A Profession If You Can Keep It: Part III – What Should We Do? Eleven Recommendations for Change (With Qualifications)

Change ahead

(This is a three part series. Read: ‘A Profession If You Can Keep It: Part I – Setting the Stage’   and Part II – The End of Lawyers (Or Something)

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

Part III — What Should We Do? Eleven Recommendations for Change (With Qualifications)

By Stephen Gillers, Elihu Root Professor of Law, New York University School of Law

“Any proposals must address this question: Who will be allowed to participate in the law business, in what capacity, from where, and with what protections for clients, the justice system, and the profession’s core values? The eleven recommendations that follow are offered as a way to start a conversation. None is inflexible.”

1. Create a Single bar Examination with Separate State Scoring

“Similarities in much of the law of U.S. jurisdictions makes separate state bar examinations presumptively unnecessary. . . .[I]t is far less important to identify knowledge of particular rules, or variations on them, among jurisdictions, than a knowledge of the legal concepts generally and demonstrated ability to work through legal and factual problems in a way we understand as ‘doing law’ or ‘thinking like a lawyer.’  It is important to be able to identify issues latent in as fact pattern and to research their resolution under the laws of the jurisdiction whose law applies (as well as to identify which jurisdiction’s law applies).  It tells us nothing about an applicant’s qualification for the bar that she has (temporarily) memorized the particular way the testing has resolved one or another issue.”

“This proposal comes with three qualifications.  First different jurisdictions may wish to set different passing scores for the single bar examination I support. . .  The second qualification . . . [is that] a state may have good reasons to test some aspects of local law and wish to supplement the national bar examination by testing local knowledge.  Frankly, I doubt that any state, save perhaps Louisiana, could justify a supplementary examination and I would be skeptical of any such claim.  But I leave open the possibility. . . .Last, every jurisdiction would have the right to conduct a character examination of any applicant, whether a new lawyer or a relocating one. . . .”

2. Permit Lawyers to Physically Relocate Their Practice from One Jurisdiction to Another without Retaking the Bar Examination

“Lawyers who have been in active practice for a period of years should be able to relocate their practices to any other U.S. jurisdiction without the need to take a bar examination.  This is now the rule in all but eleven jurisdictions.  The ABA . . . envisions a requirement of five years if practice in the previous seven years.  A requirement of three of the last seven years would accommodate the demands of parenthood, for example, without threatening the goals of the rules.  But whatever the temporal requirement, I urge the nationalization of this avenue of admission. . ..Lawyers who do not satisfy the temporal requirement should be permitted to relocate without taking a further bar examination if their score on the uniform bar examination is equal to or greater than the passing score for entering lawyers in the jurisdiction to which they wish to relocate.

A further examination of the relocating lawyer would be defensible in two circumstances:  if the lawyer’s scores on the uniform examination were lower than  the new jurisdiction then demanded of new applicants,  unless the temporal requirements; or in the unlikely event that the new jurisdiction can justify supplementing the uniform examination with one testing local law for all applicants, as described earlier.

“Lawyers should be able to form attorney-client relationships on the Internet, subject to qualifications.”

3. Permit a Lawyer Admitted in an U.S. Jurisdiction to Practice Virtually in any other Jurisdiction within the Scope of Her Competence

“A dramatic consequence of the Internet is that law firms (like other businesses) can as a practical matter sell their services nationwide without leaving home.  Virtual presence can be as nearly as intrusive on a host jurisdiction as physical presence, which is to say that, from afar, a lawyer in any state can have a vibrant practice in any other state for certain kinds of work….Advertising on the Internet, which is cheap and ubiquitous, facilitates this business model for lawyers who can credibly claim a particular expertise that will appeal to clients elsewhere.  Nor can we expect easily to be able to enforce rules forbidding attorney-client relationships in cyberspace.  This is consensual activity often impelled by rational considerations on both sides. . . .The Internet invites a market defined by reputation, price, and competence, not geography.  A virtual market also undercuts the ability of states to use physical location as the basis for control.”

