(This is a three part series. Read: ‘A Profession If You Can Keep It: Part I – Setting the Stage’)

How Information Technology and Fading Borders Are Reshaping the Law Marketplace and What We Should Do About It

According to Professor Stephen Gillers of NYU School of Law, “[d]evelopments“ external to law practice and the insular world of lawyer regulation will change the way we practice and will marginalize the effectiveness of regulation unless that also changes.  ‘Disruptive’ is a helpful word to describe these external developments.  I do not think the disruptive externalities portend anything like the death or end of law, but instead, only a need for reformulation (with the accent on ‘reform.’. . .  I am not worried about the profession, which will not die, recede, or seriously weaken.  It will just reorganize, find new products, find new ways to deliver old products, and locate new products.  It is already doing these things.  My purpose is to examine how professional regulation must adjust to the disruptive externalities; that is, how it must adjust or slide toward irrelevance.”

An Illusion of Control Is Not Good For Lawyer Regulation

“Much has been written about the constitutionality of rules regulating who may practice law and where.  Some of the harsher exclusionary rules have been struck down under one or another constitutional provision.  These have concerned the clash between state unauthorized practice rules and federal law, rules excluding out-of-state residents from a jurisdiction’s bar, and rules allowing a state’s residents to gain easier admission than could out-of-state residents.  Perhaps we have reached the end of the line, at least for the immediate term, for whatever the Constitution has to say on the topic.  Perhaps not.”

“My focus, however, is policy, not law.  What makes sense for the new world described here?  How can we best move willingly from the nineteenth-century ideology of regulation to the twenty–first century’s reality of practice while embracing the American bar’s traditional values?” The old rules depended on the illusion (even self-deception) that rules rule, full stop.  They operated from the complacent assumption that behavior will conform to rules.  The new California and ABA rules were adopted to conform rules to behavior.  The lesson from this experience is that lawyers in their bar groups and judges in their chambers cannot write rules that stray far from the rational choices of lawyers and clients and expect obedience to what they demand.”

“There is a lesson behind this lesson, which will be the main theme of this article.  Once upon a time, lawyers worked at a desk.  The desk was in a place (a state) and the government of that state (via the courts granting a license) validated the lawyer’s presence at that desk in that state.”

“Lawyers in their bar groups and judges in their chambers cannot write rules that stray far from the rational choices of lawyers and clients, and expect obedience to what they demand.”

“Without validation there was no lawyer and no desk.  The license stopped at the border of that state. . . .If lawyers stayed put, if their clients came from the same state that licenses them, if their firms had one office, if physical travel to other places was the exception, and virtual travel limited to telephone and telex, then defining the license by the geographical boundary of the state that granted it made sense; or at least it didn’t create inconvenience and widespread disobedience.  The licensing regime was not driven by a wish to keep other lawyers out because those lawyers worked at their own desks in their own states and also stayed put.  In a sense, each jurisdiction was a cocoon.”

“Geography or place remains the governing principle as a formal matter–it still animates many of the rules regulating lawyers–but at the expense of a widening gap between those rules and the conduct of the bar.  Three forces have undermined the idea of a licensing authority coterminous with a jurisdiction’s physical border.  First, technology does not recognize borders.  Second, physical travel is easy if not always pleasant.  Third, clients’ needs increasingly cross borders as they also take advantage of technology and easier travel.  These changes, which will only become more prominent, mean that we require a new (or additional) governing principle beyond geography.”

WHAT DO WE GET FOR ALL OF OUR LAWYER REGULATION?

Who Can Be a Lawyer

According to Professor Gillers, rules governing lawyer regulation “fall into two neat categories: Rules that determine who can be a lawyer and rules that determine how lawyers must, or must not behave.”

