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Improving access to justice by amending the ethics rules

UMKC CLE, June 2020

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Improving access to justice by amending the ethics rules

  1. 1. Improving Access to Justice by Amending the Ethics Rules Ellen Suni, UMKC Law Stacy Butler, Univ. of Arizona Law Lucy Ricca, IAALS Moderator: Bridget Gramme, Univ. of San Diego Law
  2. 2. The United States ranks 109 out of 128 countries in Access to and Affordability of Civil Justice -2020 World Justice Project Rule of Law Index In 2016, 86% of low income individuals’ civil legal problems received no or inadequate legal help -2017 Legal Services Corporation Justice Gap Report The Problem
  3. 3. Rules of Professional Conduct Limit Innovation that can Increase Access to Justice Why? ● The Rules of Professional Conduct tend to be protectionist of lawyers rather than the public ● Professional regulation does not keep up with change, especially developments in technology ● Professional regulation is risk-averse and not market driven ● The Rules do not properly balance public protection with access to justice
  4. 4. Rules Regarding Fees Rule 1,0 (c) . . . “lawyers in a law partnership, professional corporation, sole proprietorship or other association authorized to practice law; . . . Rule 1.5 (e) A division of a fee between lawyers who are not in the same firm may be made only if: [(1-3) provide the limited circumstances in which fees may be shared} Rule 5.4 (a) [With minor exceptions, a] lawyer or law firm shall not share legal fees with a nonlawyer
  5. 5. Rules Regarding Restrictions on Forms of Practice Rule 5.4 (b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law. (d) A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if: (1) a nonlawyer owns any interest therein, . . .; (2) a nonlawyer is a corporate director or officer thereof or occupies the position of similar responsibility in any form of association other than a corporation; or (3) a nonlawyer has the right to direct or control the professional judgment of a lawyer.
  6. 6. Problems Regarding IPJ and UPL Rule 5.4 (c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services. Rule 5.5 (a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so. UPL is not defined in the Rules and is left to state definitions which are vastly different across jurisdictions.
  7. 7. Impact of the Rules Rules of Professional Conduct fail to carefully balance the need for public protection against the glaring need for greater access to justice for low and modest means individuals and small businesses. Among the concerns are that the Rules inhibit innovation and use of technology that would make legal services more affordable without providing additional protection to the public because they: • Restrict access to capital that would allow law firms of all sizes to engage in development of innovative technologies (R. 5.4(d)(1)) • Restrict lawyers going into business with allied professionals or sharing fees with nonlawyers (R. 5.4) • Restrict consumer access to information via electronic communications about the availability and cost of legal services (R. 7.3(a) state versions)
  8. 8. Impact of the Rules (cont’d) • Impose unnecessary barriers to new marketing and lead generation strategies as well as referral modalities (R. 1.5, 5.4 and 7.2) • Arbitrarily prohibit giving “anything of value” for recommendations except to non-profits or approved referral services (R. 7.2(b)(2)) • Treat fees for lawyer matching services as impermissible lawyer referral fees (R. 7.2(b)(1)(2)) • Prevent anyone other than a lawyer from engaging in the “practice of law,” especially without addressing the wide state-to state disparities in definitions (R. 5.5) • Restrict lawyers from sharing legal fees with a nonprofit unless those fees are court-awarded
  9. 9. What are states doing to modify the rules?
  10. 10. Arizona Recommendations • Eliminate 7.2 altogether (except requirement that advertising contain “some contact information” and a lawyer’s name) • Retain only 7.1 (with 7.4 certified specialist information and 7.5 firm name comments) and 7.3 (Direct Solicitation) • Eliminate 5.4, modify several other Rules, including 1.6, 1.7, 5.1 and 5.3 to address non-lawyer owners in firms and consider additional steps for “entity” regulation
