Attorney Regulatory Reform: Where Do We Stand?

attorney regulatory reformThe legal profession is under pressure. A growing number of Americans who experience legal problems receive no or inadequate legal help. Increasingly, people are representing themselves in court rather than engaging a lawyer. At the same time, lawyers, especially those who represent individuals and small businesses, are struggling financially. This situation is a serious market failure and has been brewing for years.

Some believe attorney regulatory reform could help address the problem. Over the last couple of years, several bar associations and state task forces (including the Chicago Bar Association/Chicago Bar Foundation Task Force on the Sustainable Practice of Law & Innovation), have been analyzing the changing legal landscape and considering whether some Rules of Professional Conduct should be amended to allow lawyers to leverage modern practices, including technology, to better serve consumers.

The events of 2020 are a clarion call to continue this work at a faster, but still careful, pace. The global pandemic has revealed weaknesses in the justice system and forced lawyers and judges to adjust how we work and deliver justice through our court system. Moreover, the ongoing social unrest following the death of George Floyd has revealed the depth of public distrust in the foundations of our constitutional democracy. If current attorney regulations hamper our ability to address these problems, they should be changed post-haste.

As readers of this blog know, I have been following developments in this area for some time. It is gratifying to see several task forces generating reports and recommendations on attorney regulatory reform. What is more gratifying is that implementation is already taking place. I share an update on reform efforts in several key states below.

Illinois

After nine months of intense work, the CBA/CBF Task Force on the Sustainable Practice of Law & Innovation released its report and recommendations today. The task force, on which I serve, has focused on addressing the growing disconnect between the legal needs of the public and lawyers who could serve them.

Consumers are not having their legal needs met and yet lawyers struggle to find clients and sustain a practice.  A premise of the task force’s work is that this market failure may be partly explained by outmoded regulations that prevent lawyers from effectively advertising their services, connecting with clients, and leveraging technology and other professionals in the delivery of legal services.

The task force, which includes more than 50 members from across the state and from all corners of the profession, developed a series of recommendations that fall into three categories:

  • Helping lawyers connect to potential clients and offer affordable and accessible solutions.
  • Helping people recognize they have a legal problem and identify where they can turn for affordable and reliable legal help.
  • Spurring innovation in the legal profession and the delivery of its services.

In each category, the task force suggests changes to the existing Rules of Professional Conduct and/or the adoption of new regulatory models to help achieve the goal.

A 30-day public comment period on the report and recommendations runs through August 21, 2020. The task force seeks all feedback, including suggestions for different solutions. You can submit written feedback or sign up to participate in one of the town hall Zoom meetings, currently scheduled for August 11 and 12, on the task force webpage. I encourage you to share your comments and suggestions.

Meanwhile, as I have written about before, the Illinois Attorney Registration and Disciplinary Commission (ARDC) has an Intermediary Connecting Services Proposal that is proceeding along a parallel track. The proposal puts forth a framework for the ARDC to register and regulate services that connect lawyers with clients and suggests amendments to Rule 7.2 to make clear that lawyers may pay a fee to such services without running afoul of the rules prohibiting lawyers from giving anything of value to receive a recommendation or from splitting fees with nonlawyers.

An extended comment period has ended, and the ARDC is in a consultation and collaboration period with those who issued comments and other interested parties to explore issues that were raised. It is possible that the proposals of the ARDC and the CBA/CBF Task Force will be harmonized during this time. The consultation and collaboration period ends August 27, 2020, and the ARDC has 21 days thereafter to submit its proposal to the Illinois Supreme Court.

Utah

The Utah Supreme Court (supported by the Institute for the Advancement of the America Legal System and the National Center for State Courts) is the furthest along in implementing the recommendations of its task force. The reform proposal calls for amending certain Rules of Professional Conduct and creating a novel regulatory system involving individuals and companies who are not lawyers but provide legal services.

