We should start with the phrase “red herring.” We know that it means a decoy intended to lead us in the wrong direction. But do you know the origin of the phrase? No one knows. As with many phrases, we can find an origination. The oft-cited story explaining the modern use of this phrase is that someone used a red herring (a type of salted herring) to obliterate his smell so that hounds or wolves lost his scent.
Today’s red herring is the argument that we must have de-regulation, or changes in regulation known as re-regulation, in the legal industry. Through these changes, we can overcome the appalling and declining lack of access to justice. Let’s tear this decoy apart.
De-regulation or Re-regulation
I think most individuals looking for change in the legal industry stay away from de-regulation. Eliminating regulation of legal services delivery would let the charlatans who prey on the unsuspecting ply their trade. We can put de-regulation to the side. I have heard and read arguments for the alternative—re-regulation or changing legal services regulation. In this version of the future, lawyers lose their monopoly, but those who provide legal services must follow “legal consumer” protection laws.
Those who favor re-regulation believe authorities should remove the monopoly chokehold lawyers have on the practice of law. The UK’s Legal Services Act of 2007 gets dragged into the fray as one example. Australia’s and New Zealand’s changes are others.
Removing the monopoly should encourage new parties to provide legal services. Those new parties would bring cost competition, creativity, and access to legal services for people without access. The corporate end of legal services should benefit too. The influx of new providers will drive innovation. The theory is we will move from our dismal world ranking on access to justice (out of 100, the US falls between 65 and 94 depending on whose ranking you look at). The hope is that our ranking will improve because clients will get what they need in legal services.
Fair enough. Changing the regulations, depending on how they change, may deliver those benefits. In the UK, citizens have gotten benefits, though fewer than they or the government expected. The UK has established a group to examine the 2007 Act’s with the hope of determining what has limited the effects of the law. Let’s all agree—changing the regulations could help.
We Can Do Better Without Waiting
The red herring is the re-regulation argument. We have what we need to fix the lack of access to civil justice problem. Changing the regulations may make a few things easier and transaction costs could drop. But, the problems we need to solve are independent of the regulatory structure. The barrier to solving the problems is lawyer resistance to change. Fix that problem and changing the regulations will become a side show at best.
Consider this one example. Solo practitioners argue they have a technological disadvantage. The cost of emerging software is beyond their grasp, either in time to implement or money. The professional responsibility rules prohibit law firms from having owners without law licenses. If we re-regulate, the argument goes, these firms can get access to money and resources through new owners. They can use those investments to bridge the technology gap. We already have a solution. Create a technology business (incorporation costs are trivial). Get investments in the second business which acts as a services business to the law firm. Spread the technology firm’s costs across several small firms. This model, or variations of it, exists.
We could change the current business model for legal aid. Necessity being the mother of invention, we will need creativity if the federal budget drops the Legal Services Corporation (which the proposed budget does). Middle class Americans lack or shun access to legal services. But, we have tools and can put in the field a different legal services model, compliant with the current rules, that gives this group access to legal services. The small firm lawyers providing the services would make a nice living.
Ignore the re-regulation decoy, we could improve today. But, lawyers resist change. Go back to that false premise: many lawyers believe that they have a monopoly to practice law. Wrong! Lawyers, at best, have a monopoly to represent other parties in certain situations (e.g., court hearings). Want a will? Go ahead, draft one. Or, go on LegalZoom or Rocket Lawyer and use a form. Or, go on the Internet and download a form. Confused? The online services have help sections, you can read many articles, you can buy DIY books that may answer your questions.
You can be your own lawyer whenever you want. Bye bye monopoly. “But wait,” you say, “that isn’t what I meant. I meant you can’t hire someone to do certain things for you unless that person is a lawyer.” If you need that someone to go into court, the lawyer monopoly applies (unless you count self-representation). Clients go without lawyers because lawyer put barriers between themselves and clients. Other niches exist. Everything else requiring hiring someone to do work for you falls into that ambiguous bucket the “unauthorized practice of law.” And watch out for smart contracts. Computers practicing law without lawyers.
Could a consultant draft a contract? They do. Could a financial planner write a will? They could point you to LegalZoom. Most lawyers would say “no” to both questions. But Legal Zoom, Rocket Lawyer, and the Internet have blurred the line. It is difficult to define the unauthorized practice of law because we can’t define the practice of law. We like to think we know it when we see it.
If we go big, to corporate legal work, the unauthorized practice of law gets fuzzier. Most bar authorities believe that corporations can take care of themselves (they can) so they don’t waste time protecting them. That has left the field wide open for entrepreneurs to move in. It is hard to say today that lawyers have a monopoly. Lawyers have a pre-existing claim to certain legal services that shrinks by the day. This is one of the reasons small firm lawyers have stagnant income.
Strange, since lawyers resist change to protect incomes. They want to defend what they have left of the monopoly. They want to retain some level of prestige. They want to retain power. The list of actual and possible reasons seems unlimited. Whatever the reasons, lawyers resisting change is the principle barrier to fixing our access to justice problem.
My concern with the re-regulate movement is that it has become a distraction. Rather than acting to fix problems, we justify lack of action on failure to re-regulate. Regulation may affect how we structure changes and it may make some structures higher cost than others. Those are details. Let’s dig in and fix the problems. As the problems get fixed, regulation will become a minor issue and regulatory change will happen. As the regulators ponder, we will solve problems.
If we can fix problems, what holds us back? Go back to lawyers resisting change. We are 10 or 15 years into real change efforts in the legal industry. I have been at it for 38 years. Others have decades of change-resistance fighting on their resumes. In the boom times of the 1980s, lawyers gave no thought to change despite what I and others said. As lack of access to civil justice came to the forefront, as the recession hit, and as lack of access to civil justice is tied to larger societal problems, change is in the air. But, lawyers hold us back.
We can measure change in the legal industry by the movement of glaciers. Lawyers agreeing to change is the start. Change is big—it requires lawyers learning new ways to deliver legal services. Lawyers have to work as part of teams. Lawyers will cede some authority to gain influence. How a lawyer earns money needs to change. The changes needed to fix the problems like access to civil justice aren’t small and they aren’t without controversy.
For those who want to direct their limited time and resources at the American Bar Association or state bar associations and argue for re-regulation, go for it. The ABA is a byzantine group with as many political agendas as members. I think focusing on fixing the problems is a better use of time.
That statement presumes we can fix the problems, and I think we can. One problem that gets in the way of most others is the economic model for legal services. The current model uses high-cost labor. It is a model that worked in the 1800s, but is ill-suited to the 21st century. We know how to change the model. The tools to change have existed for decades. Some tools have existed for 100 years. Newer tools emerge each day, such as computer technology. But a world with tools ignored or left idle is as good as a world without tools.
Fix the Problems
Should we abandon the re-regulation fight? We should continue the fight, but put it in perspective. Ask yourself a question—What do I want to do to fix the access to justice problem that I am prohibited from doing by regulation? Ask if you could find a different way to do what you want to do. I ask those questions of people who tell me re-regulation is the barrier. I believe we can do what we need to do despite the lack of re-regulation. Re-regulation may help, but I am willing to solve the problems without it.