“I suggest that lawyers should be able to form attorney-client relationships on the Internet, subject to qualifications.  First, by entering a jurisdiction virtually, including through representation or solicitation of a jurisdictions’ residents, lawyer will subject herself to the disciplinary and judicial authority of the jurisdiction for claims arising out of the lawyer’s virtual presence there.  She may be deemed to have appointed an appropriate state officer as her sent for service of process.  Second, the lawyer’s home state should commit itself to accept any factual findings, legal (or ethical) conclusions, and sanctions imposed by the host state’s disciplinary authorities, subject only to the usual limitations on full faith and credit owed judicial judgments of a sister state.  In this way, a lawyer cannot misbehave, confident that she can avoid home-state sanction for her conduct.  Third, any lawyer entering a host jurisdiction virtually must identify her jurisdictional limitations (‘member of the bar of State A only’) and the name and address of the regulatory authority in her home state to which complaints can be directed.”

“Finally, most challenging is the situation where the virtual presence is not casual and episodic but rather continuous and substantial, whether or not be design.  I have in mind the possibility that a lawyer in state A will seek to expand her practice to attract clients in neighboring State B through advertising and solicitations aimed specifically at them.  Or without intending it, a State A lawyer’s virtual practice may become significantly populated with State B clients. Virtual presence can, past a point, be the functional equivalent of physical presence.  We should not allow a lawyer physically to open a law practice in State B without formal admission of some kind. When the lawyer’s virtual practice in State B can be said, whether by design or happenstance, to equal physical presence, we should also require admission.  Of course, like much in law, the question will turn on degree.”

4. To Accommodate Cross-Border Legal Advertising, Create a Uniform Rule Identifying Minimum Standards and Disclosure Requirements

“The advertising rules in U.S. jurisdictions are greatly dissimilar.  The need for uniformity in advertising rules is underscored by the national reach of legal ads, but not only on the Internet.  It is neither practical nor necessary to require legal ads to conform to all state variations.  The answer may be different for a solicitation targeted specific potential clients.  State rules can require that solicitations of state residents respect the state’s solicitation rules, thereby treating out-of-state and in-state lawyers equally.  So a rule that imposes a waiting period before contact with a prospective client with a personal injury claim would apply to all lawyers.”  But advertisements, on the other hand, are not targeted, they are generic.”

“A uniform rule for cross-border legal advertisements should require, in addition to appropriate disclaimers and a prohibition against false or misleading statements, that such advertisements contain the name and contact information of the lawyer or firm responsible for the advertisement, the name and location of the advertiser’s regulatory authority, and the jurisdictional limitations of the advertiser, if an individual.  If the advertiser is a law firm, its ad should identify the jurisdictions in which lawyers are admitted.  If states are unable to agree on a uniform rule, then the rule should be that an advertisement satisfies the rule in any jurisdiction if it satisfies the rules in the jurisdiction in which the advertising lawyer or firm practices.”

5. Permit Motion Admission without Requiring an Office or Minimum Practice within the New Jurisdiction

6. Require Lawyers to Have Malpractice Insurance

“Requiring malpractice insurance should be simple, but the resistance is likely to be intense, which is itself odd if not disingenuous if easier national practice proposals are opposed on the ground that they subject clients to incompetent out-of-state lawyers.  Only Oregon now mandates malpractice insurance.  Few if any rules could protect clients as effectively as a rule requiring malpractice insurance, which at least would ensure payment of malpractice judgments up to the limit of the lawyer’s policy and compliance with the preventive measures that insurance carriers require.  One objection will likely be that the cost of malpractice insurance will be passed on to clients but, if true, this also means that those lawyers who do not now have such insurance have a market advantage.  Their clients may not even know about the lack of insurance and most states do not require lawyers to tell them.”

7. Create a Presumption that Unless Lawyer and Client Agree Otherwise, the Conflict Rules of the Jurisdiction in Which the Client Resides (or Does Business) Governs the Client’s Relationship with Counsel

“. . . .I am encouraged to propose this weak presumption because the lawyer and client can choose to replace it with the client’s informed consent.  Rule 8.5(b) [of the Model Rules of Professional Conduct] can only go so far in enabling the parties to predict which jurisdiction’s rules will govern particular conduct in a representation in the event of a dispute.  Unavoidably, the rule states a standard, not a bright line.  The consent provisions of the conflict rules permit lawyer and client to reduce the uncertainty that a standard necessity creates.”

