Like It Or Not, Law May Open Its Doors To Nonlawyers

By Aebra Coe | September 22, 2019, 8:02 PM EDT

Jayne Reardon, executive director of the Illinois Supreme Court Commission on Professionalism, speaks in May about the evolving legal landscape at a conference in Chicago. Reardon is among those working to examine how reforming attorney regulations could improve access to justice.

Illinois is poised to launch an official exploration into opening up the legal profession to nonlawyers, in what some say could be a "tipping point" for such efforts to increase access to legal help, despite heated attorney opposition in places like California.

Just how heated is that opposition?

"A catastrophe waiting to happen" that would "completely destroy the practice of law" and "erode the quality of legal services." That's what some attorneys have told the California bar task force on allowing more nonlawyer participation in the state's legal sector. A public comment period on the proposal is drawing to a close on Monday.

And yet the number of states considering similar reforms continues to grow. Law360 has learned that the Chicago Bar Foundation and Chicago Bar Association plan to launch a joint task force Oct. 7 to explore how state attorney regulations could be modified to encourage more innovation in the legal sector and ultimately increase access to justice.

That was the stated goal of California, Utah, Arizona and New Mexico when they made moves, all within the last year, to open up the legal industry to greater participation from non-traditional players such as legal technology companies. So far the reforms are in the proposal phase, except in Utah, where the state Supreme Court voted to pursue changes to its regulatory structure last month.

Under Utah's newly approved plan, an accounting firm could soon offer legal services in the state alongside its accounting services, a technology company could use artificial intelligence to help consumers complete legal documents, or a nonprofit could allow a paralegal to offer limited legal advice to clients without lawyer supervision.

The tentative recommendations in California picture a similar legal landscape where, for example, law firms could be owned in part by nonlawyers such as legal technologists or managerial staff, and nonlawyers could serve clients alongside lawyers in an environment where fees are shared.

The changes would mean a consumer looking for help with a civil legal problem such as a divorce or landlord-tenant dispute would have several new options for how to deal with the matter, rather than relying solely on a lawyer or traditional law firm.

Jordan Furlong, a legal market analyst and author of several books on the legal sector, said that if Illinois becomes the next state to look at opening up the profession by loosening regulations on fee-sharing and the unauthorized practice of law, the U.S. will likely have reached a "tipping point."

"I think that's the point it becomes a trend and a movement that starts to sweep across jurisdictions," Furlong said.

The idea behind the reforms is that more robust competition in the sector could help close the country's access to justice gap by lowering costs and increasing options for consumers.

But there are those who argue that opening up attorney regulations would not do much to improve access to justice. Some worry loosened regulations could even put consumers in harm's way if unscrupulous business interests go unchecked under the guise of offering a new type of legal service.

According to the Legal Services Corp., 86% of low-income Americans' civil legal needs are not being met, including problems with health care, housing conditions, disability access, veterans' benefits and domestic violence.

Others say even middle-income Americans have become reluctant to hire a lawyer when faced with a civil legal challenge, and so often forgo legal help.

A 2015 study by the National Center for State Courts found that of all civil matters disposed of in 10 large, urban counties over the course of a year, 76% involved at least one litigant who was self-represented.

That's approximately double the number of self-represented litigants found in a comparable study conducted 20 years earlier, according to a report compiled for the California task force by Indiana University Maurer School of Law professor Bill Henderson.

The NCSC found that in many civil cases the cost of hiring a lawyer is often more expensive than the value of the amount in dispute, as three-quarters of all judgments in the state courts during the year were less than $5,100.

"What we're seeing is people are now willing to go on the internet to search for answers to their legal questions, but they're not so willing to pay for a lawyer to solve their legal problems," said Jayne Reardon, the executive director of the Illinois Supreme Court Commission on Professionalism. "It's the perfect storm of opportunity to recreate a legal services industry geared to what the consumers want."

