state supreme courts themselves).
  • State supreme courts have delegated disciplinary enforcement to bodies that are also made up of lawyers. And, most notably, in 21 states the state supreme courts have delegated disciplinary authority to a state bar association whose members are practicing lawyers and that exercises both representative and regulatory functions.[7]

On the other hand, those that do not see a self-regulated profession point to the facts that:

  • While the members of state supreme courts are lawyers, they are not practicing attorneys. They have the authority to make decisions in a manner that is independent of national and state bar associations. While state supreme courts (usually after consultation with the ABA via the Conference of Chief Justices and with state and local bar associations) often adopt the ABA’s Model Rules and while they often delegate disciplinary authority to a state bar association, there is no legal requirement that they do either, and they may at any time stop doing so, and
  • Other bodies have exercised authority over the legal profession. Examples include the United States Supreme Court (such as by striking down bans on attorney advertising), federal regulatory authorities (such as the FTC and the SEC), and Congress (most notably with Sarbanes-Oxley).

It is not the purpose of this book to debate, much less resolve, the question of whether or not the legal profession in the United States is self-regulated. It is the purpose of this book to explore a new regulatory framework and the obstacles to adoption of alternative structures. From that perspective, setting aside the semantics of whether the legal profession in the US is self-regulated, changing the regulatory framework with the consequences of permitting alternative structures will necessitate significant changes in the way that lawyers are regulated.

It is certainly possible that the ABA’s House of Delegates might vote to adopt an entirely new regulatory framework, but it is highly unlikely.

The ABA is the largest voluntary and representative organization of lawyers in the US. Its members are not elected and the organization has no political accountability. Most of the members of it decision-making body, the House of Delegates, are either selected or, in a few cases, elected, by state and local bar associations, and it is to those state and local bar associations that they are answerable.[8]

Today, the ABA combines both a representative function as well as a de facto regulatory one:

The ABA describes its mission as “tireless work” towards four goals, the very first two of which are to “serve our members” and “improve our profession.”[9] Indeed, various groups of the ABA work extensively as representatives of the profession. A notable example is the ABA’s Government Affairs Office — which lobbies in Washington DC to convey to national lawmakers “the Association’s concerns and views on matters of importance to the legal profession,”[10] and to advocate for ABA policies as they are adopted by the ABA’s “policy making body,”[11] the House of Delegates.

Alongside this significant representative role, the ABA plays a regulatory role, most notably its adoption and periodic review by the House of Delegates of the Model Rules of Professional Conduct: the Rules serve as the model for the ethical rules adopted by nearly every state of the US (all except California). In many cases, after consultation first with the ABA via the Conference of Chief Justices, and then with their respective state and local bar associations, the state supreme courts adopt the Rules with limited (and oftentimes no) modifications. This deference by the state supreme courts to the ABA House of Delegates gives the ABA a de facto regulatory role (not to mention the additional deference to state and local bar associations).[12]

In other words, the ABA plays a regulatory role not because of any legal authority that it holds — it holds none — but because of the deference the ABA receives from those who do hold legal authority.

In her 2014 article “Globalization and the ABA Commission On Ethics 20/20: Reflections On Missed Opportunities and the Road Not Taken,” Laurel Terry examines the work of this ABA Commission that was charged with performing a “thorough” review of the Model Rules (including, but not limited to, Model Rule 5.4), as well as a review of the “US system of lawyer regulation in the context of advances in technology and global legal practice development.”[13] In her examination, she describes the role of the ABA as a “quasi-regulator.”[14] More particularly, she states that the ABA “wears two very different ‘hats,’” one when it is acting as a trade group or a representative body of the legal profession, and the other, its “quasi-regulator” hat, when the ABA “endeavors to put aside member self-interest, and provide fair and balanced recommendations to regulators, knowing that the state courts that are the true lawyer regulators rely heavily on recommendations from the ‘quasi-regulator’ ABA.”[15] When the ABA is wearing its “quasi-regulator” hat, Terry argues:

I do not believe that anyone would seriously argue that when drafting Model Rules, it would be appropriate for the ABA to wear its “trade group” hat and promote the interests of its member lawyers over the interests of clients, the courts, or the public. In short, I believe that in light of the historic deference that has been given to Model Rules by regulators, when the ABA prepares model rules, it should not be acting with its “trade representative” hat on, nor should it try to advance the self-interest of its members. It should instead try to stand in the shoes of the regulators and develop well-balanced rules that properly take into account all of the competing interests.[16]