I suggest further that the parties should be able to substitute not merely one rule for another, but all of the conflict rules of another jurisdiction by name. . . .”

“What I propose, and what the Washington, D.C. law allows, is to permit nonlawyers who sire actively involved in a law firm’s work to participate in ownership of a firm.”

8. Require Internet Providers of Legal Products to Include Appropriate Disclosures and Disclaimers Prominently Throughout their Websites, Promotional Materials, and Advertising

“When the Texas legislature amended its unauthorized practice law in response to the court decision finding Quicken Family Lawyer violated the unauthorized practice law,  it specified that the ‘computer software or similar products’ that it was exempting from the  law’s reach had to ‘clearly send conspicuously state that the products are not a substitute for the advice  of an attorney.’  I recommend that, in addition to this disclaimer, these websites must contain the following:

If any lawyers have participated in the creation of the program or its contents, their names, business addresses, and bar status and bar numbers must be posted on the website;

If no lawyers participated in the content or creation of the program, that must be stated;

The organization should be required to file with an appropriate agency wherever it offers its services or products the location of its principal place of business and the names and addresses of its senior officers, with the fact and location of this filing revealed on the organization’s website.”

“The goal here is two-fold:  First to make the provenance of the product clear to the consumer so that there is no ambiguity about the nature of the organization with which she is dealing and, second, to provide the consumer with the identities of those who may have responsibility for the product in the event the consumer believes she may have a claim.  This is especially important for the lawyers behind the product, whose identities may be difficult to discover.  Requiring the lawyers to put their names on the productto accept responsibility for itencourages a level of care that might otherwise be lost.”

“I would not allow the seller to disclaim or limit liability as a condition of the purchase.  This position is consistent with ethics rules that forbid lawyers to bargain with a client for exemption from prospective malpractice liability unless the client is independently represented in the matter. . .”

9. Permit Lawyers to Have Equity Interests and Management Authority in For-Profit Law Firms

“Nonlawyers may manage and may participate in law firm income in many ways. Today, for example, a law firm may include nonlawyers in the firm’s “compensation of retirement plan even though the plan is based in whole or in part on a profit-sharing arrangement.”  This would seem to allow compensation tied entirely to the firm’s net profits as determined at year’s end.  Not allowed is compensation tied to fees in particular matters.  Nonlawyers may be managers of a law firm so long as they are not partners and do not have “the right to direct or control the professional judgment of a lawyer.”

“Allowing nonlawyers to share in legal fees other than through a compensation plan based on profit sharing, or to be partners in law firms, or to have an ownership or directorial interest in professional corporation or association would require significant rule changes.  One change would allow nonpayer partners but add a cap on their percentage interest and impose certain other requirements discussed next.  A second change would allow the same but without limit on their equity participation so long as the entity solely practices law.  The latter has been the rule in the District of Columbia, the only U.S. jurisdiction to permit nonlawyers partners and owners, since 1991.  It has caused no problems according to D.C. Bar counsel. . . . A more dramatic change would allow a business organization to own a law firm.  Wal-Mart could place one of its stores along other service providers, like pharmacists and opticians.  An even greater change would allow law firms to go public and sell shares on a stock exchange, as is now permitted in Australia.”

“An important distinction is needed here. What I propose, and what the Washington, D.C. rules allow, is to permit nonlawyers who are actively engaged in a law firm’s work to participate in ownership of a firm.  But the firm must be a law firm, which means it is a single disciplinary, not a multidisciplinary, entity.  In 2000, the ABA emphatically rejected a proposal to permit lawyers and nonlawyers to combine in organization that offer both legal and other services. . . .[T]he ABA not only  opposed multidisciplinary practice; it went further and opposed nonlawyers ownership ownership in law firms that offer legal services only—that is, that were not multidisciplinaryand also opposed sharing legal fees between lawyers and nonlawyers.  Allowing nonlawyers to participate in the legal industry in either of these ways was seen as posing an unacceptable threat to the core values of the profession. . . .The prediction of harm was intuitive.  The risk was deemed too great to take a chance.  It is doubtful whether any empirical evidence could have made a difference.”

