Ethics, Rules, and Norms Feed

LegalZoom Buys First Law Firm in England. Law Society Throws in the Towel

ThinkstockPhotos-179520805Calling its move "a step towards building a ‘next-generation’ law firm," the legal technology company LegalZoom has bought its first UK law firm, a 200-year-old conveyancing firm in Wakefield, West Yorkshire. The Law Society Gazette has the story.  LegalZoom was approved for an ABS (alternative business structure) license earlier this year. LegalZoom was founded in the U.S., but in 2014 the European private capital firm Permira became LegalZoom's largest shareholder.

Meanwhile, in other legal tech start-up and conveyancing news, the Law Society of England and Wales has scrapped a multi-million dollar online conveyancing portal intended to "revolutionize" home buying.


Despite Best Intentions, Legal Profession Diversity Stagnant in England

ThinkstockPhotos-486126081As in the U.S., the British have recognized racial, ethnic, and gender disparities in the legal profession and have pursued strategies for greater diversity and upward mobility in the bar and bench. According to a report out today, the strategies aren't working. Elite private school graduates, where minority populations are underrepresented, still dominate. Today's report notes that the proportion of top judges and prosecutors from the elite schools has decreased only slightly since the 1980s. Three-quarters of top judges and 71% of top QCs attended private schools.  (This 2014 report in the Guardian gives a more comprehensive picture of elite school dominance in UK society overall.)

Notably, stagnant mobility in the U.K. legal profession does not appear to be the result of active resistance to the proposition that more diversity is beneficial. According to the survey, 52% of the "senior figures in the legal industry" polled said that improving social mobility in the legal profession would be beneficial to their firm.  71% agreed that improved social mobility would benefit society as a whole. But the reasons given for not hiring more candidates from "disadvantaged" backgrounds suggest that a change is not coming soon. Respondents pointed to "presentation at interview" as the main barrier to getting law firm training contracts, followed by lack of pre-university educational attainment and lack of understanding of the profession and business.

A host of neuroscience studies explain how the same leaders who openly embrace the value of diversity make decisions based on implicit bias that undermine their best intentions. Take this test to find out how this science applies to your own brain.


Surprise? Accountants Eating Into Lawyers' Work in UK After Reforms

ThinkstockPhotos-451334397According to this story from Legal Futures, the ability of non-lawyers to invest in UK law firms is resulting in “intense competition” for mid-tier law firms from Big Four accounting firms, all of which are licensed under the reforms of the Legal Services Act of 2007 as alternative business service (ABS) providers. The story says the accounting firms are “quietly” taking the more commoditised work away from mid-tier firms, and, according to the head of legal services at the Royal Bank of Scotland, are about to move up the law firm food chain. He summarizes:

The upshot of all of this upheaval is that legal work has become disaggregated, with significantly bolstered in-house teams acting as de facto project managers to a host of legal and resource providers, with the traditional law firm just one constituent part – albeit, in many cases, the one doing the most complex, more profitable work.

Although in the U.S. growing national businesses such as LegalZoom provide a variety of legal services outside the traditional law firm legal service delivery model that is constrained by the rule of professional conduct banning non-lawyer ownership, no jurisdiction in the U.S. has a non-lawyer ownership ABS model like the UK's.


Monopoly: How The Game Has Changed for Lawyers

monopoly boardRichard and David Susskind's new book, The Future of the Professions: How Technology Will Transform the Work of Human Experts, posits that the application of artificial intelligence to services like law, medicine, and even spiritual guidance, will ultimately replace most of the traditional work of the professionals who have long held a monopoly on these services. They argue that a traditional "grand bargain" struck by society with the professions will wash away in the face of the superior product that artificial intelligence will offer. The "grand bargain" they describe is this:

In acknowledgement of and in return for their expertise, experience, and judgement, which they are expected to apply in delivering affordable, accessible, up-to-date, reassuring, and reliable services, and on the understanding that they will curate and update their knowledge and methods, train their members, set and enforce standards for the quality of their work, and that they will only admit appropriately qualified individuals into their ranks, and that they will always act honestly, in good faith, putting the interests of clients ahead of their own, we (society) place our trust in the professions in granting them exclusivity over a wide range of socially significant services and activities, by paying them a fair wage, by conferring upon them independence, autonomy, rights of self-determination, and by according them respect and status.

For lawyers, the bargain has been fraying around the edges for decades. It's not because our commitment to the standards of the profession has changed. What's changed is that broader literacy has opened up access to legal knowledge, and that access is now vastly expanded and accelerated by the Internet. Case in point: just last week Harvard Law School announced its “Free the Law” Project with Ravel Law to digitize all U.S. case law and provide free access.

