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Overview of regulatory change in legal services market (June 2020)

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An overview and summary of US states currently implementing or studying possible regulatory changes in the market for legal services. Presentation created by Alice Mine and Brian Oten of the North Carolina State Bar.

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Overview of regulatory change in legal services market (June 2020)

  1. 1. REGULATORY REFORM IN THE LEGAL PROFESSION – AN OVERVIEW Alice Mine and Brian Oten The North Carolina State Bar
  2. 2. INCREDIBLE RESOURCE: ABA LEGAL INNOVATION REGULATORY SURVEY • http://legalinnovationregulatorysurvey.info • Sign up for email updates • Emails are only sent when necessary/action taken • Another potential resource: • University of Denver’s Institute for the Advancement of the American Legal System –Virtual Convening Series on Regulatory Innovation • Contact Brian if interested
  3. 3. STATES ENGAGED IN REGULATORY REFORM EFFORTS (ACTION AND/OR STUDIES)
  4. 4. TIMELINE
  5. 5. GOVERNMENT ACTION ON REGULATORY REFORM (*DOES NOT INCLUDE STUDIES BY VARIOUS GROUPS OVER THE YEARS*) • 2001/2004 – Australia allows incorporated law practices, multi-disciplinary practices, and publicly-listed practices • 2007 – first law firm publicly lists • 2007 – Legal Services Act in the UK • June 2012 – Washington State Supreme Court authorizes Limited License Legal Technicians (LLLT); first LLLTs licensed in 2015 • June 2017 – Legal Services Corporation report on access to justice • “86% of the civil legal problems reported by low-income Americans in the past year received inadequate or no legal help.” • July 2018 – at the request of the CA State Bar,William Henderson publishes Legal Market Landscape Report • October 2018 – Utah authorizes Licensed Paralegal Practitioners (LPPs; similar to LLLTs); first LPPs licensed in 2019 • 2016-2019 – task forces with directives to propose regulatory reform start in Oregon, California, Utah,Arizona, New Mexico, Minnesota, Indiana
  6. 6. EXAMINATION OF EFFORTS MADE IN INDIVIDUAL JURISDICTIONS
  7. 7. AUSTRALIA
  8. 8. AUSTRALIA (NEW SOUTH WALES) • 2001 – Corporations Act and 2004 – Legal Profession Act authorize law firms to incorporate, publicly list, and form as/convert to multi-disciplinary practices • 2007 – first publicly listed law firm in the world (Slater and Gordon) • 2009 – revisit regulatory reform; revised Legal Profession Act adopted in 2015 (PMBR elements to improve ethics infrastructure for firms) • Is it working? Mixed reaction • New structures for law firms have increased, but reforms have not improved access to justice; new conflicts concerns • “The adoption of non-lawyer ownership of legal services may, in some instances, bring access and other benefits. However, the evidence so far does not indicate that these access gains will be as significant for poor and moderate-income populations as some proponents suggest, and if non-lawyer ownership is seen as a substitute for other access strategies, like legal aid, such a deregulatory reform strategy could even have a detrimental impact. At the same time, the evidence also does not indicate that the professionalism concerns raised by non- lawyer ownership justify a blanket ban.” When Lawyers Don't Get All the Profits: Non-Lawyer Ownership,Access, and Professionalism, 29 Geo. J. Legal Ethics 1, 61-62 (2012)
  9. 9. UNITED KINGDOM
  10. 10. UNITED KINGDOM • 2007 – Legal Services Act • Eliminated self-regulation; legal profession now regulated by entity composed of both lawyers and non-lawyers, answerable to Parliament (Legal Services Board) • Permits alternative business structures with nonlawyers in professional, management, or ownership roles.
  11. 11. IS IT WORKING IN THE UK? • Yes and no; access to justice still a concern. • New business models have been developed (800+ Alternative Business Structures). • Prices for legal services have not decreased despite innovation. • “But the biggest criticism of the Legal Services Act saga is that it has done adjacent to nothing for the ill-served retail consumers whom it was supposed to aid. As the Competition and Markets Authority concluded last December after a year-long review, occasional users of legal services struggle to find a decent product at a reasonable price.” Comment: The Legal Services Act ten years on – still waiting for the Big Bang (November 2017), https://www.legalbusiness.co.uk/blogs/comment-the-legal-services-act-ten-years-on-still-waiting-for-the-big-bang/ • CMA recommended increased transparency for legal services, primarily on prices for legal services; new rules took effect in 2018 to require lawyers/law firms to display prices for services.
