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.