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State Bar & Bar Associations,
Law Practice,
Ethics/Professional Responsibility

Oct. 22, 2021

Ulterior motive behind push for new legal service models?

The Institute for the Advancement of the American Legal System’s pursuit of and support for new legal service models in various U.S. jurisdictions under the guise of solving the U.S.’s justice gap is a Trojan horse for nonlawyer ownership of law firms in those jurisdictions.

Danny Abir

Managing Partner, Abir Cohen Treyzon Salo, LLP

Danny represents clients in the areas of property claim disputes, insurance bad faith, catastrophic personal injury, products liability, civil rights, medical malpractice, as well as complex civil litigation. For more information, please visit www.actslaw.com.

"Beware of false prophets, which come to you in sheep's clothing, but inwardly they are ravening wolves." -- Matthew 7:15 (King James).

I'm sure you did not come here in search of excerpts from the King James Bible. But the image of a wolf in sheep's clothing is the first place my mind went -- and where yours should go too -- when reading Zachariah DeMeola's Sept. 17 opinion piece published on Law360.com, "Justice Gap Demands Look At New Legal Service Models."

To be fair, DeMeola, who is employed by the Institute for the Advancement of the American Legal System, is right that there is a justice gap in the United States. But not all would-be legal consumers in the U.S. face a justice gap, and not all legal practices require new service models. Americans with legal issues traditionally handled on a contingency basis, like personal injury claims or workers' compensation claims, need not -- and do not -- worry about whether they can afford to hire a lawyer to assist them with those issues.

You wouldn't know that by reading DeMeola's piece. Nor would you know that by reading materials on the IAALS' website. That's no accident.

The IAALS' pursuit of and support for new legal service models in various U.S. jurisdictions under the guise of solving the U.S.'s justice gap is a Trojan horse for nonlawyer ownership of law firms in those jurisdictions. The IAALS is not bashful about seeking this outcome. Its "Unlocking Legal Regulation" project, through which DeMeola and the IAALS are evaluating Utah's regulatory sandbox, is focused on "creat[ing] new pathways to legal services" by "first unlock[ing] legal regulation."

"New pathways to legal services" and "unlocking legal regulation" are code words for nonlawyer ownership of law firms. With nonlawyer ownership of law firms, corporate- and venture-capital-backed entities will pursue representation of plaintiffs in consumer contingency cases and squeeze traditional plaintiffs' law firms out of their markets. These nonlawyer-owned firms, with owners who will put profits over the best interests of clients, will provide substandard legal services fraught with conflicts of interest, such as when an insurance company owns a law firm and represents people injured by others who are insured by that same insurance company.

That's why the IAALS' push for new legal service models is a wolf in sheep's clothing. It is actually a push for nonlawyer ownership of law firms that would conveniently provide "tort reform" by hampering the ability for injured people in the U.S. to obtain effective legal counsel free of bias and conflicts of interest.

The IAALS claims to be "changing how our [legal] system serves people" to "deliver[] justice all of us can believe in." But the "us" the IAALS is referring to apparently only refers to the IAALS' supporters -- individuals and entities that stand to benefit from altering the current state of the consumer contingency legal practice in the U.S.

Disrupting Contingency-fee Practice

If a person is known by the company they keep, the IAALS should be known as a defense-friendly, anti-plaintiffs' organization. Its board of advisors, "Law Firm Council," and "Business Leadership Network" are a rogues' gallery of people and organizations who likely wouldn't mind seeing a new round of tort reform that limits the universe of claims plaintiffs can bring against wrongdoers and the ability for skilled trial lawyers to secure large verdicts against those wrongdoers.

Just look at the IAALS' board of advisors. Of its 22 members: Four are partners at corporate defense law firms; one is a vice president of a Fortune 50 insurance company; one is a director of a private financial services company;

One is the former general counsel of a Fortune 500 consulting firm; one founded a LegalTech company that counts Big Law firms as its clients; and one founded a marketplace that connects large companies and law firms with legal professionals looking for jobs.

In other words, almost half of the IAALS' board of advisors have business interests in disrupting the consumer contingency legal practice in the U.S, or at least keeping corporate law firms and their corporate clients happy. The majority of the remaining members of the board are judges and academics. While they may not have the same business interests as their colleagues, they may not see the potential harm to consumers caused by the IAALS' quest, at least initially.

The IAALS' board does, however, have one consumer contingency lawyer on it. He has been practicing law for almost 50 years, does not appear to have a website for his law firm, and will presumably not be practicing law when nonlawyer ownership of law firms is prevalent in the U.S.

As for the eight law firms on the IAALS' "Law Firm Council," whose members "invest in IAALS both intellectually and financially," it is more of the same. All eight firms are corporate or corporate defense firms. Seven of them are among the largest 300 or so law firms in the world. And two of them are among the largest and most profitable firms in the world.

For good measure, the four members of the IAALS' "Business Leadership Network," which serve as advisors and investors, are DISH Network, Exxon Mobil, State Farm, and the U.S. Chamber of Commerce's Institute for Legal Reform. The latter, of course, is one of the biggest proponents of "tort reform" in the U.S. And the latter three would be heavy favorites for inclusion on a Mount Rushmore of entities thrilled to see the U.S. legal system limit the power and abilities of consumer contingency lawyers.