  12. 12. WASHINGTON STATE
  13. 13. WASHINGTON • June 2012 –Washington State Supreme Court adopts rule permitting Limited License Legal Technicians (LLLT) • 2014 – LLLT classes start • 2015 – first LLLTs are licensed
  14. 14. May 24, 2020
  15. 15. May 24, 2020
  16. 16. WASHINGTON LLLTS • Is it working? • Mixed reactions; still early to determine success/impact • Pros: Potential if expanded to additional practice areas, abilities/permissions increased • Cons: small numbers of LLLTs; employment trends; high cost for regulatory program; questionable impact on access to justice
  17. 17. UTAH
  18. 18. UTAH • 2015 – task force created to study access to justice; recommended creation of limited license paraprofessionals • October 2018 – Utah Supreme Court authorizes creation of Licensed Paralegal Practitioners (LPPs) • Required courses designed by Court/Bar; offered at UtahValley University in 2019 • First LPPs licensed in October 2019 (4) • Late 2018 – Utah Supreme Court calls for Court and Bar leadership to address access to justice issue through regulatory reform • March 2019 – task force announced • August 2019 – task force report and recommendations published
  19. 19. UTAH TASK FORCE RECOMMENDATIONS • Amend RPCs on advertising • Allow referral fees • Allow nonlawyer ownership/eliminate Rule 5.4 • Create a “regulatory sandbox” that permits alternative business structures to exist on the condition that data be provided to new regulatory body to gauge impact/effectiveness • Focus on objectives-based, risk-based regulation
  20. 20. UTAH – CURRENT EFFORTS • Proposal to eliminate Rule 5.4 and replace with new Rules 5.4A and 5.4B • 5.4A – notes the importance of lawyer independence, but otherwise permits lawyers to share fees with nonlawyers upon notice given to client • 5.4B – concerns regulatory sandbox efforts • Proposal re: advertising rules • Eliminate all advertising rules except: • Communications re: legal services cannot be false • Communications re: legal services cannot involve coercion, harassment, or duress • *Prohibition on in-person solicitation will be eliminated • Proposals are currently published for comment
  21. 21. ARIZONA
  22. 22. ARIZONA • November 2018 –Task Force on Delivery of Legal Services established • January through September 2019 – task force meetings • October 2019 – task force issues report and recommendations • January 2020 – task force petitions Supreme Court to amend various rules based upon report • Comment period currently open • April 2020 – Supreme Court authorizes law students and recent graduates to practice law under certain conditions
  23. 23. ARIZONA – TASK FORCE RECOMMENDATIONS • Remove barriers to non-lawyer ownership by eliminating 5.4 and 5.7 (law-related services) • Amend advertising rules to match ABA Model Rules • Promote education on unbundled legal services • Amend and clarify student/recent graduate practice rules; do not tie to law school clinic • Amend UPL rules to clarify what actions are permitted and prohibited • Develop a program to license nonlawyer “limited license legal practitioners” • Initiate the “Licensed Legal Advocate Pilot Program” (train lay persons to provide legal advice to domestic violence survivors) • Initiate the “DomesticViolence Legal Assistance Project Document Preparer Program” (lay persons can assist in preparing documents) • Improve access to and quality of legal document preparers (business or entity certified to prepare legal documents for self-representation without the supervision of an attorney) • Encourage local courts to create nonlawyer positions in court system that provide direct information to self-represented litigants re: court processes.
