Business of Law

Law Prof Links Lawyer Regs and ‘Gaping Hole’ in Legal Services for Middle Class

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A University of Illinois law professor thinks a change in lawyer regulations could help middle-class defendants who are being targeted in mass foreclosures and debt-collection suits.

The answer, says corporate law professor Larry Ribstein, lies in a change in the “stranglehold” of lawyer regulations that prevent innovation and a focus on the consumer. Ribstein lays out his argument in a post at the blog Truth on the Market.

Ribstein notes a Wall Street Journal story about a boom in debt-collection suits by the debt-buying industry. One debt purchaser filed 109 claims on a single day in Bronx court. Only 10 percent of the borrowers showed up for their court cases, and none had lawyers. The percentage is not all that different from industry estimates that about 94 percent of collection cases filed against borrowers result in default judgments.

Ribstein sees a “gaping hole in assistance to the middle class” and says it could be addressed with innovations such as computer-generated documents and novel ways to finance the defense of mass claims. In his article “The Death of Big Law,” he gives an example. Under current licensing laws, he says, a company may sell will-making software that gives general guidance, but it can’t sell a sophisticated program that can give individualized advice on particular issues.

Stories about mass debt-collections and foreclosures “raise the question of how long we will tolerate lawyer regulation that refuses to adjust to a rapidly changing business world,” Ribstein writes at Truth on the Market. “Every lawyer gets the same type of costly license, is subject to basically the same set of uniform rules, but must be licensed in every state in which she practices. No legal advice may be provided by people or technology without the intervention of a licensed lawyer. Every lawyer is trained in basically the same way by one of a couple of hundred cookie-cutter law schools despite increasing diversity in the work lawyers do.”

Ribstein elaborated in an interview with the ABA Journal. “I’m not suggesting that we completely deregulate the practice of law,” he says. “I think the problem is not too much regulation or too little regulation, but that we’re linked into a single business model that can’t evolve.”

Ribstein says one approach is that taken by the Legal Services Act in the United Kingdom. The law allows outside ownership of law firms and multidisciplinary firms combining law practice with nonlegal services.

Personally, Ribstein says, he would favor a legal-services regulation system based on certification rather than licensing, “but that may be too drastic to start with.” In his view, a law license isn’t necessarily needed to provide all kinds of legal help.

“It does not take three years of law school and passing a bar exam on various legal subjects to be able to handle discrete tasks like the ones involved in foreclosure cases,” he tells the ABA Journal. “We need a greater variety of people who are able to deliver the array of services that we refer to as legal services.”

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