Technology

California Task Force To Vote This Week On Sweeping Changes To Legal Services Delivery

The most cutting-edge aspect of the proposals is to allow entities to deliver legal services even when no lawyer is in the mix.

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(Image via Getty)

A task force appointed by the State Bar of California will vote this week on proposals that could lead to sweeping changes to the delivery of legal services, including allowing private businesses to deliver legal services, without regard to whether the businesses have lawyer ownership or management, provided they are appropriately regulated.

The proposals go beyond the alternative business structures allowed in the U.K., Australia, and other countries, where licensing schemes that allow private investment in legal services companies still require some level of lawyer ownership and management.

“Provided that an entity authorized to practice law is subject to appropriate regulatory standards and can be held accountable by an effective enforcement system, requiring lawyer ownership or management would not necessarily add additional public protection,” said the subcommittee that drafted one of the proposals.

The meeting June 28 of the Task Force on Access through Innovation of Legal Services (ATILS) is just a first step in what is likely to be a drawn-out process of consideration and debate over the proposed changes. Three subcommittees tasked with studying changes to California’s professional regulations will present their recommendations for approval by the task force’s full membership.

(See the agenda and recommendations here.)

If the task force approves the proposals — which one committee member said is likely — it will present them to the State Bar’s board of trustees at its meeting July 11. The trustees are expected to then put the proposals out for a 60-day period of public comment, and also to hold a hearing on the proposals during the ABA annual meeting in San Francisco in August. Based on that feedback, the task force will prepare a final version of the report and submit it to the trustees by Dec. 31, for consideration at the trustees’ meeting in January 2020.

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Randall Difuntorum, the State Bar’s director of professional competence, who serves as coordinator of the task force, said that the trustees, if they decide in January to move forward on the proposals, would then appoint a new implementation committee to take on the process of finalizing the language of the proposals on work on the process of implementation.

Ultimately, the proposed changes would require either approval by the California Supreme Court or implementation through legislation.

The State Bar appointed the task force last summer after reviewing the Legal Market Landscape Report it commissioned from William D. Henderson, professor at Indiana University Maurer School of Law. In his report, Henderson made the case that the legal profession is failing in its core mission of serving those who need legal services.

One of the most effective ways to address that, he argued, would be to ease rules on non-lawyer investment in order to allow lawyers to more closely collaborate with professionals from other disciplines, such as technology, process design, data analytics, accounting, marketing and finance.

(Henderson discussed the report and his recommendations on my LawNext podcast: LawNext Episode 9: Bill Henderson on Changing the Non-Lawyer Ownership Rules.)

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The proposals to be considered at Friday’s meeting represent the work of three subcommittees, each assigned to study one of the three broad areas the task force was asked to examine:

  • The definition of unauthorized practice of law.
  • Marketing, advertising, partnerships and fee-splitting.
  • Non-lawyer ownership or investment.

At this point, the proposals are only tentatively worded and sometimes even present alternative approaches to the same issue. However, taken together, the subcommittees’ recommendations would allow non-lawyer entities to provide legal services, particularly through the use of technology-driven delivery systems. These entities would be subject to state certification and oversight.

The recommendation calls for establishment of a mechanism for regulating these non-lawyer entities “that would ensure they are minimally competent to provide the services, and are accountable to consumers if they fall below established standards.”

The proposals also include recommendations for changes to California’s Rules of Professional Conduct. Among these is an amendment to CRPC 1.1 that would adopt the duty of technology competence. As proposed, the amendment would add a new comment 1 that would read:

The duties set forth in this rule include the duty to keep abreast of the changes in the law and its practice, including the benefits and risks associated with relevant technology.

With regard to fee-sharing, the task force will vote on two alternative proposals. One would loosen prohibitions on fee sharing. The other would remove the prohibition in its entirety. Difuntorum said that the task force is likely to accept both alternatives at this point and then reconsider them after receiving public comment.

An issue the task force still plans to consider is that of implementation, Difuntorum said. Because the potential changes could be so significant, the task force will consider whether to recommend the use of alternative implementation methods such as the regulatory sandbox being tested in Utah or limited pilot programs.

At its meeting in August, the task force will hear presentations on this issue from economist and scholar Gillian K. Hadfield of the University of Toronto Faculty of Law (who was recently a guest on my LawNext podcast) and Margaret Hagen, director of the Legal Design Lab at Stanford Law School.

Joanna Mendoza, who is a State Bar trustee and also a member of the task force, said that the most cutting-edge aspect of the proposals is to allow entities to deliver legal services even when no lawyer is in the mix.

“We are proposing something that goes further than even the U.K. and Australia have done by saying that entities that don’t have any lawyers in their ownership can engage in the practice of law,” she said. “It’s just a matter of making sure the public isn’t harmed and that the entities have rules to follow.”

Robert Ambrogi Bob AmbrogiRobert Ambrogi is a Massachusetts lawyer and journalist who has been covering legal technology and the web for more than 20 years, primarily through his blog LawSites.com. Former editor-in-chief of several legal newspapers, he is a fellow of the College of Law Practice Management and an inaugural Fastcase 50 honoree. He can be reached by email at ambrogi@gmail.com, and you can follow him on Twitter (@BobAmbrogi).

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