Assuming that Terry is right that no one would “seriously argue” that it would be appropriate (and it is not clear that she is right), it does not mean that it does not occur. More so, it does not mean that it did not occur with respect to the Ethics 20/20 Commission, and notably on the topic of alternative structures. To begin, when the Commission called for comments on the topic, nearly all of the comments it received were from lawyers, speaking either individually as lawyers or on behalf of a group of lawyers, such a committee of the ABA, a local bar association, a law firm, and, in one case, a group of general counsel of nine large corporations.[17] There is no indication that the Commission made a serious effort (or, indeed, any effort at all) to obtain input from experts with respect to other “competing interests,” such as those of economic policy, human rights, competition, consumer affairs…[18] Without obtaining that input, it is difficult to understand how the Commission could take those interests into account in a meaningful way. Further, much of the input the Commission did receive from the lawyers, again, speaking either individually or on behalf of a group, demonstrates a very strong if not exclusive focus on the perceived interests of lawyers. Here are some examples:

  • “[T]his seems like nothing more than an effort by multinational law firms to maximize their profit making ability with little regard for how the rule change will impact the profession as a whole. We should not lose sight of the reality that 50% of the profession practices in a small firm or solos setting. Imagine how “non-lawyer” ownership will work on Main Street, USA.”[19]
  • “The [New Jersey State Bar Association] is greatly distrustful of any encroachment on attorneys’ accountability and independent professional judgment, fearful of the temptation to appease non-attorney ownership interests, and concerned about the potential for confusion on the part of those dealing with the firm’s principals.”[20]
  •  “The Working Group has … gathered absolutely no evidence that nonlawyer ownership in firms even in the limited fashion proposed is desired by any material percentage of United States lawyers.”[21]
  • “Law is a profession, not a business. Thus, I am opposed to non-lawyer ownership.”[22]
  • “The proposals that have been offered for consideration have been given great public distribution resulting in the public perception that the profession is interested in allowing non-lawyers to invest in and own law firms. The Commission should clearly state now that the profession is not for sale to the highest bidder. It can do nothing less than this.”[23]

After receiving these comments and others like them, the Ethics 20/20 Commission rejected alternative structures. The only grounds the Commission gave for its decision was that it had “considered the pros and cons” and “concluded that the case had not been made.”[24] In his 2015 article “Towards the Law of Legal Services,” Andrew Perlman, who acted as the Chief Reporter of the Commission and thus had a front-row seat to the Commission’s activities, states:

History offers a useful guide as to why the ABA House of Delegates was highly likely to reject any changes proposed by the Commission in this area. Since the Model Rules were adopted more than thirty years ago, the House of Delegates has repeatedly indicated its strong opposition to the idea of ABSs.[25]

Perlman explains that for the ABA House of Delegates, and for the Ethics 20/20 Commission in particular, the entire proposal of alternative structures was a “nonstarter” and that any proposal to allow them “would likely have failed.”[26] He offered several reasons for this, including the “lack of empirical support for the idea that ABSs would benefit the public.”[27] However, and much more persuasive than that, he explains, was the “significant political effort” on the part of state bar associations to oppose them,[28] and, especially because “some members of the House of Delegates were opposed to change as a matter of principle,” even if there had been evidence that change “would benefit the public without attendant harm.”[29]

At the time this book went to press, the consultancy process of the ABA Commission on the Future of Legal Services on the topic of alternative structures (indeed, on any topic) gave little indication that it would be different from that of the Ethics 20/20 Commission. Like the Ethics 20/20 Commission, nearly all of the comments it received were from lawyers, speaking either individually as lawyers or on behalf of a group of lawyers, notably bar associations. Further, there is no indication that Commission on the Future of Legal Services made a serious effort (or, indeed, any effort at all) to obtain input from experts with respect to the other “competing interests,” that Terry admonished should be taken into account. Finally, the input the Commission on the Future of Legal Services received from the lawyers went much further than simply demonstrating a focus on the perceived interests of lawyers: many of the submissions rejected outright the idea that the interests of anyone else had equal value, if, indeed, any value at all. Here are some examples:

  • “The ABA is in the midst of a membership crisis …which is creating a severe financial strain … which will inevitably dictate cuts in service to our members which will cause us to continue to bleed members. I do not think that this particular proposal helps us in that regard… While the stated goals might be laudable, I think the ABA continues to push dues paying members away with the executive decisions we make and the policies we adopt. Goal 1 of the Association is service to our members.”[30]
  • “It appears that ABA is choosing to disregard a core principle of its mission statement: serving as the national representative of the legal profession. The ABA’s very existence is founded on representing a profession, not corporate sponsors. The ABA should not even consider serving as the agent for venture capitalists and non-lawyers that are seeking to profit from the public at any cost.”[31]
  • “Goal 1 of the ABA’s mission to service our members cannot be ignored or marginalized. [The Commission’s Issues Paper regarding alternative business structures] seems to stray from the core of ABA Goal 1 and risks further alienation of our membership.”[32]
  • “For the ABA to even to consider allowing nonlawyer ownership of law firms causes me and many of my colleagues’ [sic] great concern. I am absolutely against such an alternative business structure as proposed. I have been a long-time member of the ABA. I am strongly considering not renewing my membership.”[33]
  • “Please do not put the House of Delegates through another bruising battle. It will only result in the American Bar Association enduring yet another decline in membership as our profession views the ABA as having lost its way, losing the respect it once had when giants like Robert MacCrate[34] defended our eternal values and principles and lawyers proudly displayed their ABA membership certificate on their office walls.”[35]
  • “I am absolutely astounded that something this significant could be proposed by the ABA without a careful market survey of its constituents…The ABA is losing touch with its constituents. The current political climate clearly demonstrates the voters’ total dissatisfaction with leadership which has disconnected from constituents…This type of proposal leads me to believe that the ABA may be losing touch with its core values, its mission and the needs of its constituents — the lawyers in the profession.”[36]
  • “I urge the ABA to stand tall for the profession and the future of the profession. Reject any attempt to allow non-lawyers [to] own some or all of a law firm.”[37]
  • “The American Bar Association is an organization which should promote and preserve the professional essence of what it means to be a lawyer. I trust it will live true to its mission and reject the ABS proposal.”[38]
  • “As a bar organization, how about proposing ideas that will help lawyers — not nonlawyers?”[39]

The comments below merit particular attention, because they were submitted by persons who identified themselves as members of the House of Delegates:

  • “[T]he ABA is losing membership and money. From a purely self-preservation perspective, we are more likely to have members drop from adopting and seemingly promoting these ABS recommendations than gain constituents. You are making it harder for me to entice lawyers into joining the ABA than to disavow it. Lawyers want to be part of a professional association that lobbies for them, not against them.”[40]
  • “Goal 1 of the ABA is to serve its members and such changes would not.”[41]

The comments above strongly rebuke the Commission simply for having raised the issue of alternative structures. These comments demonstrate that many associated with the ABA (including at least two members of the House of Delegates) either are not familiar with or have chosen to disregard — if not reject — Terry’s admonition that “when the ABA prepares model rules, it should not be acting with its ‘trade representative’ hat on, nor should it try to advance the self-interest of its members.”[42]

A dual representative and regulatory role in the same body is something to which David Clementi, in England and Wales, strongly objected. In the Clementi Report he wrote:

It is difficult to understand how one body can effectively both regulate a profession and also represent and lobby for its interests without prejudice to either its regulatory or representative functions. There is a conflict of interest between the two roles which should be tackled. In a regulatory body the public interest should have primacy. Issues such as changes in practice rules should be examined, not against the wishes of the membership, but against the test of public interest…[43]

It is particularly difficult for professional bodies who combine both regulatory and representative roles to deal with competition issues. Regulatory bodies should be expected to encourage open competition, subject to maintaining quality standards; representative bodies have a legitimate right to fight their corner, warning that the public may suffer if the market is opened too widely. This is a difficult set of conflicting issues for one body to balance…[44]

[With respect to the Law Society], changes to practices rules have been held back by the difficulty of getting it though its large representative Council. [With respect to the Bar Council,] there is little evidence that the Bar has been a force for innovation in customs and practice.[45]

Is the ABA — and, in particular, its House of Delegates — the right organization to determine what is in the public interest? What is appropriate for open competition? Does the ABA — a private organization that is accountable only to state and local bar associations — have the objectivity, the expertise and the resources to make these determinations, in the absence of effective oversight of any governmental body that has political accountability to the public at large? Further, state and local bar associations and other groups of practicing attorneys who do not have political accountability also play pivotal roles in the process — are they the right persons and do they have the necessary objectivity, expertise and resources to make decisions of this kind — which have profound repercussions not just for all lawyers but also for the public and for the country as a whole?