“Allowing nonlawyers to become partners (or have equity interests) in a law firm has obvious benefits.  It will make it easier for a firm to attract talented professionals who wish to have a vote in the management and share in the profits of their businesses on a part with lawyers and for whom status as an employee, even a well-compensated one, is deemed inadequate recognition of their talents.  With other accomplished professionals on board, a firm can more easily provide services ancillary to legal services (called “law-related services”),  as Model Rule 5.7 permits—for example a financial advisor can contribute to the work of  a firm that offers estate planning advice, an environmental scientist or architect can aid the law clients of  a construction law firm, a licensed investigator can prove valuable to a criminal defense form, and a doctor or  nurse may benefit a medical malpractice firm.  But even granting these advantages, what can be done to ensure that the presence of nonlawyers as owners and managers does not threaten the core value of the profession that the ABA identified in 2000.  What can give us comfort that the nonlawyers will not lead lawyers astray?”

“Many might argue that no comfort is necessary because the premisethat the nonlawyers will seek to undermine the core values and that lawyers will either succumb or stand quietly byis wrong, even insulting, to all concerned,  Lawyers have no right  to assume, they may argue, that the presence of others poses a threat to legal clients.  Lawyers have no basis to claim moral superiority as a categorical matter.  As it happens, we do not have to take sides in this contest, let alone, empirically test the competing arguments assuming that it would even be possible to do so.  We should be able to reduce the risk if nonlawyers imposition sufficiently to enable us modestly to allow others into the legal services market. “

10. Ease Temporary and Permanent Admission to Practice in the United States for Applicants with Foreign Law Degrees

11. Increase the Likelihood of Competent Representation

“How do we now assure quality?  We do so ex ante with educational requirements and a bar examination.  Thereafter, we subject lawyers to civil law liability for malpractice or breach of fiduciary duty.  Civil law claims compensate for actionable conduct causing harm.  They operate retroactively, not preventively.  But their existence should also encourage lawyers to take care to avoid liability in the first place.  A relatively new device to foster competence is continuing legal education.  But the CLE hurdle is often quite low and easily satisfied. Yet another vehicle meant to signal special competence is certifications in a specialty.”

“How might we better assure competent work?  Several ways are apparent, although a few will meet strong resistance.  First, the CLE requirement can be more demanding; no self-reporting by a lawyer who has read or listened to a tape while driving.  Attendance at least two full days a year at as live CLE event can be mandated.  Second, states can raise their bar passage scores.  To the extent that bar examinations test skills, legal reasoning, judgment, and general knowledge, not the minutiae of a state’s practice, higher passing scores should improve the quality of the bar.  Third, we can revisit the idea of specialization, and heighten the requirements, so that lawyers skilled in an area of practice can offer credible additional credential.  The heightened requirements can include additional coursework, practice experience, and a further examination.


“Institutions and government will sometimes change rules to facilitate or encourage behavior deemed beneficial.  More often, perhaps, they react to changes when and as appropriate.  Reaction often will be the wiser course, so as to prevent precipitous action.  What is not wise is intransigence when the gap between socially beneficial conduct and the rules that constrict the conduct grows large.  We have entered such a period for the rules governing the legal marketplace, and it is in large part a product of changing technology and the cross-border activity of lawyers and clients.  Reasonable people will disagree on when and how the profession and the courts should react to this gap.  But doing nothing is not an option.  I hope my recommendations will advance the conversation about how the profession should respond.”

Editor’s Note: This has been a brief abridgment of a comprehensive study by Professor Stephen Gillers, denoted “Public Law & Legal Theory Research Paper Series, Working Paper No. 12-18,” released in 2012. According to Professor Gillers, “[t]his article benefits immeasurably from my work on the American Bar Association’s Commission on Ethics 20/20, the ideas of my colleagues there and the staff of the ABA’s Center for Professional Responsibility, and the testimony of the witnesses before the Commission.”

While this paper was released in 2012, this is a dynamic, evolving area. As mentioned, court cases relating to the subjects covered are wending their way through the courts. Various proposals will be considered throughout the country in the coming years.

For those who wish to delve further, the report may be accessed in in the Hastings Law Journal Vol. 63:101) 2012. An electronic copy is available at http://ssrn.com/abstrract=2026052. The paper includes extensive citations.

All opinions, advice, and experiences of guest bloggers/columnists are those of the author and do not necessarily reflect the opinions, practices or experiences of Solo Practice University®.

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