Companies that disrupt established industries do so with new business models and technology that can often place them in a “gray area” with respect to existing laws and regulations. Uber is a well-known example that has been thriving in this gray area for some time—primarily by classifying itself as a technology company, rather than a transportation company, to sidestep seemingly applicable regulations.
Our laws and regulations are in a never-ending race to catch up with ever-shifting changes wrought by technology. But as much as this is a challenge, it also presents a unique opportunity.
States are constantly competing with one another to attract new businesses to their communities. In fact, the sole mission of economic development organizations is to identify, recruit and incentivize companies to relocate and open offices in their respective states.
If we look back at some examples, Delaware became a place for business by offering companies predictability with their corporate laws. Connecticut and Iowa created favorable regulations to attract insurance carriers. South Dakota has lured credit card companies with favorable consumer lending laws. And more recently, the legalization of cannabis has driven economic growth in Colorado and other states.
Florida appears to have a similar opportunity with legaltech.
The legal tech landscape in Florida already includes quite a few companies. VortexLegal has its headquarters here in the state, as does Practice Panther, Rocket Matter, TrialWorks/Needles, CaseGlide, NetDirector, Provest, Premonition, and others. This is kindling for a hotbed of economic activity that needs a spark.
And a spark could come from the Florida Supreme Court which now has a number of interesting proposed rules, regulations and lawsuits pending that have the potential to establish Florida as the leading jurisdiction on legaltech issues. Were this to happen, the state could attract even more legaltech companies.
What would a legaltech-friendly jurisdiction look like?
A legaltech-friendly state would need to have regulations and rules in place that embrace technology and alternative business models in order to open the door for legal service entrepreneurs, not just lawyers, to be able to provide certain types of legal services. Recently, the States of Washington and Utah have authorized licensed paralegals to provide certain legal services in family law, eviction and debt collection matters. This is akin to the medical profession authorizing nurse practitioners to see patients and write prescriptions under the supervision of a doctor.
At present the Florida Supreme Court has three key matters before it of significant potential impact to all legaltech stakeholders.
The first could have a major impact on “matching services” and legal marketing companies. A proposed new rule would allow nonlawyers to be compensated for referrals. The current prohibition on sharing a legal fee with a nonlawyer has been a hallmark of the legal profession for many years, yet this has been systematically circumvented by using marketing and consulting agreements. Avvo recently found itself in the regulatory crosshairs about it. The company’s Legal Services product connected consumers to lawyers but concerns were raised in eight states over illicit fee-sharing and referral fees where rules expressly forbade attorneys in those states from participating in such programs.
If Florida were to create a regulatory framework that permitted these types of services, this could pave the way for other states to allow “matching services” and ultimately increase the public’s access to justice.
A second matter before the Florida Supreme Court is The Florida Bar vs. TIKD Services, LLC. The TIKD app connects consumers with ticket lawyers. The Florida Bar sued the app maker and its founder for the unauthorized practice of law and fee splitting. TIKD, by its own account, is not a law firm and is not owned by a lawyer so the question is really whether TIKD is providing legal services or if it’s simply a software company connecting users to lawyers who provide the legal services. This matter is even more interesting because the U.S. Department of Justice has weighed in on TIKD’s countersuit against the Bar and The Ticket Clinic noting that the Bar does not have sovereign immunity from its anticompetitive practices for the benefit of its members. There is a great deal at stake for the entire legaltech community that is now hinging on the outcome of this case.
The third legaltech matter of interest before the Florida Supreme Court is the proposed amendment to Rule 2.505 of the Rules of Judicial Administration. The amended rule would require “appearance attorneys” to file notices of appearance for each hearing they attend. To the best of my knowledge, Florida is the only state that is considering such a rule. If the court adopts this rule, it should additionally issue guidance for adequate implementation. Such a rule requires a technology solution and so, in my opinion, the court should require that the state’s efiling portal must offer an open API to allow lawyers to file notices of appearance digitally.
If the Florida Supreme Court considers these three issues together, it will see that before the court is a unique opportunity to address the evolving needs of the legal services market. This includes increasing access to justice for consumers and creating a regulatory environment that welcomes innovative legaltech companies to the state. Every state needs better rules, guidelines and case law to explain what is and what is not the unauthorized practice of law and guidelines to recognize revenues. Rules should also explain the role of matching services and software. And ultimately, they need to set a path that all other states can use to navigate the choppy waters between law and technology.
By implementing rules, regulations and case law that are legaltech-friendly, the State of Florida stands to take the lead on attracting legaltech companies and talent and become an economic hub of legal innovation and technology.
The founder and CEO of VortexLegal, Jonathan Broder is an attorney by background who left the practice of law to follow his entrepreneurial passions. Jon was a lawyer and legal recruiter before launching VortexLegal, an alternative legal services provider. VortexLegal provides an automated matching and billing platform that connects law firms and corporate legal departments with a curated community of appearance counsel to attend routine, administrative hearings for a flat rate resulting in substantial savings for clients. Jon earned his J.D. from the John Marshall Law School in Chicago in 2004, was a member and editor of the Law Review and is licensed in Florida.
