Regulation and Its Undoing 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.


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


Bar Exam Blues, Blue-Sky Thinking

ThinkstockPhotos-106518831Most of the law school graduates who took the Michigan bar exam in July got good news last week. 61% passed. First-time takers, as usual, fared better -- 71% passed. The breakdown by law school can be found below the fold. While the passers can now get on with the next formidable task, the business of being a lawyer, many others are left to struggle with the need to try again.

The Michigan stats are consistent with nationwide trends -- lower passage rates in a declining pool of bar applicants. According to Bloomberg Business, the average score on the multiple-choice portion is at the lowest level since 1988. The mean score was 139.9, down from 141.5 the year before.

The overall decline in passage rates has been explained by Erica Moeser, the CEO of the National Conference of Bar Examiners, as predictable based on a recent overall decline in the test-taking aptitude of law students as measured by LSAT scores. Moeser's explanation has been sharply criticized within the legal academy. This Legal Whiteboard post is a good representation of the criticism. 

Underlying the controversy about whether recent multi-state bar exams have been fair is the larger question of whether the bar admissions process is the right gate-keeping mechanism for assuring essential quality in the provision of legal services. Interest in the question is fueled by a weak labor market  that has given rise to widespread concerns that the market is flooded with law school graduates who have cleared the bar exam hurdle but are unemployed and not "practice-ready." Whatever the actual magnitude of that phenomenon, would brainstorming outside of conventional conceptions and assumptions lead us to a radically different way to assure the public that legal practitioners are qualified for the work? The State Bar's 21st Century Practice Task Force is taking on that challenge.

In a provocative post at 2Civility, Michelle Silverthorn (MLaw '08), Diversity and Education Director at the Illinois Supreme Court Commission on Professionalism, asks the ultimate question: "Should We End the Bar Exam?" Most of us who have survived the bar exam probably react to that suggestion the same way Marines might react to the idea of abolishing boot camp. But Silverthorn's questions should not be ignored:

Which is it? Is the bar exam a protectionist enterprise that overburdens minority and low-income students, or is it a legitimate method of creating minimal standards that protect American consumers?

But more importantly, does the answer even matter? We are now solidly in a world where people are relying more and more on peer reviews and less on professional evaluations. Would it be sufficient to have the “market” decide which lawyers are qualified and which are not? Perhaps we should invest our bar exam resources in creating a robust peer review and disciplinary system. (Peer review alone would be insufficient; in his “consumer protection” response to Mendenhall, Professor Scott Fruehwald cogently explains why.)

Finding the best possible answers to these questions is only part of the puzzle of solving the best legal future challenge. The range of issues being addressed by SBM's 21st Century Practice Task Force can be found here. To both the 61% of July's test-takers we now welcome into our profession, as well as the 39% who must try again, we commit our best effort.

Continue reading "Bar Exam Blues, Blue-Sky Thinking" »


Are Two Susskinds Better Than One? Read With Us to Find Out

ThinkstockPhotos-467422984Does anyone want to argue seriously with the proposition that Richard Susskind's The End of Lawyers? single-handedly jumpstarted the conversation about the impact of technology on the future of law? Now comes Susskind and son, Oxford don Daniel Susskind, to tell us that lawyers are not alone -- all of the learned professions as we know them may be going down, as legendary Alaskan lawyer Ted Stevens would put it,  the internets' tubes.  

The Future of the Professions: How Technology Will Transform the Work of Human Experts won't be out in hard copy until January, but you can, fittingly, get it now on your e-reader. Here's the review in this week's The Economist. This blog will be posting on it periodically as we work our way through its seven chapters, ending in the provocative question, "What Should We Want?". Please join us.

From the book's prologue, here's why you should pay attention:

To the sceptics, who might already be tempted to put the book to one side, consider this: in the mid-1990s, when we predicted (in retrospect, rather unambitiously) that electronic mail would become the dominant way in which clients and lawyers would communicate, senior officials at the Law Society of England and Wales said that we should not be allowed to speak in public, that we failed to understand confidentiality, and that we were bringing the profession into disrepute.

Today, an evolutionary blink of the eye later, the Law Society of England and Wales is fully engaged in the work of adapting the profession, its habits, culture and ethics, to technology's imperatives. Check out the speech given by the Law Society's President Jonathan Smithers last week in Vienna, "What does the future hold for small law firms and what is the role of Bar Associations in helping them?"

The State Bar of Michigan, too, is fully engaged. We don't want to disappear down the rabbit hole of history.


Self-Represented Litigants: Turns Out We North Americans Really Are Alike

ThinkstockPhotos-121024995Hockey. Humor. English common law. And, apparently, legal services in the 21st century. All things that U.S. and Canada have in common. The University of Denver's Institute for the Advancement of the American Legal System IAALS has released the preliminary results of a study of self-represented litigants that turns out pretty much to mirror the results of a 2013 study of Canadian self-represented litigants. Among its key findings: 1/4 of those surveyed had previously retained a lawyer, and, most significantly for the practicing bar, the most common advice that self-represented lawyers had for others was “get a lawyer.” Both studies showed that the primary motivation for self-representation is financial but that the motivation is "complex and cumulative."

