Our Profession’s Losing Battle Against the Market

By Bob Glaves  |  CBF Executive Director

By any definition, we have a failure in the market for legal services for everyday people today, and a growing one at that. We have more lawyers than ever before at the same time as record numbers of people who need or would benefit from legal help are not getting it. Yet when faced with proposed changes to the Rules of Professional Conduct to address this market failure, the default response of our profession is to fight to maintain a losing status quo perhaps making some technical changes but avoiding the larger issues.

Lipstick on a pig, as the saying goes, when what we really need is a new regulatory approach that does not force lawyers to compete in the market with one hand tied behind their backs.

The Origin and Scope of the Problem

The fundamental problem is that our Rules of Professional Conduct do not permit lawyers to share fees, ownership, or profits with anyone who is not a lawyer in their own firm. The Rules also separately place a litany of confusing and counterproductive restrictions on advertising and communication by lawyers.

The original intent of these rules was to protect clients and to protect lawyer independence, both noble goals. But the net effect of these restrictions is that lawyers (1) are severely limited in accessing capital and scaling up their practices to the degree necessary to compete in modern consumer markets, and (2) have trouble connecting with clients who need or would benefit from their services. This has severe consequences for access to justice.

As Bill Henderson, a Professor at Indiana University Maurer School of Law who studies our profession has starkly put it in his Legal Evolution blog: Our legal system as it pertains to ordinary people is unraveling. Hundreds of millions of people can’t afford to hire a lawyer to solve their legal problems. As a result, they go it alone or give up altogether. In turn, as the PeopleLaw sector shrinks, a large number of lawyers are under tremendous economic stress. No amount of tinkering at the edges is going to fix or reverse these trends. Instead, we need a series of fundamental redesigns.

Meanwhile, the Market Senses a Vacuum and Is Filling It

A variation of the old adage that nature abhors a vacuum is often cited in the business context. In this instance, other entrepreneurs and professionals indeed are stepping into the growing void in the legal market to offer alternative resources and services.

Legal Zoom is likely the most familiar. And something LegalZoom is doing must be working, as they recently received new investments that value the company at more than $2 billion today. Many other companies are stepping in to the breach as well, offering self-help technologies, online dispute resolution tools, and other services that help people address their legal problems through alternative means.

These resources and services all have a place on the access to justice continuum and can offer people viable solutions in many instances. However, as I discussed in more depth in my recent  Fool for a Client series, there remain many instances where someone really needs a lawyer to represent them. In those situations, these alternative means are imperfect solutions at best, and can be downright harmful.

If our profession does not start scaling up innovation in the way we actually practice law, people are going to increasingly gravitate to these alternative providers because we’re not giving them any other practical choice. As Bill Henderson puts it in one of his later posts: If legal services cannot be delivered more efficiently, ordinary citizens will forgo legal services. This is not a prediction; it is a statement of what is happening today.

This Is Not a Zero Sum Game

Unleashing market forces in the profession and advancing the noble goals that underpin today’s overly restrictive regulatory landscape are not mutually exclusive.

Two years ago, the ABA House of Delegates adopted model regulatory objectives for the provision of legal services to guide regulation of our profession in the new world of technology and innovative businesses that are offering important services in the community but are not always owned by or run by lawyers. By focusing on what we are actually trying to protect, the ABA resolution provides a framework for making forward-looking changes to the Rules of Professional Conduct that can open up the legal market and significantly improve access to justice.

Yet in one of the first tests of how the ABA would actually implement these forward-thinking objectives, the ABA just passed amended model rules on lawyer advertising that, while a modest improvement over the previous version, merely nibble around the edges of the larger problem that most people who want or need legal help are not connecting to lawyers.

The ARDC’s recent report suggesting a new look at the Rules of Professional Conduct to better regulate client lawyer matching services is an example of the better way forward here. The CBF supports this more open-minded approach as well as streamlining the other rules governing lawyer advertising and communication.

How will our profession respond? We can expect the protectors of the inadequate status quo to make their voices heard. You have an opportunity to counter that vocal minority view and signal your support before the comment period closes on August 31st. There are instructions for how to weigh in, and I hope you will take a few minutes to do so.

As I noted in a prior post about our profession’s artificial barriers to innovation, we also should warm up to the idea that lawyers and law firms should be able to share ownership and get outside investment from other partners and investors, not just other lawyers in their firms. While I speak only for myself on that one right now, I know that many others share that view, and we should not let vocal minorities in our profession shut down this conversation.

An Essential Part of the Larger Solution

While market forces and innovation alone will not get us to equal access to justice proper funding for pro bono and legal aid services and making the courts and legal system more user-friendly and accessible are also integral we can’t get there without the private market playing a much larger role. Our recent op-ed in Crain’s Chicago Business gives added context for how it all fits together.

The bottom line is that we should be doing all we can to connect people with legal problems to lawyers who can help them. In order to do that, this is one of many times that we need to acknowledge that lawyers aren’t the best at everything in the world. Other legal and business professionals can and will play an integral role in making those connections when we find a responsible way to bring them into the system.