Tangling with tech companies’ move into legal services

By themselves, the 10 objectives listed in the American Bar Association’s Resolution 105 are pretty innocuous. Outlining what state supreme courts should consider when developing regulations for non-traditional legal service providers, the objectives call for protecting the public, transparency, delivery of affordable, efficient and ethical service, and remedies for malpractice, among other things.

However, the pushback from the practicing bar was strong enough to nearly kill the resolution, titled “ABA Model Regulatory Objectives for the Provision of Legal Services.” When the Commission on the Future of Legal Services offered the guidelines to the House of Delegates during the ABA’s midyear meeting in February, an amendment had to be adopted reaffirming the association’s opposition to non-lawyer ownership of law firms to make the resolution acceptable.

The point of contention centered on Internet-based companies, such as Legal Zoom and Legal Shield, that offer legal assistance and forms to individuals and businesses who call or email.

Carol Adinamis, president of the Indiana State Bar Association, described Resolution 105 as the ABA “throwing up its hands” in regards to what she sees as online legal service providers attacking the legal profession. She noted alternative providers do not have to abide by the same rules of ethics and administration that lawyers are required to follow, which creates unfair competition.

Adinamis

Discarding the rules, Adinamis said, “takes away from the law as a profession.”

The skirmish over Resolution 105 came a few months after the ABA announced its partnership with Rocket Lawyer to launch a pilot program testing online legal services. Small-business owners in Pennsylvania, Illinois and California were able to ask two questions online of an “ABA-member lawyer” for $4.95. Those who wanted additional legal help would have the opportunity to become a client of an attorney.

In a press release, the ABA billed the initiative, called ABA Law Connect, as providing small businesses with affordable and accessible legal services while also matching attorneys with potential clients.

Bar associations in Illinois and Pennsylvania cried foul and raised questions about the qualifications of the participating attorneys, the ethical concerns of handling questions about the law quickly, and the confidentiality of the process because the online provider was a third party to the attorney-client conversation.

The Pennsylvania Bar Association asked the ABA to identify the local lawyers participating in the pilot, according to President William Pugh. It wanted to confirm the attorneys were licensed, in good standing and had malpractice insurance but, he said, the ABA did not provide their names.

Rocket Lawyer deemed the collaboration a success. Founder and CEO Charley Moore said seeing that his company and the bar association shared the common mission of increasing access to justice and the availability of attorney advice was inspiring.

“Even controversy is good,” Moore said, “because it shines a light on the big problem – legal advice is out of reach for too many people because of the high cost. Now we need to shine a positive light on the many lawyers and innovators, both in the public and private sectors, who are actively delivering solutions.”

Leveraging technology

Moore asserted leveraging technology can provide a “radically efficient system” for lawyers to deliver legal services to clients from anywhere. They can answer simple questions or review and analyze documents. He said consumers have come to expect this kind of service, arguing accessing legal help online is no different from banking online, getting a ride from Uber or purchasing concert tickets over the Internet.

“The fact is that lawyers who don’t use these tools are falling out of date,” Moore said.

To ISBA President-Elect Mitchell Heppenheimer, the primary issue should be protecting clients. He charged the online providers are trying to eradicate the rules that other lawyers have to follow, like prohibitions on unauthorized practice of law, fee splitting and firm ownership, which will put people at risk of being harmed.

Heppenheimer

Heppeheimer served as an Indiana delegate at the ABA midyear meeting. He voted against Resolution 105 even after the amendment was offered. Like Adinamis, he wants the ABA to be “a little more aggressive” in holding the legal service companies to the same standards to which lawyers are required to adhere.

Moore countered his company operates well within the current regulatory framework. “The rules of conduct and the existing rules governing attorneys doesn’t really hinder anything we’re doing,” he said.

Pointing to the mushrooming of online providers, the Commission on the Future of Legal Services maintained the development of regulatory objectives was necessary. Investors plowed $66 million into legal service technology companies in 2012. It ballooned to $458 million a year later and, according to the commission, jurisdictions around the country are considering how to respond.

The commission explained the regulatory objectives are a guide for state supreme courts and bar associations to use as they review and revise their existing regulations.

Terrence Murphy, executive director of the Chicago Bar Association, described the commission’s actions as punting the problem to the states instead of leading a serious discussion with state and local bar associations about how to improve access to justice. Murphy worried states will adopt standards based on what is already being done rather than innovating a way to provide attorneys for people who can’t afford them.

Before the battle over Resolution 105, the Indiana State Bar Association formed the Future of the Provision of Legal Services Committee. This 10-member group, chaired by James Riley Jr. of Riley Bennett & Egloff LLP, has been charged with providing recommendations for how to protect the legal community from the online providers and ensuring the public has access to competent legal advice.

Adinamis is hopeful the committee will submit a report in time for Indiana attorneys to consider during the ISBA’s annual meeting in October.

Access or profit?

During the Law Connect pilot, small-business owners asked a total of 170 questions, according to the ABA. Of the 23 attorneys participating, 18 answered the questions, a quarter of which concerned contracts and business transactions.

Pugh and Murphy disputed their opposition was rooted in trying to protect the revenue that comes from their associations’ referral services. The purpose of the service is not money, of which only a small amount is realized, but to connect people with vetted, qualified attorneys.

Also, like Heppenheimer, they disputed the ABA’s latest moves toward online service providers were about access to justice. If the pilot was about access, the program would have targeted the consumers who cannot afford an attorney to help with landlord-tenant issues, divorce and child custody disputes. Instead, Law Connect offered services to small-business proprietors who likely have the resources to pay for an attorney.

“Our argument is not with Rocket Lawyer. They are what they are,” Murphy said. “The bar associations need to be vigilant in making sure all the checks and balances are in place to ensure the public is protected.”•