Future Law

ABA Resolution Encourages Innovation in Lawyer Regulation

lawyer regulationA new American Bar Association resolution encourages U.S. jurisdictions to consider innovative approaches to lawyer regulation to increase access to affordable and quality legal services. If approved by the ABA House of Delegates, the resolution would support the revision of existing regulatory structures to better align with the public interest.

The resolution and report, which was released by the ABA’s Center for Innovation, supports regulatory reform in three broad areas. These include new categories of legal services providers, reexamining Rule 5.4 (which prohibits lawyers from partnering and sharing fees with those who aren’t attorneys) and exploring new approaches to policies on the unauthorized practice of law (UPL).

Noting that evidence doesn’t yet support a particular regulatory model, the resolution also calls for increased data collection and analysis before and after any regulatory change.

The ABA House of Delegates will vote on the resolution at the organization’s midyear meeting in February.

A call for reform

Traditional fixes to the access to justice crisis aren’t working, the report says. Though legal organizations have called for increased funding for civil legal aid and pro bono services, 80% of Americans below the poverty line and a majority of the middle-class still lack assistance when facing legal issues.

At the same time, the existing legal regulatory structure in the U.S. can act as a barrier to those seeking legal help. For example, the report points out that Rule 5.4’s prohibition on partnering and fee-sharing “impedes the development of innovative legal service delivery models, especially those that require the active involvement of other kinds of professionals, such as technologists, or that need substantial outside capital to succeed.”

Moreover, the report says that many U.S. jurisdictions define UPL so broadly that the risk outweighs the benefit for prospective innovators who might develop new legal services.

U.S. Supreme Court Justice Neil Gorsuch has spoken out on business reform, writing on the U.K.’s permitted alternative business structures (ABSs) in his book “A Republic, If You Can Keep It.” Gorsuch writes, “Six years into the experiment, the Solicitors Regulatory Authority analyzed ABSs and found that while these entities accounted for only 3 percent of all law firms, they had captured 20 percent of consumer and mental health work and nearly 33 percent of the personal injury market — suggesting that ABSs were indeed serving the needs of the poor and middle class, not just or even primarily the wealthy. Notably, too, almost one-third of ABSs were new participants in the legal services market, thus increasing supply and presumably decreasing price.”

Exploring lawyer regulation nationally 

The regulatory categories identified in the resolution are based on work already been done on lawyer regulation at the state level. Regulators and bar associations in states including Arizona, California, Illinois, New Mexico, Oregon, Utah and Washington, are exploring or evaluating re-regulation initiatives. Organizations like the Association for Professional Responsibility Lawyers and the Institute for the Advancement of the American Legal System are also exploring new regulatory models.

For example, the Utah Supreme Court has directed the formation of a “regulatory sandbox” that will allow new kinds of legal services providers to operate on a pilot basis without UPL concerns. Task forces in California and Arizona have also issued recommendations for Rule modifications that may improve the delivery of legal services in their states.

In Illinois, the Chicago Bar Association and Chicago Bar Foundation launched a joint task force in October to reimagine legal regulation in the state. The task force will submit recommendations for ethics rule changes to the Illinois Supreme Court by fall 2020.

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