At least two persons would respond “no” to these questions.[46]

The first person who would respond “no” is James Moliterno. In his book The American Legal Profession in Crisis: Resistance and Responses to Change,” Moliterno does not directly pose the question of whether or not the legal profession is self-regulated. On the other hand, in asking who speaks for the legal profession, he makes the observation that:

Actions of courts and legislatures in their supervision of the legal profession continue to be a useful source of information about the views of the legal profession. Many such actions are taken at the behest of the profession itself and are adopted by lawyer-dominated institutions.[47]

In his book, Moliterno examines in-depth a number of “crises” that the legal profession faced in the 20th and early 21st centuries, such as: the immigration rush of the early 20th century, the communist infiltration, the civil rights movement, Watergate, and globalization and technology. In examining how the legal profession, and, in particular, the ABA, reacted to each crises, Moliterno makes this finding:

Calm in the face of crisis is an attractive trait…[T]he profession’s reaction to crisis varied by the nature of the crisis but always served maintenance of the professional status quo. When outsiders threatened to invade the bar’s homogeneity, the profession reacted harshly and often without much reflection…By contrast, when social, economic or technological change was occurring around the profession, the profession’s calm became intractability and myopia…In either event, the profession sought the status quo and resisted ‘innovation and change that was being demanded,’ even when change was inevitable or desirable.[48]

As a result of this finding, Moliterno posits this thesis:

[T]he profession too often looks inward to diagnose and solve its crises. Doing so has caused the profession to be a late-arriving member of society during times of change. Doing so has caused the profession too often to fail in what could have been a leadership role in society. Rather, the profession has too often seen itself as a last bastion of a prior time, clinging too tightly to its past and failing to grow in step with world developments. This is not to say that the profession should dismiss its core attributes at the first sign of societal change; it is to say that a perceptive growing with change would be preferable to consistent, persistent resistance to change. We credit the greatest lawyers with being able to anticipate and predict the course of the law’s change and the readiness of society for such change. The legal profession has been a poor lawyer by this measure. The legal profession, as an institution, most often stays blind to change that is happening all around it.[49]

The second person who would respond “no” is Toby Brown. As a participant on a panel on the future of the legal profession for the National Conference of Bar Presidents, which discussed, in part, Washington State’s new Limited Legal License Legal Technicians (LLLTs, discussed further in part IV), he reported his experience as follows:

[The panel began with a presentation of LLLT]. The audience focused in on the details of the LLLT program, trying to poke holes in it. This audience was made up of Bar Presidents and Executive Directors. These people are well positioned to drive change across the profession. But instead of talking about how they could adopt similar changes in an accelerated fashion, they were looking for ways to kill it.

I sat there as long as I could listening to this. Finally I could take it no longer and interjected. I “suggested” that a failure to drive disruptions would lead to others moving in and taking over the legal market…

After the presentation a number of attendees from state bars sat down to chat with me about all of this. A universal theme was that whatever they might do to disrupt the market and drive innovation will be met with strong resistance by the bar membership. As I see it, bar associations have little to gain by pushing on this issue, even though they have a lot to lose by doing nothing. Their members will not abide any efforts short of turning the clock back. I gave numerous suggestions for how a bar might drive change to the group. All were met with exacerbation and a recognition that any efforts will be met with broad and strong resistance.

For a long time I have held out hope that the legal profession would step up and address the needs of the market: for both lawyers and clients. After this experience, I have come to the hard conclusion: That is not going to happen. As smart as lawyers are, their training and experience have made them a reactive and dogmatic group. In their minds, the way they have been doing it is the only way to keep doing it. Anything else is a threat to the profession and their practice specifically.[50]

The ABA (which, again, is answerable only to state and local bar associations) has the power to ban alternative structures only because the governmental bodies that have or could assert the power to end the ban choose not to act.

As unlikely as it is to happen, what if the ABA did try to put in place a new regulatory framework — one that governed not lawyers but also other actors: entities as well as individuals who are not lawyers? If they did so, it is likely that someone would object. After all, what could justify the ABA — again, a private, unelected organization of lawyers — exercising any kind of regulatory power over persons who are not lawyers?

That being said, it is not entirely clear who could act in the ABA’s place, nor how they could do so.

In the United States, legal services, or, at least, the legal profession, are regulated at the state level. While there are many similarities among the states in this regard, there are also many differences that make it difficult to generalize, let alone clearly identify the authorities with the power to act.

One important difference is the fact that while 18 states have a voluntary bar association, the other 32 (plus the District of Columbia) have unified (or integrated) bars.[51] The difference is this:

In states with a voluntary bar association, the de jure regulatory authority (that is, the authority accorded by law) lies with a governmental entity, in most cases the state’s Supreme Court or another governmental authority to whom the Court has delegated authority. Regardless, that entity does not represent the interests of the members of the bar. Instead, that function is filled by one or more separate, non-governmental associations of lawyers, and for the lawyers of that state, membership in any such association in voluntary.

