Towards the Law of Legal Services: Reflections on Gillian Hadfield’s “Rules for a Flat World”

By Dean Andrew Perlman, Chair, ABA Center for Innovation

The public now has access to an increasingly wide array of legal service providers other than lawyers and law firms.  I referenced some of those options in an earlier post.  These developments require a new way of thinking about the regulation of legal services, and Gillian Hadfield’s excellent book, Rules for a Flat World: Why Humans Invented Law and How to Reinvent It for a Complex Global Economy, adds an important new conceptual framework for what this approach might look like.

The Inadequacy of the Law of Lawyering

I come to this subject having written a bit about it.  In an article, “Towards the Law of Legal Services,” I argued that it is time for us to broaden our thinking about the regulation of legal services.  Rather than focusing on the “law of lawyering” – the body of rules and law regulating lawyers – I suggested that we need to develop a broader “law of legal services” that authorizes, but appropriately regulates, the delivery of more legal and law-related assistance by people who do not have a J.D. degree and who do not work alongside lawyers.  Here is one way to visualize the point:

The “law of lawyering” branch of the tree includes the traditional subjects that have occupied legal profession scholars for decades, such as rules of professional conduct, the law of malpractice, and administrative regulations directed at lawyers.  Of course, some of these subjects overlap with other doctrinal areas (e.g., civil procedure, SEC regulations, and IRS regulations), but the point is that there is now a fairly robust body of law governing lawyers’ work.

In my article, I argued that we need to spend a lot more time thinking about (and growing) the right side of the tree – the law of other legal service providers.  This means devoting more attention to the increasing array of legal services professionals who are authorized and regulated by courts, such as Limited License Legal Technicians, Legal Practice Officers, courthouse navigators, and document preparers.  (You can read more about these types of providers here.)  Other kinds of service providers are emerging in the marketplace and are either public-facing (e.g., LegalZoom) or delivering services to law firms and corporate legal departments (e.g., legal process outsourcers and e-discovery companies).

For the public-facing providers who are not authorized and regulated by courts (the bottom right corner of the diagram), the regulatory framework has not been particularly robust.  It has consisted primarily of restrictions on the unauthorized practice of law and consumer protection laws.  Put another way, new players are either accused of engaging in the unauthorized practice of law or they are subject to the minimal regulatory constraints of ordinary consumer protection provisions.

I believe that this binary approach is inadequate.  Unauthorized practice of law provisions are notoriously vague, have been used in anti-competitive ways, and are stifling competition without any clear public benefit.  At the same time, a laissez faire approach is also problematic, because it provides the public with only modest protections when purchasing these services, as if they are no different from (say) purchasing a pair of shoes.  A third way is possible and desirable – the development of new kinds of regulations that expressly authorize these emerging providers and subject those providers to more rigorous regulations than currently exist. I sketch out a few such possibilities in my article.

Towards “Right Regulation”

Gillian’s book tackles these and many other broader issues, such as how we might develop more effective legal infrastructure for a modern world.  I can’t do justice to the many threads of the book, but Gillian develops two ideas that nicely supplement what I have sketched out above.

First, Gillian describes a concept that she refers to as “right regulation.” For all intents and purposes, it is the “third way” that I think needs to exist when regulating new kinds of legal service providers.  She explains:

Challenges to the existing regulation of legal markets by bar associations are sometimes cast as proposals to deregulate legal markets.  But the name of the game is not deregulation; it’s what I call right regulation: putting in place intelligent regulations that ensure the markets for legal goods and services are functional and competitive.  (p. 244)

Gillian cites the UK’s Legal Services Act of 2007 as an example of such an approach; that is, it liberalizes, but appropriately regulates, the legal services market in the U.K.

“Right regulation” also has some applications to the left side of the tree.  For example, Gillian argues that lawyers should be permitted to partner and share fees with people who are not lawyers (currently prohibited in nearly all U.S. jurisdictions under rule 5.4 of the rules of professional conduct), but with appropriate regulatory arrangements, as is the case in the U.K.

Who Does the Regulating?

One of the greatest strengths of Gillian’s book is that she provides a conceptual framework for addressing a particularly challenging question: who should be responsible for drafting the relevant “right regulations”?  This is not an easy question to answer, and it is one that I have expressly bracketed in my own writing.

One possible answer is that we should leave these issues to the courts, which historically have regulated legal services.  Another possible answer is to have legislatures more actively involved, with appropriate delegation to administrative agencies.  Both of these answers have benefits and costs, but neither offers an ideal solution.