In his comprehensive article, Prof. Gillers discusses three rules governing who can be a lawyer: (1) An educational requirement; (2) an examination requirement; and (3) a character requirement.  As he notes:  “A person must satisfy all three rules unless excused.”  Attorney-readers of this blog are no doubt familiar with the requirements; indeed those providing services to attorneys often have a passing knowledge of the rules.  Now, at least from my perspective, is the heart of the discussion.  Professor Gillers continues:

The Rules Governing Lawyers

“So far, I have identified rules that control entry into a jurisdiction’s legal profession.  Separate and exponentially more complicated sources govern the conduct of the admitted lawyer.  These include cases that define legal malpractice and breach of duty as a fiduciary (which a lawyer is), ethical or professional conduct rules under various names; and legislation and case law that control how law is practiced. . . .These rules fall into two categories, one of which most concerns me. . . .The rules in the second category, the focus here, address how the law marketplace is organized and how it sells its product.  They answer such questions as who may trade in legal services in the jurisdiction; what they word in” means in an age of virtual communications; when law practice is unauthorized; how a law office may and may not be organized; and who may profit from, own, and manage a law firm. In short, these rules define the legal marketplace by tightly controlling the organization and operation of the supply side of the producers of the service and who may earn money from it.”

DISRUPTIVE EXTERNALITIES

“By disruptive externalities, I mean real-world developments that exert pressure on the traditional legal regulatory model.  Some developments may be outside the traditional power of the regulator’s authority or impossible to police effectively.  One example is computer programs that dispense legal advice to consumers. Two other examples that defy effective regulation are virtual cross-border advice and legal processing outsourcing (“LPO”).  Alternatively, a development may be compliant with existing regulations, or even promoted by them, but inspire unanticipated changes.  An example is the incipient move toward a uniform bar examination, which may make it difficult to resist movement toward a national, or at least a multistate, law license.  Yet other examples are the increasing move toward uniformity in legal rules across U.S. jurisdictions, with differences modest and easy to discover; the fact that federal law, which is the same everywhere, is pervasive; and the fact that U.S. law and the law of many nations is available to anyone, anywhere, with a computer terminal and a subscription to Lexis or Westlaw.”

“These developments and others can be sliced, diced and recombined in various ways.  Whatever the organization, however, I lesson, I contend, is the same: The nineteenth- and twentieth-century regulatory models will buckle under the weight of the twenty-first century’s innovations. Buckle, not collapse, but still no longer serviceable.   Comparison to print media helps explain some of the disruption.  What print media–newspapers and magazines–sell is information (fact and opinion) and little else.  The effect of technology on the media’s business model is now well known, although solutions remain elusive.  How can the media generate the required revenue from subscriptions and advertisement when a consumer no longer needs to buy a hard-copy publication and when online competition is offering commodity news (in other words, news everyone has, like what the President said yesterday. . . .”

Lawyers without Borders

Professor Gillers discusses the fading of place as a basis in various scenarios taken from actual cases.

Virtual Presence.“What about an attorney admitted in DC but not Massachusetts, who lives in Mass. and did most of her work “from home or from an office space in Boston?”  Referring to another case, Professor Gillers noted than “under the nineteenth-century regulatory model, it is not the law you practice, it is where you practice law.”

Virtual Law Offices.  “The same laptop allows us to ‘talk’ to colleagues, clients, and adversaries as though we were in the office next door or a building across town.  And it accommodates international calls for next to nothing using Skype or other voice-over-Internet services.  Lawyers have remarked to me that even when in their offices, they communicate with colleagues down the hall or a floor above via e-mail, not in person.  The same is true in my law school.  As video conferences become seamless and crisper, any lingering sense that meetings should occur in physical space will be seen as sentimental.  All but long and important meetings will rapidly succumb to convenience and cost. I predict that jury trials will remain live and in person, but many trials to judges and arguments will be held in virtual courtrooms.  Why not?”

Online Legal Research.  “Technology has erased physical space as the repository of physical information. . . .It has made quaint the place that once housed them–the law library. . . .Who today depends on the law library for research?  Our law libraries are now digital, so the law of nearly anywhere is available nearly anywhere. . . .The change in  the source of legal information  means lawyers now take their law libraries with them. . . .The hard copy that anchored us to place is history, and with it so is one of  the few obstacles to the practice of  law from anywhere…. [T]echnology further undermines reliance in a physical place by allowing us to access on that same laptop via flash drive, a virtual private network, or “cloud,” any documents we may need to do our work, including drafts of contracts and briefs.  We can access our office files from 10,000 miles away.  There is no practical limit on volume.”

Law Without Lawyers

Computer Progams. “A computer, . . .with seemingly limitless memory and capacity for intersection with a live user (formally called ‘a client’),  can be programmed to do what lawyers do, at least for routine tasks–ask questions, follow-up questions, and so on, eventually delivering  document if desired.  . . .[A] program in a ‘cloud’ can contain a vast library and accommodate many factual variations and jurisdictional differences. . . .”

