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An Open Letter to the State Bar of California

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The following is the text of a letter I sent to the State Bar of California when it solicited public comment on the Civil Justice Strategies Task Force Report and Recommendations.

1. Overview of the Washington LLLT Program

The Washington LLLT program came about after our Supreme Court commissioned a Civil Legal Needs Study in 2003, which concluded that there was limited access to justice for those with little or no financial means.  The Practice of Law Board, which investigates UPL complaints, drafted the initial proposed LLLT rule with Supreme Court directive and sought public comment in 2005.  There was little to no support for the program among the WSBA Board of Governors (“BOG”) and bar membership, but strong support by the WSBA Executive Director and the majority (but not all) of our Supreme Court Justices.

The Board submitted its proposed rule to the Court in 2008, which was eventually enacted by Court order in 2012 as APR 28, despite being formally rejected by the WSBA BOG on multiple occasions.

APR 28 allows non-lawyers to “engage in discrete activities that currently fall within the definition of the ‘practice of law.’”  The Court’s stated purpose for creating the LLLT program was to increase access to justice.

The Court adopted the LLLT Rules of Professional Conduct in January 2015, which were effective in February 2015.  The first LLLTs take their licensing exam on May 11, 2015 and successful candidates are expected to be licensed in late spring 2015.

The Court also enacted new attorney Rules of Professional Conduct in March 2015, which allows LLLTs to own a minority interest in law firms with lawyers, making Washington the first U.S. state to formally permit alternative business structures (ABSs), which is generally defined as non-lawyer investment and/or ownership in law firms.

Expansion of the lawyer RPCs designed to promote LLLT business interests and to usher in ABSs was recently done by Supreme Court order with no prior notice to bar membership and no public comment period.  The Court has, ex post facto, invited public comment on the already enacted rules.

2. Inaccuracies about the LLLT Program in the Task Force Report

Given that Washington’s LLLT program is currently being both sold and considered as an attractive model for numerous states, it is important to correct some of the misstatements about the Washington LLLT program as articulated in the Task Force Report.

First, the Court and proponents of the LLLT program stated that, based on the Civil Legal Needs Study findings, the high cost of lawyers is the primary cause of the justice gap.  However, that was not the finding of the study upon which they rely, which is attached for your reference.

Although the stated purpose for the Washington LLLT program is to promote access to justice for those in need, there is no requirement that LLLTs cap their rates or provide services to low-income individuals.The study found that 85% of low-income people are not able to access justice, which is defined as the ability (or lack thereof) to hire an attorney.  In Washington, LLLTs are not attorneys and, in fact, hiring an LLLT still leaves the client unrepresented, as LLLTs do not represent clients in court or in negotiations with third parties. Therefore, this program will provide little to no benefit for low-income individuals who want or need legal representation from an attorney.

Furthermore, the study concluded that the primary reason people do not hire an attorney is that they do not know they have a legal problem or that anything could be legally done about the problem they were experiencing.  The second reason for not hiring an attorney was that even if the person knew they had a problem for which help was available, they did not know where to find that help.  Concern over cost came in third.  Notice, however, this does not mean that hiring an attorney was actually too expensive, but rather that the survey participants assumed an attorney would be too expensive.  All three of these primary reasons for the justice gap are more directly related to a lack of access to information rather than a lack of access to justice.

It is also inaccurate that family law was understood to be one of the areas with the highest unmet need.  In fact, according to the Civil Legal Needs Study, family law was the area of law with the highest rate of met needs.  Additionally, family law was not the area of law most commonly faced by low-income people – housing was.  This study was replicated in 2014, the results of which are expected to be published in June 2015.  The updated study found that family law was not in the top three areas of need and was the second highest area to have met needs.

The LLLT program was also not intended to reduce the unauthorized practice of law (UPL).  Moreover, there is no logical connection between the creation of LLLTs and reducing UPL.  Someone comfortable engaging in UPL pre-LLLT will be no less comfortable doing so post-LLLT, as becoming an LLLT is still significantly more burdensome than not.

The Task Force Report also inaccurately states that LLLTs cannot communicate with another person or lawyer on behalf of a client.  This is not the case.  LLLTs cannot negotiate on behalf of their client, but they can communicate with an attorney representing an opposing party.