Self-interests on Display

Once you understand the IAALS' and its supporters' ulterior motive for pushing new legal service models, you can't help but see the bias, self-interest, and flawed logic within DeMeola's opinion piece.

First, DeMeola points to the World Justice Project's Rule of Law Index as proof that the U.S. needs "new types of [legal] service providers -- and new models for the delivery of legal services." The index ranks the U.S. 37th out of the world's 37 highest-income countries for its citizens' ability to access and afford civil justice. This factor takes into account "the accessibility and affordability of civil courts, including whether people are aware of available remedies; can access and afford legal advice and representation; and can access the court system without incurring unreasonable fees, encountering unreasonable procedural hurdles, or experiencing physical or linguistic barriers."

Putting aside the merits of this ranking given the contingency fee model prevalent in the U.S. civil justice system, DeMeola omits the fact that the United Kingdom landed in the rankings one whole spot ahead of the U.S., coming in at 36th for its citizens' ability to access and afford civil justice.

Why am I highlighting the U.K.'s ranking? Because in 2011, the U.K. authorized nonlawyer ownership of law firms. That's right. In about a decade of nonlawyer ownership of law firms, the U.K. has as accessible a civil justice system (according to the World Justice Project) as the U.S. has today.

Further undercutting DeMeola's suggestion that nonlawyer ownership of law firms is the panacea for all that ails the U.S. legal system is a 2016 article published in the Georgetown Journal of Legal Ethics: Robinson, Nick, "When Lawyers Don't Get All the Profits: Non-Lawyer Ownership, Access, and Professionalism," 29 Geo. J. Legal Ethics 1 (2016). The article paints a bleak picture of nonlawyer-owned law firms in the U.K. Looking at one part of that picture, according to the article, nonlawyer owners of law firms in the U.K. were disproportionately drawn to personal injury law because of the profitability of the practice despite a justice gap in other areas of the law. Again, personal injury law is not an area in the U.S. where access to justice is a problem.

And if you thought my hypothetical about conflicts of interest created by an insurance company owning a law firm was fear mongering, the article will disavow you of that thought. It notes that insurance companies in the U.K. own law firms and that "[c]onsumers who [were] directed to [a nonlawyer-owned law firm] because their insurance company own[ed] it ... seem[ed] to be referred simply because of the monetary benefit to the insurance company and not because the referral [was] necessarily in the consumer's best interest."

Second, citing news coverage of marketing collateral from a company that sells software to law firms, DeMeola notes that "many lawyers struggle to make ends meet, with small and solo practitioners often facing the largest hurdles." He does not explain why nonlawyer-owned law firms, which would introduce more competition into the marketplace -- especially if they're staffed by nonlawyers licensed to perform tasks once considered the practice of law -- would solve this problem. Struggling lawyers would be helped more by better marketing and practice management skills than by increased competition from new legal services providers.

Third, DeMeola skates past the glaring conflicts of interest issues and the broader policy considerations introduced by new legal providers and new legal service models. I already touched on the conflicts of interest issue, but the broader policy considerations are just as concerning. With nonlawyer-owned law firms or licensed paraprofessionals, there will be a two-tier legal system in the U.S. Those who can afford to hire a traditional law firm -- that will assign a licensed lawyer to work on their matter -- will do so. Those who cannot will go to nonlawyer-owned law firms or paraprofessionals who are unlikely to provide the same quality legal services -- because of conflicts, a profit-first mindset, lack of knowledge or experience, or for other reasons -- as licensed lawyers would.

Fourth, DeMeola does not explain why allowing nonlawyers and artificial intelligence to practice law would address the overall justice gap more effectively than state bar associations stepping up and providing additional resources to underserved communities. Perhaps that's because such a scenario is not as lucrative for the IAALS and its supporters as disrupting the middle-class legal market and tearing down needed protections against the unauthorized practice of law in the name of "access to justice."

Finally, DeMeola fails to mention what happened in Washington state last year. In June 2020, the Washington Supreme Court voted to sunset the state's Limited License Legal Technicians program. Under the program, nonlawyers were allowed to perform legal tasks within a family law practice. Despite the first LLLTs being licensed in 2015, as of May 2020 there were fewer than 40 active technicians. There were likely a number of reasons why Washington's LLLT program floundered, including the fact that the costs for administering the program exceeded its revenues by almost $1.4 million. But the fact that it did flounder should be raised in any honest discussion of similar paraprofessional programs and regulatory sandboxes designed to test new legal service models.

I Push for New Legal Service Models Bares Fangs

DeMeola and the IAALS drape themselves in phrases like "new pathways to legal services" and "unlocking legal regulation" in the hopes of conjuring images in our minds of a romantic, idealistic world where all those who need legal services receive them at a price they can afford.

As wonderful as that sounds, that's not the only result DeMeola, the IAALS, and its supporters seem to be pursuing. Instead, they apparently want to bring nonlawyer ownership of law firms to the U.S -- leading to a disruption of our country's consumer contingency legal practice and a reduced ability for injured Americans to hold corporate wrongdoers liable for their actions.

Americans and consumer contingency lawyers alike should carefully approach and engage with the sheep that is the IAALS' pursuit of new legal service models. For once they turn their backs, that sheep will bare wolves' fangs and make them its prey. 

#364736


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