In contrast, in states with a unified (or integrated) bar, lawyers are required to be members of the state bar organization, and this organization combines both regulatory and representative functions. To add to the complexity, there are significant differences in the manner by which authority is allocated between the supreme courts of these states and their unified bars: in some states the authority is held by the supreme court who delegates it to the unified bar (and who, theoretically, could withdraw that delegation at any time), in some states the unified bar holds its authority by virtue of a legislative act, and, in one state, California, the unified bar is recognized in the state’s constitution.

In the 18 states that have a voluntary bar association,[52] the most obvious bodies that could assert power to change the regulatory framework, and thereby end abdication to the ABA, are the state supreme courts. In those 18 states, the authority of state supreme courts to adopt rules that are different from the ABA’s Model Rules is clear. It is the state supreme courts that, to date, have chosen to take a mostly passive role. A number of reasons have been suggested for this choice: because judges believe that the formulation of the rules is best left to the ABA, because the development of abstract rules is something judges are not comfortable doing (they are comfortable responding to concrete cases), because the state supreme courts do not have the resources to conduct legislative-like research and hearings,….

As regards the 32 states (as well as the District of Columbia) that have unified (integrated) bars, the situation is less clear. In some of these states, the supreme court retains responsibility for rule-making, with the bar organization responsible for enforcement. But in other states with a unified bar, it is the bar organization that not only enforces the rules, but also formulates them, subject, at most, to the approval of the state’s supreme court. In these states, it is not at all clear that the state supreme court has any real power to adopt rules with which the bar does not agree.

In the end, whatever the explanation may be, the fact that state supreme courts do not play an active role in the formulation of the rules is an important reason behind the de facto regulatory power of the ABA.[53]

Outside of the ABA and state supreme courts, there are, at least in theory, other bodies who could also assert authority to put in place a new regulatory framework. These include: (i) state executive and/or legislative branches, on the grounds that they are regulating not attorney conduct but consumer services and corporate structures, (ii) federal agencies, such as the FTC, on the grounds that they are regulating not attorney conduct but restrictions on competition, and (iii) the executive and/or the legislative branches of the federal government, on the grounds that they are regulating not attorney conduct but trade and commerce, economic policy and the protection of human rights.[54] Of course, unlike state supreme courts, if any of these bodies did attempt to assert their authority in this manner, it would not go unchallenged: the bar, and notably the ABA, has on a number of occasions formally challenged the right of any governmental body, other than state supreme courts, to attempt to regulate lawyers in any manner.

In spite of the challenges, some potential actors — particularly the FTC[55] — may feel emboldened by the February 2015 decision of the US Supreme Court in North Carolina Board of Dental Examiners v. FTC. In this case, the North Carolina dental board, consisting mostly of practicing dentists, took certain actions to keep non-dentists from offering teeth-whitening services in North Carolina. The FTC sued the dental board under federal antitrust laws, claiming anticompetitive conduct. However, the issue before the US Supreme Court was not if the actions of the dental board were anticompetitive. Instead, the issue was whether the dental board was acting under a doctrine that would give it, as a “state actor,” immunity from claims of anti-competitive conduct in violation of federal antitrust law. The dental board claimed that is was a state actor and thus was eligible for such immunity, on the grounds that an act of the North Carolina legislature appointed the dental board as the “agency of the State for the regulation of the practice of dentistry.”[56] The Court, however, disagreed, stating that “active market participants cannot be allowed to regulate their own markets free from antitrust accountability”[57] and that “prohibitions against anticompetitive self-regulation by active market participants are an axiom of federal antitrust policy.”[58] Additionally, the Supreme Court stated “The question is not whether the challenged conduct is efficient, well-functioning, or wise… [t]he question is whether the State’s review mechanisms provide ‘realistic assurance’ that a [private party]’s anticompetitive conduct ‘promotes state policy, rather than merely the party’s individual interests.’”[59]

While this case involved the dental rather than the legal profession, the decision of the court is highly pertinent for the legal profession. It places anti-competitive actions by any group of “active market participants” — such as bar associations — under intensified scrutiny.[60]

Challenging the regulatory power of the ABA should not be confused with advocating for the loss of independence of the legal profession. Again, the ABA’s regulatory power is only de facto — the ABA has regulatory power only because the state supreme courts decline, for the most part, to exercise their de jure regulatory powers (that is, the powers accorded to them by law), and notably because they decline to take a more active role in the formulation of the rules that govern the legal profession. At the same time, a principal justification offered for vesting de jure regulatory authority in state supreme courts is in order to maintain the legal profession’s independence from the government. Seen from this context, it is difficult to understand how state supreme courts asserting a more active role not only in rule formulation but also in creating a new regulatory framework would result in the loss of independence of the legal profession, or of legal services providers more generally.