HT @WillHornsby


Does It Matter to UK Lawyers Whether Britain Leaves the European Union?

ThinkstockPhotos-482480268A referendum on whether the United Kingdom should leave the European Union could happen as soon as next spring. Should UK lawyers care?  According to an analysis by Oxford Economics commissioned by the Law Society, the answer is yes. The UK is Europe's leading legal services provider but that an EU exit would threaten that status, the study suggests. The study concludes that legal services providers would be disadvantaged disproportionately compared with the UK economy as a whole due to their reliance on intermediate demand from other sectors likely to be adversely affected, particularly financial and other professional services, and from resulting lower levels of business investment. 

Another reminder that law is an industry as well as a profession, that the market for legal services increasingly is global, and that barriers matter.


Who Cares Who Goes To Law School And How They Get In?

ThinkstockPhotos-502868047If a lot of legal needs in the future are going to be met by sophisticated computer programsself-help, and specialized technicians, then who cares who goes to "law school"?  In the meantime, there's a whole lot of caring going on, as illustrated by this story in today's New York Times: "Is the Bar Too Low to Get Into Law School?"  

Do any of these viewpoints or concerns capture yours?:

If you care, read it. If you really care, pay attention to what the State Bar's 21st Century Practice Task Force is up to. What law students should be learning, how to test it for admission to the bar, and new ways to deliver legal services are on their menu.


Is the DOJ Poised to Take A Bite Out of Lawyer Self-Regulation?

ThinkstockPhotos-496971595A U.S. Supreme Court decision in February of this year, North Carolina Board of Dental Examiners v. Federal Trade Commission, rebuked an all-dentist North Carolina dental board for its anti-competitive action against stand-alone tooth-whitening businesses in the state. The Court held that when a controlling number of the decision makers on a state licensing board are active participants in the occupation the board regulates, the board can invoke state-action immunity only if it is subject to active supervision by the state. Although its implications are hotly disputed, the decision continues to send ripples of anxiety about lawyer regulation throughout the country. In their unsuccessful amicus brief urging the Court to reject the reasoning of the Fourth Circuit, the North Carolina State Bar, the North Carolina Board of Law Examiners, the West Virginia State Bar, and The Florida Bar explained why:

The Fourth Circuit holds that "when a state agency is operated by market participants who are elected by other market participants, it is a 'private' actor," and therefore must be actively supervised by other state officials to receive state action immunity (while also stating that its "opinion should not be read as precluding" an otherwise undefined category of "more quintessential state agencies," not "composed entirely of private market participants," from "arguing that they need not satisfy the active supervision requirement").  Absent such supervision, no action of a state body run by elected professionals would appear to be reliably protected by state action immunity, even if the conduct is authorized by state statute or a state's constitution. That holding is extraordinarily broad, reaching far beyond the specific facts presented. 

The SCOTUSblog commentary by Eric M. Fraser immediately following the release of the decision stoked anxiety about lawyer regulation:

Bar associations in particular have been a source of litigation over the doctrine of state action immunity. Today’s opinion cites three important cases concerning regulation of lawyers by state bar associations. The Court’s descriptions of the cases suggest that those cases should be interpreted to mean that only the specific actions of a bar that are actively supervised by the state (e.g., a state supreme court) get antitrust immunity. The rest of a bar association’s activities likely have no such immunity.

Until the meaning of the decision becomes clearer, the ABA has provided this webpage devoted exclusively to the case to help follow developments, including two lawsuits filed against attorney regulatory boards in North Carolina and Ohio. 

 


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. 


Canadian Chief Justice on Change in the Legal Profession

800px-Beverley_McLachlin_(crop) 

When a country's chief justice embraces key concepts of legal futurism you know that the ideas are going mainstream. In an address to the Canadian Bar Association in Calgary last month, Chief Justice Beverly MacLachlin emphasized that technology threatens the very relevance of the legal profession:

 

In the age of the Internet, people are questioning why they, the consumers of legal product, should be forced to go to expensive lawyers working in expensive office buildings located in expensive urban centres. Why, they ask, should a client retain lawyers, when integrated professional firms can deliver accounting, financial and legal advice? Why are simple disputes not resolved in simple, cost-effective mediation rather than by elaborate and expensive court proceedings? Public attitudes and demands are changing.

She identified four basic opportunities for positive change and challenged the profession to:

  • embrace flexibility and innovation
  • expand service to sectors that may not have benefited from legal services in the past
  • restructure the ways law firms have traditionally organized their internal operations
  • collaborate with other lawyers and other professionals, in recognition of the fact that clients’ problems are often complex, polyvalent and incapable of solution on uniform cookie-cutter models

And she offered two jokes to light the way:

“How many lawyers does it take to change a light bulb?” The answer, “What’s change?”

But, she said,  she prefers this one:

“How many psychiatrists does it take to change a light bulb?” The answer, “One, but the light bulb has to want to change.”

Photograph: Agência Brasil