The Illinois Supreme Court is considering a proposal to loosen regulations on attorneys' ability to pay for recommendations for their services. The change, if enacted, would allow for attorney-client matchmaking services or platforms that pair lawyers looking for work and consumers looking for legal help.

Kenneth Grady, a professor at Michigan State University College of Law's Center for Legal Innovation, says he believes reforms like the ones happening out West are likely to spread across the U.S. quickly.

Still, the legal industry tends to be averse to big changes, and the comments California received on its reforms demonstrate the kind of opposition that other states can expect to face.

"As a whole, [the proposals] are reflective of what appears to be an intent to completely destroy the practice of law as we know it," one commenter said, adding that nonlawyer ownership of law firms and the provision of technology-driven legal advice is likely driven by a desire on the part of big business to control the practice of law.

"The proposal is a catastrophe waiting to happen intended to line the pockets of those who wish to exploit those most in need of legal services," said another.

Some expressed fear that the quality of legal services will decline or that lawyers will be out of a job. Others complained that they had shouldered massive student debt in order to attend law school and because of that don't think it's fair for nonlawyers to be granted more involvement in the profession.

"This is going to erode the quality of legal services in the state by allowing unlicensed individuals to give legal advice and own law firms. It is going to devalue my license and hurt the public," said Michael Cefali, a personal injury lawyer in Newport Beach, California.

Naturally, increased competition may sound scary to lawyers. But Furlong and Grady, both lawyers themselves, say it doesn't need to.

Grady says he sees the proposed changes as a positive for the industry and for consumers. Under the current regulatory structure, lawyers are permitted to maintain a monopoly on the provision of legal services, he said.

The reform efforts aim to open up the profession in a way that would target consumers who currently are not, for the most part, being served by lawyers — small businesses and middle-income and low-income Americans, Furlong said.

Some of the alternatives proposed by the states, such as lower cost paraprofessionals who can help with less complex legal matters, or a technology-driven tool that helps consumers with their legal challenges, are meant to address that gap.

"When you still regulate an industry, but open it up so that competition is present, that spurs everyone to now become very creative and innovative and look for better ways to do things that satisfy their customers," Grady said.

While many legal industry experts see the potential for increased innovation and improved access to justice in the reforms, others say the changes are unlikely to be that momentous.

In a public comment submitted in California, U.K.-based legal industry consultant and author Richard Tromans said he believes, based on what has happened in the U.K., that both sides of the debate are overestimating the effects of the proposed changes.

The U.K.'s Legal Services Act of 2007 allowed nonlawyers there to take an ownership stake in law firms through what are called alternative business structures, both as partners and as institutional investors.

"Different ownership models alone do not drive innovation nor improve access to justice," Tromans wrote in his comment on the California proposals. "What drives innovation is a willingness of the owners to make it happen, and that can be driven by all-lawyer partnerships, a mix of lawyers and other professionals, or even a law firm 100% owned by institutional investors."

An interim study on the effectiveness of the law released last week by University College London found that while the changes "heralded a more modern and liberal approach to the regulation of legal services," they have not sufficiently addressed consumer needs or improved access to justice.

The report suggested further tweaks should be made to make room for the wider array of legal provider models — many of which are technology-based — that have hit the market in recent years, rather than focusing on lawyer regulations.

The deregulation of the legal services market in the U.K. neither caused a revolution, nor a rash of ethical issues, Tromans said in his written comment.

"It simply didn't change things half as much as many expected," he said. "There is more diversity of ownership and some new business models, but that in itself has not meant more innovation."

Still, experts like Furlong say there are major differences between the U.K. and U.S. legal markets, and in the ways U.S. regulators have approached reform that they believe will spur more change in the access to justice arena than the industry has seen across the Atlantic.

States such as California have a long entrepreneurial tradition, and much of the reform in the U.S. is being overseen by access to justice task forces and commissions that are pushing for change with everyday consumers in mind, he said.

"I think events could unfold very differently," Furlong said.

--Editing by Kelly Duncan.

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