Further, the example of England and Wales shows that it is possible to establish regulatory bodies and procedures that permit the legal service providers to remain independent — not only of the representative interests of the legal profession and of the government but also of the courts, all while maintaining political accountability. With respect to solicitors, England and Wales has done this in two steps:

  • By removing the regulatory function of the Law Society and placing it into a newly created Solicitors Regulation Authority (SRA), leaving the Law Society as a purely representative body (or nearly so[61]), and then
  • By placing both the SRA and the Law Society, as well as other regulators of legal services, under the authority of a newly created regulatory oversight body, the Legal Services Board (LSB), whose members consist of a chairman, appointed by the Lord Chancellor, and between seven and ten “ordinary” members (the majority of which must be nonlawyers), appointed by the Lord Chancellor in consultation with the Lord Chief Justice.[62]

Under this structure, the LSB has political accountability — to the Parliament, via the Lord Chancellor, and under the “sponsorship” of the Ministry of Justice — yet the LSB remains independent of the state (that is, free of political influence or pressure by the government in power).

Self-regulation of the legal profession and independence of the legal profession from the state are not synonymous terms — there is no reason why challenging the power of the ABA to regulate legal services will necessarily result in ending the independence of the legal profession from the state (that is, in leaving the legal profession vulnerable to political influence or pressure by the government). The work of creating a new regulatory framework for legal services can and should include a review of the existing regulatory bodies to assure that they operate independently of both the profession and state. England and Wales provides just one example of how that can be done.


John Ray, Senior Consultant, Law Firm Consulting Group: Ray explains that, with respect to Model Rule 5.4, the decision makers of the ABA have a conflict of interest because the large corporations that the decision makers, as lawyers, represent have a vested interest in opposing alternative structures.

Sir David Clementi: Clementi rejects self-regulation of the legal profession on the grounds that regulation is a public service. For that reason, and like the regulation of all other service providers, it should be carried out in the interest of the public and be independent of representation of the profession.

John Briton, Former Legal Services Commissioner, Queensland: Briton argues that a membership body will always find it difficult if not impossible to take regulatory action which its members perceive to be a threat to their livelihoods, no matter how great the benefit to the public may be.

Darrel Pink, Executive Director, Nova Scotia Barristers’ Society: Pink argues that a lesson from England and Wales and from Australia is that it’s not about self-regulation, but about independent and professional regulation.



[1] Chandler et. al., “Comments of Nine General Counsel,” 6. See also: DRI – The Voice of the Defense Bar, 5; Texas Association of Defense Counsel et. al, “Comment and Opposition by Texas Association of Defense Counsel, Texas Trial Lawyers Association, and Texas Chapters of the American Board of Trial Advocates on Alternate Business Structures,” May 4, 2016, 1,

[2] Ibid., 5.

[3] Ibid., 2.

[4] “Framework Document: Agreement between the Ministry of Justice and the Legal Services Board,” June, 2011, 8,

[5] On this topic generally, see Fred C. Zacharias, “The Myth of Self-Regulation,” Minnesota Law Review 93 (2009): 1147-1190,

[6] See, for example, Benjamin H. Barton, “Do Judges Systematically Favor the Interests of the Legal Profession?” University of Tennessee Legal Studies Research Paper No. 1, 2007, 8-9,

[7] Judith L. Maute, “Global Continental Shifts in a New Governance Paradigm in Lawyer Regulation and Consumer Protection: Riding the Wave,” in Alternative Perspectives on Lawyers and Legal Ethics: Reimagining the Profession, ed. Francesca Bartlett, Reid Mortensen and Kieran Tranter (London: Routledge, 2011), 30.

[8] Andrew Perlman describes the state bar associations as “important constituencies” for the House of Delegates. Perlman, “Towards the Law,” 78.