  11. 11. Why Arizona is reforming its regs: • Nationally, 1 in 3 households will experience a civil legal need this year. • 76% of civil cases involve at least one self-represented litigant. • Law firms are increasingly providing services to entities - while total receipts of United States law firms from 2007 to 2012 rose by $21 billion, receipts from representing individuals declined by almost $7 billion.
  12. 12. Reg reforms proposed in AZ: • Eliminate Arizona’s Rules of Professional Conduct (ER) 5.4 and 5.7 and amend ERs 1.0 through 5.3 to remove the explicit barrier to lawyers and nonlawyers co-owning businesses that engage in the practice of law • Develop, via a future steering committee, a tier of nonlawyer legal service providers, qualified by education, training, and examination, to provide limited legal services to clients.
  13. 13. Reg reforms proposed in AZ: 8 additional recommendations, including promoting unbundled services by lawyers, updating the certified document preparer program, and encouraging court-based navigator programs. • The only state in the country to approve a pilot licensing non- lawyers to provide legal advice in a non-profit setting (for DV survivors).
  14. 14. Reaction to reg reform in AZ: • Private bar overwhelmingly opposed: • “allowing non-lawyers to own law firms would put an undue burden on lawyers by creating added business pressures.” • “complete watering down of the legal profession - you're essentially giving paralegals the ability to practice law.” • Public overwhelmingly in favor: • 62% want non-lawyer ownership • 80% want licensed paraprofessionals
  15. 15. Utah: Drivers of reform • Utah Justice Gap survey: In 93% of civil cases in SLC area, at least one party unrepresented. • The gap is acute for low-income Utahns, but extends up the income ladder to impact many more. • Rule 5.4 and UPL rules → serious economic restrictions on market for legal services → dysfunctional legal economy. • Negative impact of 5.4/UPL outweigh evidence of risk of harm by permitting increased nonlawyer participation.
  16. 16. Utah • Loosening restrictions on lawyer advertising, solicitation, and fee arrangements, including referrals and fee sharing S. Ct. Task Force recommended new regulator / “regulatory sandbox” • Providing for non-lawyer investment and ownership of entities providing legal services • Creating new regulatory body to oversee new legal service entities using risk-based, empirically- grounded regulation • Potential for nonlawyer practice (both tech and human) under this entity oversight
  17. 17. 17 Utah State Bar Office of Legal Services Innovation Rules of Professional Conduct Risk -based regulation Utah Supreme Court **regulates the practice of law** Lawyers / trad. law firms Non-trad. legal services / providers SANDBO X
  18. 18. Utah How it works: Innovation Offices assesses a Sandbox applicant around risk of harm to consumers: ● What aspects of this proposal could cause harm to consumers? ● How can provider mitigate potential harm? ● How can the Innovation Office monitor for consumer harm? Rec. for authorization goes to Supreme Court. Every Sandbox applicant must meet disclosure requirements and data reporting requirements (e.g. non-financial outcomes, expert review of products, complaints).
  19. 19. Utah Examples of non-traditional providers and/or services ● Law firm elevating marketing lead to partner ● Law firm taking outside investment ● Lawyers partnering with other professionals in multi-disciplinary professional service entity ● Legal tech company hiring lawyers to offer legal services to public ● Community non-profit offering limited legal advice via social workers or other frontline service providers (e.g. on benefits)
  20. 20. Utah Reactions to Reg Reform Mixed response from lawyers ● Similar negative arguments to AZ: concern around impacts on professionalism, solo and small firms, rural lawyers ● Positive responses around possibilities to innovate, grow business, partner with other professionals, use technology
  21. 21. California Recommendations • New limited licensing category for paraprofessionals • Regulatory Sandbox to provide data on potential benefits and consumer harm if restrictions are lifted •Consider amending advertising and solicitations rules •Consider amending Certified Lawyer Referral Service rules
  22. 22. California Recommendations • Political opposition has been very strong in CA, both to paraprofessional licensing and to reform of 5.4. • CA Bar Board of Trustees recently voted to allow the formation of another working group to study and make recommendation on implementation of the Utah sandbox model in CA. • Position of the Supreme Court on these issues of reform is unclear.
  23. 23. Questions/ Discussion 23