It is also interesting to note that, prior to enactment, the LLLT program was represented by its proponents as intended to be very narrow in scope, with emphasis that LLLTs should not be permitted to represent parties in court, should not be permitted to negotiate on behalf of parties, and were primarily needed for the purpose of helping those of limited means fill out forms and otherwise understand their basic rights. However, since the enactment of the LLLT rules and before the first LLLT has been licensed, the LLLT Board has proposed an expansion of LLLT practice authority to include representation of parties in court, negotiating on behalf of parties, fee splitting with lawyers, and co-ownership with lawyers in law firms.  To date, the Supreme Court has only approved fee splitting and non-lawyer LLLT co-ownership.  The LLLT Board is now considering a proposal to authorize LLLTs to write opinion letters to third parties and will likely petition the Court to enact this proposal.

The Report incorrectly articulates the educational requirements of LLLTs.  First, LLLTs are not required to have a college degree in paralegal or legal assistance studies.  An LLLT simply needs an associate’s degree.  Second, LLLTs must complete 3000 hours of work supervised by an attorney before or after completing the LLLT program.  Most LLLT applicants are paralegals, so this does not create additional training over and above what a paralegal would gain in the first couple of years of working in a law firm.  LLLTs also have to complete 45 credit hours at a community college in legal studies and then complete 15 online credits in family law, currently only offered at the University of Washington.  Lastly, LLLTs sit for an exam written, administered, and graded by the LLLT Board, which has become, for all intents and purposes, a trade association embedded by Court order within the WSBA, and whose primary activities include advocating for the practice and business interests of future LLLTs.

Lastly, the Task Force Report incorrectly references the Court Rules applicable to LLLTs.  GR 24 defines the practice of law.  GR 25 creates the Practice of Law Board.  APR 28 is what establishes the rules for LLLTs and is attached for reference.

3. Five Points of Caution Regarding the LLLT Program

States should consider the following five points before adopting Washington’s LLLT program:

First, Washington’s LLLT program is a market-based, for-profit construct that includes no duty to serve the poor or engage in activities that promote access to justice.  Although the stated purpose for the Washington LLLT program is to promote access to justice for those in need, there is no requirement that LLLTs cap their rates or provide services to low-income individuals.  Like anyone engaging in for-profit activity, LLLTs will likely seek to maximize their return on investment and will, inevitably, set rates consistent with what the market will bear.

Moreover, for those with little or no means, there is virtually no difference between, for example, an LLLT hourly rate of $150 and a lawyer rate of $250.  Low and no income people can afford neither without some kind of legal aid.

Thus, if California chooses to implement a Washington-style LLLT program, the purpose thereof will be for something other than narrowing the justice gap for the poor.

Second, wait and see.  There has been a lot of conversation about the value of LLLTs both in Washington and around the country. The reality is that LLLTs are purely conceptual. Washington has not yet licensed a single LLLT.  The impacts of LLLTs, for good or bad, have not yet been tested.

There are three or four individuals from Washington who travel the country sharing their views and encouragement regarding LLLTs. However, the number of WSBA members who actually support the LLLT program is statistically irrelevant, and the value LLLTs are likely to offer toward improving justice is, at best, speculative.  Moreover, an LLLT program brings with it a significant weight of controversy, rollout complexity, resource consumption, and lack of existing regulatory infrastructure.

In light of these facts, it may be wise to take a “wait and see” approach before adopting a similar program in your state.  This is apparently the Task Force’s position regarding ABSs.[1]

California will likely discover that the greatest service it can provide for those in need is to provide readily available public information regarding everyday legal problems, how those problems can be resolved, and how and where to access available resources.Third, a well-intentioned but shortsighted attempt at solving a problem can in fact exacerbate the problem while creating new ones. With respect to promoting access to justice for the poor, the only resource known to make a measurable difference is legal aid through pro bono, non-profit legal aid, and government funded programs.  There is no empirical evidence from either within the U.S. or other jurisdictions that indicates anything otherwise, including from jurisdictions that have experience with market-based regulatory liberalization.[2]  It is likely, however, that over time more competition and consumer choice will cause some downward pressure on the cost of legal services, which will primarily benefit those who can presently afford legal services, but will likely do little for those in need.

Because two of the three legal aid sources are predominately supported by lawyers, decision makers should consider the potential impact on access to justice if lawyers were to dramatically reduce their time/financial support of pro bono services and legal aid programs, which is likely as competition increases and the social contract under which lawyers and society have operated Vis a Vis the state sponsored monopoly continues to unwind.