“A computer can. . .answer questions and produce legal documents tailored to a user’s particular needs under the law of any jurisdiction.  Like a tax preparation program, a law program can respond to a consumer’s selections with simple questions, the answers to which determine the next question.  It can do this for estate plans, divorce documents, separation agreements, contracts for the sale of a home, and simple bankruptcies.  It can generate forms to incorporate a small business, to apply for not for-profit status, to create a partnership, to register a trademark or copyright,” and so on.  In short, computer programs can offer products that are part of many lawyers’ inventory of routine services, and will be more effective than traditional services to the extent that the programs encompass a manageable universe of options—especially if they are form-driven, requiring a “fill in the blanks” orientation, rather than judgment.”

“Self-help of this nature is not advisable for all clients.  It may be especially unwise if the matter is complex.  But that is not the question.  It is available to those who elect it. . . .The simple fact is that some legal services can be mass-produced, standardized, and commodified.  Lawyers have long known this.”

Law Without Law Firms

Multidisciplinary Practice.   Following what has happened in tax practice, where lawyers take their skills to accounting firms, Professor Gillers believes that the model should work  elsewhere.  “Take, for example, multidisciplinary practice.  The ABA rejected a multidisciplinary practice proposal that would have allowed lawyers to invite nonlawyers to join law firms and offer its clients services in addition to  legal services.  But nothing stops lawyers from joining entities that are not law firms and partnering with nonlawyers, so long as the service they offer is not within the lawyers’ monopoly.  One candidate for compliance may be compliance work.  This service looks a lot like law and may skirt close to the lawyer’s realm—after all, compliance with what?– but it is apparently sufficient to avoid claims of unauthorized  practice.  Perhaps that is because defining a rule’s requirements which is legal work is not the same as implementing the requirement (which is compliance).”

“Specialized knowledge will often define the borders of a lawyer’s competence with greater assurance than will the geographical borders of his licensing jurisdiction.”

The Law of Anyplace.  “This Subpart differs from the earlier discussions of lawyers without borders. That discussion posited that the physical location of the lawyer has receded (not disappeared) as a useful basis for regulation.  Here I propose that the governing law also has receded as a useful basis for regulation.  The two predicates–law and place– are distinct.  The lawyer may be in a virtual place, which means the lawyer can be anywhere physically.  Separately, the law that informs the lawyer’s work may have no connection to the place where the lawyer is.  Of course, law, like place, remains a factor in lawyer regulation.  A lawyer has to be some place, and the law of a place (though not the place the lawyer is), must be an ingredient in the legal service to which the lawyer’s work contributes.  The premise, however, is that what the law is, like where the lawyer’s place is, has declining utility to the goals of regulation, including licensure.

“Three interrelated developments have diminished the importance of home-state law. . .as a useful and effective organizing principle for the regulation of the bar: . . .(1) increasing  homogeneity and accessibility of law, (2) increasing lawyer specialization, and  (3) the long-standing ability of contracting parties to choose what law will govern their agreement, the identity and nature of the tribunal that will resolve any disputes under it, and the location of that tribunal that will resolve any disputes under it, and the location of that tribunal.”

THE SUM OF THE PARTS

“We can have law without either lawyers or law firms.  On our laptops or in a ‘cloud,’ we can carry a vast law library and any documents we may require for our work.  Even without a laptop, we can access the same material from anywhere in the world with an Internet connection and easily available programs.  We can communicate from anyplace with anyone, anywhere, in text, video, or voice.  Our physical location can be hidden from, or in any event, not revealed to, anyone, including courts, clients, adversaries, and regulators.  Within modest limits, we can agree to resolve disputes anywhere, before anyone we choose, under any law we select or no specified law.  The law anywhere is growing closer to the law everywhere else, and federal courts can override local control of law practice.  Specialized knowledge will often define the borders of a lawyer’s competence with greater assurance than will the geographical borders of his licensing jurisdiction. . . .”

“The traditional model of lawyer regulation cannot expect to police this new world.  It can pretend to do so, and on rare occasions it will discover a miscreant and punish her as an example to others and thereby affirm its power and legitimacy in its own eyes.  But it will become less effective than Prohibition-era law enforcement.  What then should enlightened regulators do, not because they legally must but because they should?”