While the Grand Bargain was fully in effect lawyers didn't have much incentive to market the value of their training in applying knowledge of the law to the needs of potential clients or to compete to deliver legal services economically. The game has changed. The ethical rules still apply, but strategies must adjust. Hence the astonishing proliferation of new marketing tools and advice, and new business models. Lawyers need to make sense of the new landscape to continue to be relevant. And bar associations must help their members negotiate the change to continue to be relevant. The State Bar of Michigan accepts the challenge


The 20% to 5% Generational Mismatch Problem for Law Firms

According to Beaton Capitol, it's time for law firms to start hiring and paying attention to younger associates:

Leadership in AmLaw100 firms is concentrated in the hands of older baby-boomers and members of the Silent Generation, born before the end of World War II. But while there is clear evidence of generational change occurring in the leadership of their clients, the same is not as clear in firms.This slowness to respond to generational change on the part of law firms is creating risks of cultural and generational mismatches. ...  [A]lmost 20 percent of Fortune 100 and 30 percent of Nasdaq general counsel are Gen X members compared with fewer than 5 percent of AmLaw leaders. This generational mismatch poses dangers for client relationship management. And also for partner retention if older partners hold on too long and don’t share opportunities for growth with their younger peers.

 


The Escalating Cost of Technological Incompetence

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The Lawyerist reminds us of several ways in which technological incompetence has caused actual harm to lawyers and their clients. And from the UK, the Solicitors Regulation Authority (SRA) says that cyber criminals have caused “substantial losses” to 50 law firms in 2015.

So far in the U.S. 15 states have amended their rules of professional conduct to bring them in line with the ABA's amended Comment 8 to Model Rule 1.1: 

Maintaining Competence

To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject. (Emphasis added.)

The State Bar of Michigan's 21st Century Practice Task Force has this issue on its radar and will be making its recommendation in March. In the meantime, stay safe out there. And use the State Bar's free practice management resources to help.


Just Who Do We Think We Are?

ThinkstockPhotos-92831723A key postulate of legal futurists is that the professional self-identity of lawyers as self-contained experts is holding us back from making the changes we need to survive in a dynamic, Internet-driven world.

Just what is our traditional professional self-identity?

I think this description from a 1994 law review article by sociologist Robert Granfield does a fair job of capturing its essence:

[Lawyers constitute an ethical community of autonomous experts who contribute to the maintenance of a rational social order.  This conventional view of lawyering assumes that professionals are independent specialists who stand above or apart from the competing social, economic and political bases of power in society.

Standing apart, we see ourselves as jacks (and now jills) of all things legal, even when all those things require different skills, temperaments, and training. Counselor. Problem solver. Champion. Defender. Disrupter. Protector. Pit bull one day, Lassie the next. J.D. in hand, we feel entitled, ready or not, to do it all, and to keep others from entering our domain.

To put it mildly, this is not a view that leads comfortably to collaboration with others. So why is that a problem? Perhaps it's as simple as this:

 "In the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed." - Charles Darwin

Illustration:  Hablot Knight Browne for Charles Dickens’s Bleak House. Sir Leicester's lawyer,  Mr. Tulkinghorne, discovers Lady Leicester's darkest secret and threatens to reveal it to her husband.


What Would It Mean To List A Law Firm On The Stock Market?

ThinkstockPhotos-479382552First, it would mean that you are not in the U.S., where the rules of professional conduct in all 51 jurisdictions on non-lawyer ownership of law firms currently stand in your way. And you are probably not in Canada, either.

But if you are so inclined and you happen to be in Australia or the U.K. where non-lawyer ownership of law firms is permissible, you can find some handy advice about the decision to list a law firm on the stock exchange here, including:

 

You don’t have to speak to many solicitors in merged or restructured law firms to discover that the reality of life beneath the new corporate surface is rarely smooth or untroubled. There’s nothing new in that, and Gateleys may well be the honourable exception that proves the rule (I have no direct knowledge of them), but the point is that many law firms simmer with politics and egos: the different elements of merged firms continue to operate in quite different ways long after the surface change; partners do not easily submit to any rules at all, let alone those of a listed company, and certainly not to rules that the partners haven’t chosen themselves.

Whether that is better managed in a corporate context is a nice question. There will be some who argue it will, and they may have a point. But the risk is just as much that, with key personnel deprived of partner status; forced into a corporate straitjacket, and deprived of the freedom of management and manoeuvre which has enabled them to function, that the web of relationships that makes most law firms tick is strained to breaking point.

Think about it.  Seriously, think about it. USC's Gillian Hadfield says lifting the ban would greatly increase access to justice.  The U.K. is providing some real evidence.  And Indiana's Bill Henderson warns about the costs to the profession of delay, arguing that our ban on nonlawyer ownership is driving nonlawyers to take on various disguises to deliver creatively financed legal services in competition with lawyers.