Fourth, objectively collect and analyze data, and design solutions that logically tie back to opportunities for improvement.  California will no doubt endeavor to discover the root causes of its own access to justice deficiencies.  As it does, it seems obvious that resources should be directed toward both the most significant deficiencies and the most effective solutions. In addition, care should be taken in analyzing data to avoid reaching conclusions that obscure or overstate the problem.  As was pointed out in a recent Harvard Law article,

It should also be borne in mind that the decision not to seek legal advice does not always equate with diminished access to justice. Studies confirm that people can and do turn to non-legal avenues to solve everyday problems. The modern vision of access to justice reform captures and encourages these diverse pathways to redress.

California will likely discover that the greatest service it can provide for those in need is to provide readily available public information regarding everyday legal problems, how those problems can be resolved (through diverse pathways), and how and where to access available resources, including from for-profit lawyers, non-profit organizations, and government programs.  In Washington there are many lawyers who offer reduced fees, flat fees, unbundled services, and other innovative alternatives, including those offered by young, struggling lawyers.  It is very possible that a great deal can be accomplished by simply connecting the demand to the supply.

Fifth, it will get ugly.  Once the lines are drawn between those who are for LLLTs and those against LLLTs, be prepared for a growing culture of lawyer derision and devaluation of the role lawyers play in our legal system by those who zealously support LLLTs and other reforms. LLLT proponents often make emotive appeals by maligning lawyers, suggesting, among other things, that lawyers are responsible for the failures of access to justice in society.  This assumes that lawyers alone should be expected to bear the entire social burden of access to justice for the poor in a society in which the Rule of Law continues to infiltrate every aspect of modern life.  In fact, access to justice is the responsibility of an entire civil society, and U.S. lawyers do and always have played a necessary, honorable, valuable, and committed role in supporting pro bono and access to justice.  However, it is simply unrealistic to expect the private bar to be the sole source of legal aid to the poor.

The reality is that without legal aid, the poor will be in no better position to afford LLLT rates than lawyer rates, as market-based solutions require customers with money to spend.When interests no longer align, factions arise and thus begins the grab for power and control.  As an example, the BOG and WSBA membership have been at odds with both the regulatory arm of the WSBA and the Supreme Court over the LLLT program and other issues.  Despite the fact that the WSBA has always considered itself an integrated bar association, a WSBA Task Force on Governance recently recommended that the name, The Washington State Bar Association, be changed to eliminate the word “Association” and be renamed The State Bar of Washington.  They also recommended a change to the title Board of Governors to Board of Trustees.  The stated purpose of this is to disabuse the BOG and bar members of the historical reality that the WSBA’s purpose is and always has been to act in the capacity of a professional association on behalf of attorneys, in addition to performing its regulatory duties and other mandates.  The Governance Task Force is also recommending the amendment and restatement of age-old WSBA bylaws to send the same message. In fact, the WSBA Task Force on Governance went so far as to suggest that it is a breach of fiduciary duty for an elected WSBA Board Governor to advocate the interests of his or her constituent members.

The WSBA Governance Task Force is also recommending that the Supreme Court be given veto power over the hiring and firing of the WSBA Executive Director, who is often at odds with the BOG and membership, but is often aligned with the Supreme Court.

In Washington State, the historical regulatory construct is no longer viable, there are internal conflicts of interest, and Washington lawyers no longer have a professional association working on their behalf.  To avoid a similar experience, California should engage in change management planning. In so doing, the California Task Force should anticipate the impact that future changes will likely have on its current state bar culture, practices, organizational structure, and responsibilities.  Once considered, the bar should set up a framework to actively manage and balance the distribution of power, influence, and communication in a way that is respectful, responsible, open, and transparent.

4. Suggestions for the State Bar of California

First, if and when the California Bar Association and/or its Supreme Court decides to implement an LLLT program, California should require lawyer supervision of

LLLTs.[3]  In fact, an LLLT program that requires both lawyer supervision and lawyer responsibility for the services provided could be beneficial in both protecting clients and reducing costs for at least two reasons.  First, it would allow lawyers, government, and non-profits to hire LLLTs at a lower cost than hiring lawyers to do particular things that many of us would already consider suitable to be done by experienced, trained, and properly supervised paralegals.  The market-based result would be that a supervising lawyer could then pass on the savings to clients by charging a lower fee for the work performed by the LLLT, and non-profits and government programs would be able to employ more human resources to assist clients.  This would put competitive pressure on other lawyers and firms, which would presumably cause an overall change in how legal work was assigned within firms, favoring the behavior of assigning work to the lowest cost/lowest rate timekeepers qualified to provide the service.  Thus, the effect would benefit clients from a cost perspective, while also optimizing the integrity of the service provided.

