Uber, Taxis and the Legal Market

March 27, 2019

By Bob Glaves | CBF Executive Director

Take a trip down bad memory lane to about ten years ago when you needed to get a cab but were not in a place where taxis tend to be plentiful on the street. Remember what that was like?

Hold that thought for a moment, and now think of what it is like today for someone who is looking for a lawyer and doesn’t know where to turn. While it is sure to get most lawyers upset to be compared to the taxi industry, the similarities in these two market failures are striking. We can write a different script for what happens in the legal market but need to start now.

Comparing the Taxi Experience Before Ridesharing to the Law Today

Before Uber and Lyft came on the scene about ten years ago, here’s a brief reminder of what it was like when you tried to get a taxi.

  • Outside of downtown areas or airports, trying to find a cab was a challenge at best and at times impossible.
  • You could try looking up the phone number for one of the cab companies and calling their dispatch (there was no central number or reasonable online option), and then hope for the best if you were in a place where they could send a cab. And sometimes you were just out of luck.
  • If you were lucky enough to get a cab sent to you, it was a crapshoot when it might arrive. And you had no idea what kind of condition it would be in (inside or out), what it was going to cost, or what kind of service you might get.
  • If you had enough cash on you to pay the unpredictable cost, great. If you wanted to pay by credit card, well…
  • If you had a complaint about any of the above, well, good luck with that.

The taxi industry then in some ways was even more highly regulated than the legal profession is today, with significant barriers to entry, limits on the number of licenses, and little appetite for change.

The current legal market for everyday people shares much more in common with the taxi industry of yore than most of us are comfortable admitting. Someone with a legal problem without a good referral in their immediate network is in a very similar place to the person looking for a cab in 2009 at somewhere other than an airport or busy downtown area.

Unless you know enough to contact a bar association lawyer referral service (and the numbers suggest that only a small fraction of the consumer legal market do), looking for a lawyer is a lot like going through the old taxi dispatch. Apart from some good options for free legal help for those who qualify, there is no central number or online entry point for someone looking for legal help.

And if you get through to someone, for most legal issues it is very difficult to know if the lawyer or firm is any good (in general or for your particular legal issue), how much it is going to cost, or what kind of service you can expect to get.

The Personal Transportation Market Today

In a span of less than ten years, the taxi industry and overall market for personal transportation today looks quite a bit different and functions quite a bit better.

Uber and Lyft have used technology, savvy marketing, and basic principles of good customer service to completely change the transportation landscape. They created apps that give people a sense of control in their transportation destiny. Someone can easily order their ride, know when it will arrive, know what kind of car it will be (with some assurance it is in good condition), and have an advance sense of the total cost. They also made it easy to pay for it via credit card, with some accountability if things do not go right.

And thanks to the innovation and new competition Uber and Lyft brought to the market, the taxi industry is much better today as well. It’s now the norm that you can pay by credit card in a cab, drivers tend to be more responsive and have cleaner and more comfortable vehicles, and there is now even a cab-hailing app.

Ultimately, it is the consumer who is better off, with a new range of flexible and transparent options when they need transportation. And many people who live in places where cabs were unreliable or nonexistent now have options for getting personal transportation for the first time.

I am not endorsing everything about these companies or their business models, just the innovation they have brought to personal transportation access and customer service, and the beneficial impacts competition has created for this market.

Lessons for Law

While there is much that our profession can learn from the experience of Uber, Lyft and the taxi industry, lawyers generally disdain the idea of being compared to cab drivers. The other thing that scares lawyers about this analogy is the concern that Uber and Lyft took advantage of lighter regulation to build their companies while the heavily regulated taxi industry could not compete on the same field.

There’s no question that the taxi industry was caught flatfooted and did not have the flexibility to do everything their new competitors could, and there has been some real suffering as a result. But they never gave these competitors a choice, as there was no way for this kind of innovation or new business model to emerge in the taxi industry’s isolated regulatory bubble.

We already are seeing similar trends play out in law today. LegalZoom is the best known company pushing the envelope from outside of traditional law practice. They and others like them are bringing a lot of innovative service models that, like Uber and Lyft, are very popular and well received by consumers.

But these innovative legal models can’t incorporate traditional legal services because our Rules of Professional Conduct won’t let them. And the result is, much like the taxicab industry did before us, that we are driving innovation in the consumer legal market away from the traditional practice of law and setting our profession up for a hard fall.

Writing a Different Script for Legal Services

That is why Part Two of my New Year’s Resolution to tackle our profession’s affordability problem for regular people is to modernize our Rules of Professional Conduct for how lawyers can market their services and share fees with other professionals and entities.

Some modest reforms to these areas of the Rules will help improve how lawyers connect with the people who need their help and expand the ability to partner with the other professionals and entities who can help lawyers most efficiently, effectively and affordably deliver their services. Consumers will be better and more affordably and flexibly served, lawyers will get more clients who aren’t coming to them now, and our legal system will be much better for it.

Like the personal transportation market, many if not most people in the consumer legal market won’t go the route of using these larger entities and networks for their legal needs. But like the experience with taxis, everyone will benefit from improved competition and the better functioning market.

I have laid out the case for this regulatory reform in more detail in a prior post, and it remains one of the CBF’s principal advocacy initiatives. Making these changes can maintain the underlying goals of the Rules to protect clients and ensure lawyer independence while at the same time improving access and affordability for clients. And by taking this approach, we can avoid the mistakes of the taxi industry by creating responsible ways for these innovative companies to partner with lawyers.

The Growing Risk of Standing Still

If that isn’t enough to make us change our ways, there is one other part of this story that should get our attention. Uber and Lyft ultimately were able to grow and thrive without most of the regulatory strictures of the taxi industry because there was no other way they could do it. And once the genie was out of the bottle and consumers were voting with their feet by using these new services, there was no going back to force ridesharing to conform to the old taxi rules.

Up until now, we’ve relied on the fact that our profession is self-regulated to maintain boundaries on the practice of law and the market for legal services more generally. But we no longer can take self-regulation for granted if we won’t recognize the current market failure and make necessary changes to open up the market.

We don’t just need to look at the personal transportation industry to see that is the case—it already is happening to our profession in other countries and is starting to happen in other U.S. jurisdictions as well. 

Every lawyer can do something in their practices to make their services more transparent, predictable, flexible and ultimately more affordable, and that was the first step for carrying out of my 2019 New Year’s Resolution for our Profession. No one can do it on scale to really fix the vast market failure for legal services on their own though. That will require changes to our Rules of Professional Conduct, which will enable the kind of innovation needed to meet the true need for legal services in the consumer market.