Gillian’s innovative answer, drawing on the U.K. for inspiration, is to have private market-based approaches to regulation and to use government as a so-called “super-regulator” (regulating the regulators).  She describes it this way:

Instead of civil servants or the managers of a regulated company designating the details of how to achieve politically set goals…, private for-profit and nonprofit companies could offer this as a service in the market, for a fee.  In order to participate in this market, these companies would have to be approved as private regulators by the government.  Approval would be based on meeting the policy objectives established by the government for regulation—developing a system that ensures that regulated businesses meet targets [of various kinds related to the industry]. (p. 266)

I came away from the book with a much greater appreciation for the ways in which we might go about creating a more flexible legal infrastructure in the future.  Although the approach won’t work in every setting (as Gillian concedes), I think there are some interesting implications not just for the law of legal services, but for many other regulatory structures in a rapidly changing world.

The future of legal services in the United States

by Judy Perry Martinez
Past-chair of the ABA’s Commission on the Future of the Legal Profession

(This essay originally appeared in the book “Innovation and Future of the Legal Profession in Europe / L’innovation et l’avenir de la profession d’avocat en Europe” edited by Michel Bénichou.  A copy may be purchased here.)

Regardless of industry, change occurs for two reasons: necessity and opportunity. Both are in large supply in the legal sector.  The American Bar Association already has made its mark as an innovation leader with the creation of the Commission on the Future of Legal Services in 2014 and the establishment of the ABA Center for Innovation in August 2016. The ABA is now well positioned to lead through the period of profound transformation in legal services presently unfolding in the United States and beyond.

Before discussing the future of legal services, it is instructive to look at the environment of necessity and opportunity in which the ABA’s efforts were conceived.

The United States requires attorney representation for criminal matters, but no such guarantee exists for civil issues. Traditionally, the bar has relied upon pro bono and government and privately funded legal aid attorneys to meet the civil legal needs of the American public. However, in recent years, those efforts have been shown to be woefully insufficient. In 2016, the World Justice Project’s Rule of Law Index ranked the United States as tied for 94th out of 113 countries on “accessibility and affordability of civil justice.”

The statistics are staggering. It has been estimated that eighty percent of the poor and the majority of people of moderate means don’t have access to legal services. As many as 100 million Americans are living with civil justice problems, many of which are rooted in a lack of what the ABA terms “basic human needs”, i.e. Food, Shelter, Safety and Health. Even if an individual meets the strict income and subject matter requirements necessary for legal aid representation, there simply are not enough legal aid attorneys to meet the need. The recent “The Landscape of Civil Litigation in State Courts” report by the National Center for State Courts found that in 76 % of civil cases, at least one litigant is self-represented.

It is estimated that less than a quarter of all civil legal issues are taken to an attorney. This is not due solely to the cost of legal services; many people don’t realize that their issues have a legal component or legal resolution available to them with which the courts or an attorney can assist. They see the challenge they face as a moral failing, a challenge presented for which there is no legal solution, or even just the way life is. The justice consumer’s lack of awareness regarding where to turn to solve what ultimately are legal issues, in part, represents a failure of the bar to educate the public on how the bar can assist them to assert their legal rights or how they can otherwise address the challenges which they face.

However, as a direct result of advancements in technology, opportunities exist to communicate with the public regarding how the problems they face have legal solutions and to deliver legal services to those in need in ways that are faster, smarter, and more efficient. Legal services can now be delivered on a variety of platforms, not just in a traditional one lawyer to one client as they sit in a physical office. The new surge of technology should not be viewed as a force that is going to supplant lawyers, but rather as tools and enhancements that lawyers can harness to benefit a broader segment of the public they have been sworn to serve. That same technology and innovations in delivery models also can bring legal services to those whom lawyers have not reached historically.

It was into this ecosystem that the American Bar Association created the Commission on the Future of Legal Services in 2014. This Commission was made up of practicing lawyers, in-house counsels, judges, innovators, academics, and futurists. The Commission sought to determine how they could harness technology and innovation to increase access to justice in the United States.

Over the course of two years, the Commission held eighty-five grassroots meetings and hearings. It produced five white papers on topics of major concern in the legal innovation space and solicited hundreds of comments on the papers. Additionally, the Commission presented a compendium of fifteen scholarly works by leading academics on legal innovation which was published in the University of South Carolina Law Review. The final work product of the Commission, “The Report of the Future of Legal Services in the United States”, laid out findings and recommendations of the Commission. Some of the findings of the Commission included:

  • many recent law graduates are un- or under employed, despite the great need for legal services by the public;
  • the traditional law practice business model constrains innovations that would provide greater access to, and enhance the delivery of, legal services;
  • there is an inherent resistance to change in the legal profession;
  • there is a limited amount of data available to inform public policy recommendations regarding innovations.