The primary recommended changes to the Rules of Professional Conduct fall into two categories:

  • Simplifying the advertising rules. This means eliminating most provisions in Utah’s Rules 7.1 through 7.5 and modifying Rule 7.1 to prohibit attorneys from making false or misleading claims about themselves or their services or interacting in a way that involves coercion, duress, or harassment.
  • Amending Utah’s version of Rule 5.4 by allowing lawyers or law firms to pay for client referrals and share fees with nonlawyers as long as the professional independence of the lawyer is preserved (Rule 5.4A). In addition, allowing lawyers to work together with other professionals in structures where nonlawyers have an ownership interest as long as the professional independence of the lawyer is preserved (Rule 5.4B).

As for legal companies or individuals who are not lawyers, Utah Supreme Court Standing Order 15 created an Office of Legal Services Innovation. The office is answerable to the Court and is responsible for developing, overseeing, and regulating non-traditional legal providers and services in the regulatory sandbox.

The idea of the sandbox is to experiment and test regulations in a controlled environment, collecting data to see what works before going through the arduous process of creating rules. If a lawyer goes into business with an entity in the sandbox, the lawyer would be within the regulatory scope of the sandbox and Rule 5.4B. A two-year pilot phase for the regulatory sandbox is planned, and applications for legal services offerings are being accepted.

Arizona

The Arizona Supreme Court has taken similar steps to implement attorney regulatory reform recommendations from its task force. A petition was filed with the Court to eliminate its Rule 5.4, which prohibits fee-sharing with nonlawyers and forming partnerships with nonlawyers in the practice of law. The rationale is that the professional independence of the lawyer is protected through other rules, including the conflict rules.

The petition requests that the Court adopts a framework for regulating entities, which may consist of both lawyer and nonlawyer owners. In addition, the Arizona petition recommends easing the anti-marketing rule (Rule 7.2) and adopting a new category of nonlawyer legal services providers called limited license legal practitioners (LLLPs).

Similar to programs adopted in Washington (Washington’s program has since been abandoned) and Utah, this new category of licensed professionals could perform the routine, relatively straight-forward, and high-volume work that is rarely done by lawyers. These practitioners could also appear in court and administrative hearings in limited practice areas. The Court is expected to rule on the implementation proposals in August.

California

Meanwhile, in California, the state bar is considering the implementation of wide-ranging attorney regulatory reform recommendations that the Task Force on Access Through Innovation of Legal Services issued last summer. As recommended by the task force, the Board of Trustees formed a working group to explore increasing access to legal services through the limited licensure of paraprofessionals. This work will be completed by July 2021.

More recently, the Trustees approved a Working Group on Closing the Justice Gap to explore developing a regulatory sandbox. The working group also considering possible changes to existing laws and rules that inhibit the development of innovative legal service delivery systems and other new delivery systems that are created through the collaboration of lawyers, law firms, technologists, entrepreneurs, and others.

The working group may consider relaxing rules and laws regarding the unauthorized practice of law, fee-sharing, and nonlawyer ownership. In addition, the working group is charged with assessing concepts for amendments to the rules governing lawyer advertising and solicitation and fee-sharing with nonlawyers. This work is slated to be completed by September 2022.

Next steps

Momentum around the country appears to be building. The ABA’s Center for Innovation is tracking regulatory reform jurisdiction by jurisdiction. Other jurisdictions considering or implementing regulatory reform to better serve the profession and the public include Connecticut, New Mexico, Florida, and Washington, D.C.

I will explore the increased urgency for advancing attorney regulatory reform efforts in a post next week. Stay tuned.

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Jayne Reardon
As a prior trial lawyer, Jayne leads lawyers to embrace the transformative possibilities of future law practice. As a prior disciplinary counsel, Jayne is passionate about promoting the core values of the legal profession. She is a graduate of the University of Michigan Law School and the University of Notre Dame. Jayne lives in Park Ridge, Illinois with her husband and those of her four children who are not otherwise living in college towns and beyond.
Jayne Reardon

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