Following decades of discourse on nonlawyer legal services, questions of motives continue
As some states consider relaxing ethical rules prohibiting nonlawyers from owning law firms, supporters and opponents of these proposals remain suspicious of one another.
Those in favor claim the proposals could help individuals who need attorneys but can’t afford legal fees. According to that group, greed drives the opposition.
Plaintiffs lawyers have similar accusations of rapacity, with fingers pointed at big technology. They fear public companies will buy interest in law firms, find plaintiffs with lawsuits worth millions, automate the legal work and settle cases for much less than they are worth.
“Let’s say Google gets in the practice of law. Or Amazon,” suggests Craig Peters, president of the plaintiffs bar group Consumer Attorneys of California. They’d find contingency-fee clients through well-placed advertising and take a smaller cut of settlements than lawyers, who’d likely get squeezed out, he adds.
The ABA Journal asked Peters which big tech companies had expressed interest in law firm ownership.
“They’d be foolish to say this out loud. Of course they do; that’s what’s driving this,” adds the San Francisco lawyer. He also thinks big tech having law firm ownership could lead to ethics conflicts, which would not be prosecuted. He blames that on the State Bar of California, which has been criticized for having a discipline hearings backlog.
Google did not respond to an ABA Journal interview request. An Amazon spokesperson said it “[doesn’t] comment on rumors or speculation.”
California is one of a few states exploring law firm ownership by nonlawyers, and it’s not just the plaintiffs bar pushing back. Every few years the debate goes national with the American Bar Association, according to Stephen Younger, a past New York State Bar Association president and current ABA House of Delegates member, who serves as his state’s delegate.
He helped write an August 2022 resolution passed by the House of Delegates affirming support for the idea that fee sharing with nonlawyers and allowing them ownership in law firms is inconsistent with the legal profession’s “core values.”
Younger, a partner with Foley Hoag who does commercial litigation and alternative dispute resolution, says a concern for big-firm lawyers involves retiring partners selling their ownerships to corporations.
“You could get 10 times your capital back,” he adds. “But the average lawyer does not want to have some nonlawyer telling them how to run their business.”
The 2022 resolution was brought by the Illinois, New York and New Jersey State Bar Associations. The ABA’s Tort, Trial & Insurance Practice Section and its Solo, Small Firm and General Practice Division were also sponsors.
New language was added shortly before the vote to clarify the matter should not be read as suggesting change to a resolution passed in 2020, encouraging regulatory innovation to expand access to justice.
The 2020 resolution had a fair amount of controversy. Sponsored by the ABA Center for Innovation and four ABA standing committees, it was preceded by a draft report suggesting states consider trying new approaches so they could learn from them and then consider possible changes to rules prohibiting law firm ownership or practice by nonlawyers.
References to the types of regulatory innovation states should consider were cut from the commission’s final report, according to Andrew Perlman, who helped draft the 2020 resolution. Also, the 2020 resolution included wording to make clear it was not suggesting changes to any of the Model Rules of Professional Conduct, including 5.4, which prohibits nonlawyer ownership of law firms.
“It seems like some group within the ABA really wants this. It’s clear the lion’s share of the bar is against it,” says Younger, who has been involved in ABA opposition to fee sharing since 2011.
Perlman, the dean of Suffolk University Law School, was the inaugural chair of the Center for Innovation’s governing council.
“I don’t think it matters whether a lot of lawyers want it or only a few do. What should matter is whether these initiatives are ultimately helpful to the public we’re responsible for serving,” he told the ABA Journal.
Regarding states other than California, in 2020, the Arizona Supreme Court eliminated its ethics rule prohibiting nonlawyers from having ownership in law firms and participating in fee sharing. And Utah has a regulatory sandbox, which in 2021 was extended to run through the end of August 2027.
“This fear that it’s going to be corporate America that comes and provides legal services, it’s not borne out by the data,” says John Lund, a former Utah State Bar president.
Lund, a trial lawyer, is of counsel with Parsons Behle & Latimer. He co-chaired a Utah work group on regulatory reform, and its 2019 report led to the state’s regulatory sandbox. Deno Himonas, who then served as a Utah Supreme Court justice, was the other co-chair. He joined Wilson Sonsini Goodrich & Rosati as a partner in March, shortly after the Silicon Valley-based firm opened a Salt Lake City office.
“I think our court has fully embraced this idea that they serve the public more than they serve the bar,” Lund says.
In Minnesota, the state supreme court approved a 2020 pilot plan allowing nonlawyers to do certain legal tasks related to family law, and a similar project was approved by the Oregon Supreme Court in July. The idea is currently under consideration by the Colorado Supreme Court.
“I think they got the votes because the court felt enough pressure from lawyers who opposed the plan,” says Steve Crossland, a former Washington State Bar Association president who chaired the Limited License Legal Technicians program.
Some lawyers, including Foley Hoag’s Younger, question whether the state proposals would increase access to justice. According to him, existing corporations currently involved in legal work, most if not all of which is automated, focus much of the work on document preparation for business owners.
Many legal aid offices use automation to help clients, and the Legal Services Corporation has offered technology grants for almost 20 years, says Jonathan Pyle, the contract performance officer for Philadelphia Legal Assistance.
Pyle is a computer programmer and former law firm associate who defended class actions. In 2015, he built Docassemble, a free, open-source platform used to assemble filings for a variety of legal issues, including divorce, eviction and Chapter 7 bankruptcy.
If technology lowered the cost of legal services, there would likely be a consumer market for it, but quality control could be an issue, says Pyle, a 2019 ABA Journal Legal Rebel.
Asking consumers what they think about such ideas could be challenging, according to plaintiffs lawyer Peters.
“The general population doesn’t tend to do well when it comes to analyzing proposals that have details,” he says.
Others claim consumers are excited about the proposals if they’re aware of them.
“Almost every person has a story about themselves or their friends and family having a situation where they needed legal support but couldn’t afford an attorney. So they navigated the legal waters on their own and suffered the consequences,” says Stacey Lake, a Victorville, California, resident who owns two legal staffing businesses, Lawfecta & Law Wurk.
“When I tell them about these initiatives, they all say they wish they had something like that when they had legal issues,” she adds.
Updated Aug. 17 at 1:16 p.m. to clarify a sentence about settlements.