Second, it would be a mistake to require less qualification than Washington does for LLLT licensing, unless California requires lawyer supervision and responsibility for LLLT services. We should endeavor to preserve and improve the integrity and quality of legal services, and thus the integrity and dependability of our entire legal system.  In reality, most experienced paralegals who are properly supervised by a lawyer are perfectly capable of providing more value to clients by taking on some of the work that only lawyers are currently licensed to do.  Thus, a regulatory approach could be taken in which lawyers are permitted to assign work to their supervised paralegals (similar to the work contemplated for LLLTs), thereby avoiding the complexity, cost, and regulatory hardships that are required for independently operating LLLTs.

Third, the California Bar Association and Court should remain open, transparent, and engaged with its members.  Bar leadership and the Court should be mindful of lawyers’ tendency to focus on their work and not the internal workings of the bar, and therefore should purposefully, proactively, and repeatedly engage membership in education and conversation regarding regulatory reform, the future of the profession in general, how/why lawyers should begin to adapt to that future before it arrives, etc.  In other words, it should perform as a professional association is expected perform for its members.

Fourth, legal aid and pro bono are the only factors known to increase access to justice.  I have attached a recent report from the Tennessee Bar Association, which found that for every dollar invested in legal aid, a return of $11.20 is realized.  Thus, investment in legal aid not only has a direct and immediate effect on access to justice, it also generates a positive ROI.

The reality is that without legal aid, the poor will be in no better position to afford LLLT rates than lawyer rates, as market-based solutions require customers with money to spend.

The bar should study ways to incentivize increased lawyer pro bono participation.  Of course, the more difficult it becomes to earn a living, the more difficult it becomes to contribute time and money toward pro bono.  Also, there should be state data gathering and reporting on the value and economic impact of lawyer pro bono.  Society and the bar should understand this value, and Courts and bar associations should consider this data when balancing the impacts of regulatory liberalization on pro bono, which is directly linked to access to justice.

In the U.S., we are at the very beginning of what will be a paradigm shift in the regulation of legal services.  Deregulation has occurred in the U.K. against the will of the bar.  Other countries have or are in the process of liberalization or deregulation.  If lawyers do not proactively lead these change efforts, change will be imposed upon us.  Leaders and decision makers should be well informed and intellectually rigorous when architecting the future in order to preserve the independence and integrity of the legal system, meet the needs of modern society, and avoid causing unintended consequences.

Finally, I recommend that the Task Force read the article, The Taxonomy of Lawyer Regulation, in which the authors do a good job of explaining the more fundamental issues we are facing as we consider the future of what is becoming the legal services industry.  The article will help to put the concept of LLLTs and other possible regulatory reforms into a more meaningful context.


Attachments:

2003 Civil Legal Needs Study

Economic Impact of Civil Legal Aid Organizations in Tennessee

APR 28

LLLT Rules of Professional Conduct

LLLT Order

Taxonomy of Lawyer Regulation article

Harvard Law article

[1] It may be wise to consider reversing focus:  Greenlight exploration of ABS, and wait and see on LLLT. It is one thing to allow non-lawyer investment in law firms and quite another to authorize non-lawyers to practice law, particularly without the direct oversight and ultimate responsibility of a lawyer.  ABSs make far more sense to me with respect creating an environment of innovation which could lead to improvements in access to justice, if non-lawyer investment/ownership is limited to 49% and lawyer independence is otherwise protected.

[2] In 2011, the UK implemented significant law practice regulatory reforms. The result of these market-based changes, which were designed to promote competition and consumer choice, has had no measureable impact on increasing access to justice.  This was in part because at the same time legal services were de-regulated, the UK gutted its long standing legal aid program.  Thus, the net effect of legal services reforms in the UK has been a substantial decrease in access to justice.

[3] In Washington, certain approved LLLT activities do require lawyer supervision, but not all; and LLLTs are able to provide direct and independent legal services to the public without lawyer supervision and oversight.

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