Guest post by Dan Lear, Director of Industry Relations at Avvo.
The sanctity of lawyer-provided legal services was central to my law school experience. I left law school believing the provision of legal services by non-lawyers was unthinkable. Restrictions on non-lawyers practicing law seemed as fundamental to our legal system as the hallowed doctrine of judicial review.
Today, it’s clear that unauthorized practice of law (UPL) regulations are doing lawyers more harm than good. Rethinking UPL regulations will help lawyers adapt to the realities of the modern legal marketplace but, before jumping into that in detail, let’s step back and understand the historical reasons for the development of the current UPL regime.
The Origins of UPL
Interestingly UPL regulations, the laws that effectively prohibit non-lawyers from practicing law, are relatively recent developments. The first century of the United States’ legal system was characterized by a loosening of the UPL infrastructure as many state legislatures passed measures permitting non-lawyers to appear in court.1 Even by 1908, the first Canons of Ethics by the American Bar Association (ABA) made no mention of the UPL.2
In the late nineteenth century, bar associations’ power grew and these entities sought to limit infringement on their services by those outside of the profession.3 Less than 30 years after it was first published, the ABA’s Canon of Professional Ethics in 1937 added a clear denunciation of UPL, stating “No lawyer shall permit his professional services, or his name, to be used in aid of, or to make possible the [UPL] by any agency, personal or corporate.”
Since that time, for a variety of reasons, including a Supreme Court decision that found certain ABA efforts to limit UPL to be anti-competitive, UPL prosecutions have declined.4 Still, every state but one has an unauthorized practice of law statute that makes it illegal for anyone who doesn’t meet the requirements set by state bars or lawyer regulators to practice law.
Influence of UPL on the Business of Law
Functionally these rules prohibit individuals who are not lawyers from doing things that have been reserved to lawyers, also known as practicing law. However, as the rules have developed, they’ve also been expanded to include other activities that don’t necessarily involve people who aren’t lawyers practicing law (such as fee-splitting). Further, in a rule-interpretation only a lawyer could truly love, fee-splitting rules also extend to non-lawyers owning law firms because owners share in the profits of an entity and all law firm profits come from legal services.
These regulations—or more broadly—this paradigm which emerged and gained hold most firmly in the last century, have generally been good to lawyers. Between 1910 and 2000 the proportion of total employment of lawyers and judges compared to that of the general employment population more than doubled. In the first decade of this century, the nominal size of the legal sector grew from just under $150B to more than $200B by 2009.
Yet, the legal sector has some significant problems. Let’s start with the fact that pro se bankruptcy filings are increasing twice as fast as overall filings. Or that more than 4 out of 5 low-income litigants go it alone because they feel priced out of the legal market. Finally, roughly half of medium- to high-income consumers in the U.S. are avoiding lawyers. Access problems in our country are well-documented but when even medium-to-high income people are avoiding lawyers the problem is clearly larger than legal services for those who can’t pay for them.
Some have argued that the legal services delivery system in our country is fundamentally broken. I won’t go that far, but I will suggest that the legal industry has some significant problems and that we must look outside of law—and beyond lawyers—to try and fix them.
Bringing In Outside Talent
A logical solution to solve access to justice and lawyer affordability would be to bring in big business and economic minds to help. We’ve seen other professions revolutionized for the good by this type of reexamination: in accounting there are not only companies such as H&R Block, but massive, helpful, and efficient systems like TurboTax. While healthcare and medicine remain a hot-button political issue and very much a work-in-progress, few can argue that those who need urgent, immediate medical help in this country can’t get it.
I’m not sure that the same can be said of law.
But even if lawyers did reach out for help, why would those outside law who possess the type of business and strategic knowledge respond? What is their incentive? Unfortunately, due to UPL restrictions, whatever goodness they unlock, their maximum upside is a consulting fee rather than any sort of profit sharing.
Using UPL regulations, today’s lawyers have excluded non-lawyers from participating in delivering legal services. To make matters worse, lawyers are known to bully out of existence threats to their monopoly on legal services. By using UPL regulation, lawyers have eliminated any incentive for non-lawyers to either deliver legal services or own any stake in entities that do.
The Benefits of Dismantling UPL
The consequences of irrationally excluding outside experts from full participation in law is pretty clear. Where is the legal industry’s Bill Gates, Jeff Bezos or even Mark Zuckerberg? When is the last time a non-lawyer focused on launching the “next big thing” in legal?
While UPL may have served to better organize the legal profession and, maybe, help consumers to find competent representation 50 years ago, now it is only hurting it. UPL is preventing lawyers from adapting to the swift changes around them because, to do so, lawyers must fully embrace, not exclude, professionals from other fields who can partner with them.
In addition to letting lawyers focus on practicing law, business people can help lawyers develop and market legal services that are responsive to consumer demand and that can compete with those provided by online legal service providers. They can also help lawyers raise money, manage finances, and streamline their operations.
Beyond business operations and growth, business acumen will also help lawyers run more ethical and less risky practices. Misappropriation and mismanagement of client funds is a cause of some of the most severe lawyer discipline and significant malpractice claims. Business leaders can help lawyers put together plans and systems that avoid operational oversight or cash flow problems.
But it’s not just business people. Lawyers need to partner with economists, statisticians, technologists, designers, content developers, and others. These professionals bring an array of differing skill sets to the table that can help lawyers connect with prospective clients and the general public in new and important ways. Every other industry does this. Why are lawyers any different?
Finally, I’m not just talking about hiring law firm consultants who specialize in any of these disciplines. Consultants can help, but they will never bring the passion and innovation of a business owner. To create the proper incentives, non-lawyers need to be invited into legal services businesses as true partners. Under the current UPL framework, this kind of true partnership is prohibited.
It’s time for lawyers to rethink UPL. We are facing a drastically changed, and rapidly changing, landscape. Lawyers need outside expertise to respond to the demands of the increasingly savvy clients and consumers of low-to-moderate means.
Although, ultimately, restrictions on having non-lawyers do lawyerly things are without much justification, we don’t have to start there. Instead, let’s re-evaluate the specific prohibitions on sharing fees with non-lawyers that prohibit us from bringing in outside help as a partner and owner, not simply as a consultant. If we challenge the previously sacrosanct exclusivity of lawyer-delivered legal services, even a little, we will discover that the extensions of those prohibitions are, ultimately and immediately, doing us more harm than good.
Featured image: “ conceptual, businessman tethered and strained” from Shutterstock.
See Barlow F. Christensen, The Unauthorized Practice of Law: Do Good Fences Really Make Good Neighbors-Or Even Good Sense?, American Bar Foundation Research Journal Vol. 5, No. 2 (Spring, 1980), pp. 159, 169-75. ↩
Derek A. Denckla, Nonlawyers and the Unauthorized Practice of Law: An Overview of the Legal and Ethical Parameters, 67 Fordham L. Rev. 2581 (1999), pp 2583. ↩
James W. Hurst, The Growth of American Law: The Law Makers, p. 323 (1950). ↩
Denckla, pp 2585. ↩