The Commission published twelve recommendations for the legal services industry to undertake to improve the efficiency of the delivery of legal services as well as increase access to justice. One recommendation was that courts should examine judicially authorized and regulated legal service providers and, if the courts deem it appropriate, adopt rules and procedures to govern them. The guiding principle in determining whether to authorize the legal service provider should be if it is beneficial to the public. The Commission determined that online legal services by entities that employ new technologies and internet- based platforms should also be examined. One note of caution was extended to the courts: the absence of regulation in these areas may be what is sparking innovation and courts should take care to not inadvertently stifle innovation through regulations.

It should be noted that the rules and regulations regarding the practice of law in the United States are promulgated at state level. The ABA can only offer guidance regarding regulations that should be considered by the fifty state supreme courts. To assist in this endeavor, the Commission created the “Model Regulatory Objectives for the Provision of Legal Services.” These objectives will serve as a guide to state supreme courts as they navigate the rapidly changing landscape of legal service providers. The objectives can also be used as a guidepost in interpreting existing regulations. The “Model Regulatory Objectives for the Provision of Legal Services” was submitted as a resolution to the ABA House of Delegates at the 2016 midyear meeting and was approved. The ABA Model Regulatory Objectives are now policy of the ABA.

One recommendation of the Commission on the Future of Legal Services that already has come to fruition is the creation of a Center for Innovation housed within the ABA. The Center started operations in September 2016. The Center will be at the forefront of the role of the ABA as the leader in legal innovation. A special feature of the Center is that its operations and activities will be guided by all interested in legal innovation – not only lawyers, but those involved in other industries such as design and engineering, and academe. Through the Center, all are invited to participate in the shaping of the future of legal services.

The Center for Innovation will facilitate the creation of tools and services to be used by lawyers and the public in the furtherance of access to justice. First, the Center will host fellows who will be involved in the creation of tools and resources that will assist either the public or the practicing bar. NextGen Fellows will be recent law graduates who will spend a funded year with the ABA working on their ideas to improve legal services. Innovation Fellows will be individuals more established in their career (and not necessarily lawyers) who will spend 90-120 days at the ABA Center focused on accelerating an innovative project, app, or idea.

Another way that the Center will improve legal services is through in-house creation of tools that will increase Access to Justice. Two of these are already in production and they are both mobile applications for smart phones. The first was developed in the wake of devastating floods in Louisiana this year. Due to cultural norms around unofficial transfers of property ownership, it was very difficult for residents to prove the ownership of their houses necessary to be eligible for government disaster relief funding. The app created by Stanford Law School in collaboration with the ABA Center of Innovation will guide people through the process of collecting information and documents necessary to prove ownership which will in turn allow them to more easily collect federal and state disaster funding. The other smart phone application is being created in response to the rise of hate crimes seen in late 2016. It will allow people to report these crimes to the appropriate agencies and organizations and aid individuals who are victims of hate crimes.

In addition to the tools created in-house by fellows and Center members, the Center will act as an accelerator and champion of innovation in the legal services industry. It will look for projects that will benefit from collaboration with the tools and resources that the Center for Innovation and American Bar Association can provide. It also will seek out innovative tools and practices and shine a spotlight on them.

The Center of Innovation will be a hub where all those interested and involved in legal innovation can connect and learn from each other. The Center will sponsor and produce educational content for the ABA membership and public at large so that they can learn the best practices in legal innovation as well as the latest cutting-edge trends.

The Center will also maintain an inventory of innovations currently taking place in the legal industry. Many of the people working in the legal futures space are operating in isolation. One goal of the innovation inventory is to connect those working in legal innovation. It is hoped that this effort will allow innovators to find collaborators, prevent duplication of effort, and afford a way for innovators to learn from each other’s mistakes. This inventory also will serve as a valuable resource for legal educators who are trying to design their curricula to keep pace with a rapidly changing legal landscape.

With the benefit of new tools and new service models, there is opportunity to redefine how not only lawyers but, more importantly, how the public sees legal services. The American Bar Association Center for innovation is embracing the possibilities presented by change and will lead the legal profession and the public to greater access to justice.

(This essay originally appeared in the book “Innovation and Future of the Legal Profession in Europe / L’innovation et l’avenir de la profession d’avocat en Europe” edited by Michel Bénichou.  A copy may be purchased here.)