  24. 24. CALIFORNIA
  25. 25. CALIFORNIA • 2018 – task force formed to study online legal services delivery models and determine if regulatory changes are needed to better support and/or regulate the expansion of technology in legal services. • Three subcommittees associated with the task force: • UPL/Artificial Intelligence subcommittee • Rules and Ethics Opinions subcommittee • Alternative Business Structure/Multidisciplinary Practice subcommittee • July 2019 – task force publishes report and recommendations • May 2020 – regulatory sandbox authorized
  26. 26. CALIFORNIA – TASK FORCE RECOMMENDATIONS • Amend/create UPL exceptions to permit technology-driven legal services delivery systems; permit nonlawyers to provide legal advice in specified areas • Amend Rule 1.1 comments to include reference to technology • Amend Rule 5.4 to permit nonlawyers to have financial interest in litigation; permit lawyers to share fees with nonlawyers • Adopt MR 5.7 to foster investment in technology-driven delivery systems for legal services with nonlawyers • Amend Advertising RPCs
  27. 27. NEW MEXICO
  28. 28. NEW MEXICO • 2015 – Access to Justice Commission recommends creation of LLLTs in New Mexico • 2018 – Innovation Team workgroup begins study to identify potential projects/ideas to address access to justice gap in New Mexico • May 2019 – Supreme Court requests report from workgroup • December 2019 – workgroup issues report and recommendations: • Recruit qualified attorneys to New Mexico, targeting rural areas • Implement Court Navigators Program (no legal advice; assist in completing forms, etc.) • Rural Law Opportunity Program (stipend as incentive for lawyers to move to rural areas) • Continue studying LLLT
  29. 29. MINNESOTA
  30. 30. MINNESOTA • 2017 – Alternative Legal Models Task Force recommends development of a program for affordable legal services that does not rely entirely on lawyers • March 2019 – Supreme Court creates committee to study idea and implementation of a Legal Paraprofessional Pilot Project • March 2020 – committee report with recommendation to create the LPPP • License nonlawyers for representation in housing and family law disputes • Under the supervision of an attorney • Project initial duration: 18 months
  31. 31. OREGON
  32. 32. OREGON • April 2016 – Oregon State Bar creates a “Futures Task Force” consisting of two committees: • Legal Innovations Committee – focused on tools and models for modern legal practice. • Regulatory Committee – how best to regulate the profession and protect the public considering changing legal market. • June 2017 – Task Force issues report and recommendations on the future of legal services in Oregon. • September 2019 – State Bar approves recommendations to create a) licensed paraprofessionals and b) a pathway to lawyer licensure without attending law school. • Proposals still need to be approved by Supreme Court.
  33. 33. REGULATORY COMMITTEE • Create licensed paraprofessionals (landlord/tenant and family law) • Revise RPC to remove barrier to innovation • Amend advertising rules to allow in-person/real-time solicitation • Allow fee sharing with referral services • Allow fee sharing with paraprofessionals • Clarify that providing access to web-based, intelligent software to assist in creating documents is not UPL • Improve resources for self-navigators • Embrace data-driven decisions • Expand lawyer referral service • Enhance practice management resources • Reduce barriers to accessibility • Bar-sponsored incubator program (assist new lawyers in establishing practice to serve low- and moderate-income populations) INNOVATIONS COMMITTEE OREGON
  34. 34. ADDITIONAL JURISDICTIONS WITH NEW/ONGOING STUDIES • Colorado • Connecticut • District of Columbia • Florida • Illinois • Indiana • North Carolina
  35. 35. SUMMARY OF REGULATORY REFORM IDEAS
  36. 36. MOST FREQUENT REGULATORY REFORM IDEAS AMONGST THE STATES • Paraprofessionals/LLLTs • Nonlawyer ownership/partnership • Fee sharing • Amendments to Advertising Rules • Permitting referral fees (for-profit?) • Referral services • Prohibition on in-person solicitation • UPL liberalization • Document preparers, etc. • Legal Regulatory Sandbox • Alternative Admission to the Bar • Without law school but with bar exam • Based only on law school/no bar exam • Court navigators *Goals: Improve Access to Justice; Promote Innovation in Delivery of Legal Services throughTechnology*
  37. 37. WHAT’S HAPPENING IN NORTH CAROLINA
  38. 38. ONGOING NORTH CAROLINA EFFORTS • Administrative Office of the Courts – e-courts project (case management integration; e-filing; e-forms) • EAJC’s Legal Needs Assessment Steering Committee – chaired by Justice Earls • Identify legal needs of low-income communities and document current resources and services available to meet those needs. • Understand specifics regarding the gaps in availability of services and what resources are needed to address unmet legal needs. • Provide data and analysis that will be useful to legal aid providers and stakeholder organizations seeking to expand access to civil legal aid. • Gain a more detailed understanding of how race, gender, age, disability and other factors affect the depth and type of civil legal problems people experience. • Identify by geographic, racial, gender and other demographics who gets help and who does not.
  39. 39. DISCUSSION
  40. 40. METHODOLOGY AND PROGRESSION THROUGH STUDY • Issue-focused vs. jurisdiction-focused? • Other considerations? • Frequency of meetings? • Additional perspectives for committee? • Eventual product from committee?
  41. 41. NEXT STEPS • Next meeting – date and topic? • Brian will survey re: availability
  42. 42. INCREDIBLE RESOURCE: ABA LEGAL INNOVATION REGULATORY SURVEY • http://legalinnovationregulatorysurvey.info • Sign up for email updates • Emails are only sent when necessary/action taken • Another potential resource: • University of Denver’s Institute for the Advancement of the American Legal System –Virtual Convening Series on Regulatory Innovation • Contact Brian if interested
  43. 43. REGULATORY REFORM IN THE LEGAL PROFESSION – AN OVERVIEW Alice Mine and Brian Oten The North Carolina State Bar

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