[9] “ABA Mission and Goals,” American Bar Association, accessed August 21, 2015,

[10] “Governmental Affairs Office,” American Bar Association, accessed August 21, 2015,

[11] “ABA House of Delegates,” American Bar Association, accessed August 21, 2015,

[12] Schneyer has described the “professional conduct systems for lawyers” in the US as “professional self-regulation,” notably due to the magnitude of the role played by the ABA. See Schneyer, “The Case for Proactive Management-Based Self-Regulation.”

[13] Laurel S. Terry, “Globalization and the ABA Commission on Ethics 20/20: Reflections on Missed Opportunities and the Road Not Taken,” Hofstra Law Review 43 (2014): 95,

[14] Ibid., 117.

[15] Ibid.

[16] Ibid., 117-118.

[17] A list of and links to the submissions are available and the ABA website: “Alternative Law Practice Structures Comments Chart- Last Updated 8/28/2012,” Certainly some of the comments attempt to address other interests (in particular, Responsive Law attempts to address the interests of consumers of legal services) but the fact remains that nearly all of the comments were submitted by lawyers.

[18] This failure accords with Devlin and Morison’s reflection that the governance of legal services in the US is a “monologue rather than a dialogue” overwhelmingly dominated by the ABA. Devlin and Morison, “Acess to Justice,” 527.

[19] Murrell, “Ethics 20/20 Non-lawyer Ownership of Law Firms.”

[20] New Jersey State Bar Association, Comment Submitted to ABA Commission on Ethics 20/20, January 31, 2012, 1,

[21] Douglas R. Richmond, “Discussion Paper on Alternative Law Practice Structures,” January 6, 2012, 1,

[22] Ruffin, Comment Submitted to ABA Commission on Ethics 20/20.

[23] Richard L. Thies, Letter to the ABA Commission on Ethics 20/20, February 23, 2012, 4,

[24] ABA Commission on Ethics 20/20, “ABA Commission on Ethics 20/20 Will Not Propose Changes.”

[25] Perlman, “Towards the Law,” 75.

[26] Ibid.

[27] Ibid., 78.

[28] Ibid.

[29] Ibid., 79. With these words alone, Perlman proves Terry wrong: by failing to condemn this attitude by those members of the House of Delegates, Perlman implies that it can be appropriate for the ABA to wear its “trade group” hat when the ABA prepares model rules. Indeed, Perlman’s account is as interesting for what it says as it is for what it does not say. At no point does Perlman question either: (i) the process the ABA followed (for example, that no significant input was sought or received from persons outside the legal profession (such as experts in economic policy, competition, human rights, consumer affairs,…) nor (ii) the legitimacy of the ABA’s regulatory power in this regard.

[30] Forum on the Entertainment and Sports Law Industries, “ABA Commission on the Future of Legal Services — Issues Paper on Alternative Business Structures/Comments Requested,” May 3, 2016,

[31] Middlesex County Bar Association, “Issues Paper Regarding Alternative Business Structures,” May 6, 2016, 3,

[32] Tort Trial & Insurance Practice Section, “ABA Commission on the Future of Legal Services / Issue Paper Regarding Alternative Business Structures,” May 6, 2016, 1,

[33] Leonard R. Grossman, “Alternative Business Structure Proposal of the ABA,” May 2, 2016,

[34] Robert MacCrate, a former President of the ABA, is credited as the driving force behind the resolution that the ABA House of Delegates adopted in 2000 stating: “The sharing of legal fees with nonlawyers and the ownership and control of the practice of law by nonlawyers are inconsistent with the core values of the legal profession. The law governing lawyers, that prohibits lawyers from sharing legal fees with nonlawyers and from directly or indirectly transferring to nonlawyers ownership or control over entities practicing law, should not be revised.” See John Gibeaut, “’It’s a Done Deal’: House of Delegates Vote Crushes Chances for MDP,” ABA Journal 9 (2000): 92-93,; Paul D. Paton, “Multidisciplinary Practice Redux: Globalization, Core Values, and Reviving the MDP Debate in America,” Fordham Law Review 78 (2010): 2209,

[35] Lawrence J. Fox, “What Would Bob MacCrate Think?”, 2016,

[36] Henry Mills Gallivan, “ABA Proposal in Alternative Business Structures,” April 28, 2016,

[37] Benjamin H. Hill, III, “Non-Lawyer Ownership of Law Firms,” April 25, 2016,

[38] James T. Murphy, “Comment: Issues Paper Regarding Alternative Business Stuctures [sic],” April 26, 2016,

[39] Christopher G. Betke, “Proposal for ABS,” April 28, 2016,

[40] Laura Bellegie Sharp, “Comments Regarding the Alternative Business Solutions Issues Paper,” April 28, 2016, 2, Sharp further wrote:

My Austin Bar Association, who I represent in the HOD, has strongly and repeatedly indicated that I oppose all measures to allow any non-lawyer participation in law firms. Pursuant to those directives, and while they permit me to represent them in the HOD, I will fight any measure to dilute the practice of law that would allow in any way non-attorneys to participate as owners of firms… However, even if they did not, I as an individual member of the ABA and legal profession strongly object to the repeated attacks by what most of us see as a subsection of the ABA who have members that are promoting ideas that only benefit the few…How will small town attorneys and small law firms compete? They will not be able to, they will find something else to do. Law schools will have even further declining enrollment because only LaWmart and the largest law firms will be hiring. The brightest students will not apply to law schools because the LaWmart pay will be too low to ever pay their student loans. We might as well just go ahead and “kill all the lawyers” rather than subject them to a lingering death by attrition. Ibid., 1-2.

[41] Paula Hudson Holderman, “Commentary on the report from the ABA’s Commission on the Future of Legal Services,” April 27, 2016,

[42] Terry, “Globalization and the ABA Commission on Ethics 20/20,” 95.

[43] Clementi Report, 27-28.

[44] Ibid., 29.

[45] Ibid., 29-30.

[46] At least one group would also respond no: the OECD. In a 2016 Issues Paper, it wrote:

[L]egal professional self-regulators may be unable, or ill-suited, to identify accommodations that permit innovative entrants to serve consumers…there is the possibility that incumbents engage in anticompetitive behaviour to prevent innovative new entrants from accessing their markets. There is a risk that legal professional organisations may act to maintain the traditional market structure and business model of the legal services industry in a manner that exceeds their regulatory mandate. Organisation for Economic Co-operation and Development, “Protecting and Promoting Competition,” 2, 12.

[47] Moliterno, The American Legal Profession in Crisis, 13.

[48] Ibid., 3.

[49] Ibid., 4.

[50] Toby Brown, “The Legal Profession is Doomed,” 3 Geeks and a Law Blog, February 10, 2015,

[51] Maute, “Global Continental Shifts,” 30. But also see Barton, “Do Judges Systematically Favor,” 10, stating that there are unified bars in 36 states plus the District of Columbia.

[52] Those states are Arkansas, Colorado, Delaware, Illinois, Indiana, Iowa, Maine, Kansas, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Tennessee, and Vermont.

[53] See, for example, Benjamin H. Barton, “The Lawyer’s Monopoly — What Goes and What Stays,” Fordham Law Review 82 (2014): 3080-81,

[54] Hadfield and Rhode argue in favor of a single, national licensing authority for entities combined with certain state-based regulatory powers, notably for lawyers as individuals. Hadfield and Rhode, “How to Regulate Legal Services,” 40-48.

[55] The FTC should also feel emboldened by a 2016 OECD Issues Paper which  urges (if not exhorts) competition authorities to advocate “in favour of pro-competitive professional regulations that reflect market realities [including] advocating for the opening up of markets which may not yet be accessible to disruptive innovators.” The Paper encourages competition authorities to undertake market studies “assessing the degree to which legal services professional regulations affect competition, and whether there are alternative regulatory approaches with fewer competition impacts.” Organisation for Economic Co-operation and Development, “Protecting and Promoting Completion,” 13, 14.

[56] North Carolina State Board of Dental Examiners v. Federal Trade Commission, February 15, 2015, 6,

[57] Ibid., 8.

[58] Ibid., 2.

[59] Ibid., 9.

[60] See, for example, Hadfield and Rhode, “How to Regulate Legal Services,” 6, 37-38. See also Ken Friedman, “Could Dental-Board Decision Unlock Lawyer Control of State Bar Regulations?” Forbes, March 4, 2015,; and Tamara Tabo, “What Lawyers Must Learn From Dentists About The Unauthorized Practice Of Law,” Above the Law, March 2, 2015,

[61] At the time this book went to press, the SRA operated as the “independent regulatory arm” of the Law Society, but not as an independent legal entity. In November 2015, the Ministry of Justice announced that it will conduct a consultation with the view, in part, to complete the separation of the SRA from the Law Society. See Nick Hilborne, “Separation Would be Better for Both of Us, SRA Leaders Tell Law Society,” Legal Futures, December 3, 2015,

[62] “Framework Document: Agreement Between the Ministry of Justice and the Legal Services Board.” See also “LSB Framework Document,” Legal Services Board, accessed August 22, 2015,


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