American Bar Association / ABA

Back In The Race: Can Alternative Legal Services Providers Force The ABA To Change The Non-Lawyer Ownership Rules?

Right now, it seems unlikely, since ALSPs are not in a position to rebel and demand the repeal of the non-lawyer ownership rule.

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resume girlLast December, the city council of Austin, Texas passed an ordinance that requires drivers for internet-based transportation services like Uber and Lyft to pass fingerprint-based background checks. The law also prohibits drivers from stopping in traffic lanes for passenger dropoffs and pickups, requires vehicles to visibly identify themselves, and imposes a variety of data-reporting requirements on the ride-hailing companies.

Uber and Lyft, both of whom got their start by disrupting the taxi industry with unlicensed drivers, were not happy with the ordinance and spent millions on Proposition 1, a voter initiative that would repeal the ordinance. As part of the campaign, Uber and Lyft threatened to cease operations in Austin if the initiative failed, hoping that the residents would vote in their own selfish interests. But in last Saturday’s municipal election, the voters turned down Proposition 1.

True to their word, both Uber and Lyft shut down their services in Austin and it is unclear who will cave. Will Austin residents miss the convenience and generally lower fees and demand that their leaders repeal the ordinance? Or will Uber and Lyft come back and accept the new rules as residents find other ways to get around town?

This story interested me because of the way Uber and Lyft rebelled against the ordinance and the people who supported it. It seems like they should be able to comply with Austin’s ordinance without spending an unduly burdensome amount of money. So it looks like these companies are acting like bullies by threatening to take their toys and go home because they don’t like the city’s rules. They are betting that the disruption to the public and potential for chaos will force the city to repeal the ordinance.

I wonder whether third parties, particularly alternative legal services providers (ALSP) with large financial resources, can take a similar rebellious stand in the legal business. Let’s look at a recently reopened issue which will create odds between lawyers, the public, and ALSPs.

On April 8, 2016, the ABA Commission on the Future of Legal Services released an issues paper on the use of Alternative Business Services (ABS) looking at whether non-lawyer ownership of law firms would be beneficial. One of the issues is improving access to justice on legal matters that solo practitioners and small firms traditionally handle. Most of the rhetoric and talking points from both sides focused on protecting the public from people who are more interested in making money rather than delivering justice and efficiently resolving disputes. But what both sides are really interested in is whether the current rule disallowing the splitting of fees with non-lawyers should be repealed.

Based on the comments, the debate didn’t bring up any new arguments and ideas. Lawyers and bar associations were against it, claiming that it undermines professional independence. Existing ALSPs like Avvo and LegalZoom advocated for the acceptance of ABS claiming that other countries that have done it and it can promote innovation and improve access to justice. Others have advocated for longer study of the issue (which never seems to end).

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My guess is that the Commission will either recommend upholding the current rule prohibiting non-lawyer ownership or do nothing while further studies and observations are done. There will be no meaningful change in the rule unless they have support from the majority of practicing lawyers or from the general public or through their elected leaders.

To gain support from practicing lawyers, existing or startup companies will have to learn what lawyers want. Solo practitioners and small firms want a steady stream of clients and income. They don’t want an outsider interfering with their professional judgment. And they want to run their practices efficiently, minimizing unnecessary time and expenses. And helping improve the image of lawyers can also be useful. Of course, all of this is easier said than done.

Also, lawyers are sick of hearing “greedy lawyers” and “access to justice” as the talking points for changing the ethics rules, usually coming from failed lawyers trying to change the system that didn’t work for them. ALSPs will have to find new ways to convince attorneys and policy makers that the rules as they stand do not work. Look around. There are many unemployed, forced solo practitioners who need help developing business because they themselves can’t sell water in a desert. The key is to provide some kind of win-win proposal for the lawyer and the public.

Right now, ALSPs are not in a position to rebel and demand the repeal of the non-lawyer ownership rule. Lawyers and bar associations are not going to budge on this issue unless they hear something other than access-to-justice issues. They can try taking it up with the public, but educating them on the issues and the benefits of non-lawyer ownership of law firms can be expensive and time consuming. Finally, most ALSPs don’t have brand recognition, so the public is not likely to know or even care if they threaten to shut down.

The solution is simple: ALSPs should try to work with practicing attorneys and bar associations to find a creative, win-win solution to the ABS issue. Or they can spend millions of dollars trying to convince the public that lawyers are greedy.

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Shannon Achimalbe was a former solo practitioner for five years before deciding to sell out and get back on the corporate ladder. Shannon can be reached by email at sachimalbe@excite.com and via Twitter: @ShanonAchimalbe.

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