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Bars Can’t Handle The Regulation of Non-Lawyer Providers, So Let Us Solos/Smalls Compete

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To the Commission on the Future of Legal Services,

These comments respond to the Commission’s issues paper seeking feedback on whether state bar associations ought to consider regulation of non-legal service providers – ranging from online how-to publications and websites to human-supported or technology-enabled form-filling services. The short answer – don’t. Because just as Tom Cruise’s character couldn’t handle the truth, the state bars can’t handle the regulation of non-lawyer service providers. Moreover, there’s no need to, because they are already subject to three higher and more effective forces of regulation: the Federal Trade Commission, market forces and e-shaming .

I’m not suggesting that non-legal service providers are perfect, or that they expand access to justice the way many claim. Some day they may – but they’re not there yet, and in this regard, the arrogant proclamations that tech has solved the problem seem premature at best.

The reality is different. Like any emerging technology, non-legal service providers are enduring serious growing pains.  A quick search on the web shows hundreds of complaints about Legal Zoom (here), Rocket Lawyer (here,  here and here) and Avvo (here). Most state bars can scarcely keep pace with the several dozens of complaints lodged against lawyers. How could they ever effectively address consumer complaints about, and oversee compliance with non-legal service providers?

The fact is that state bars aren’t well suited to address the problems that consumers have about these services. If you look through the complaints, many common gripes emerge: abysmal customer support, deceptive billing practices and sluggish service and response times.  Most consumers simply want the money back – a remedy that state bars can’t provide anyway. And even if one state bar were to shut down a service, it would simply re-emerge elsewhere.

More effective mechanisms exist to address deception by non-lawyer providers. Consumers can file complaints at the Federal Trade Commission and the Better Business Bureau or air their gripes online. There’s no need for the state bars to attempt to replicate existing regulation, when at best, they could only serve as a pallid shadow of these systems.

Does that mean that there’s no role for state bars in dealing with non-legal service providers? Absolutely not. Foremost, state bars should start by fulfilling their job of educating consumers about legal services. For example, state bars can educate consumers about how services like Legal Zoom and Rocket Lawyer compare to hiring a lawyer (on the one hand) and relying on entirely free tools (like Court self-help programs or using resources at state secretary offices to incorporate).   But more importantly, they ought to stand out of the way and let solo and small firms compete with non-legal service providers instead of imposing more and more regulation that deters members of the public from using lawyers to begin with.

Here’s a list of what needs to change. I’ve covered many of these topics at MyShingle, a blog that the Commission should be reading:

Abolish Trust Accounts – They don’t keep client money safe  and have made it difficult for lawyers to accept credit card payments (like non-lawyer providers) and deposit the money directly into operating funds to facilitate cash flow. Likewise, make it easier, not harder to accept flat fees.

Eliminate Unfair and Ridiculous Advertising Regulations – Lawyers are subject to a completely ludicrous maze of regulations governing advertising –which don’t apply to non-lawyer providers . Compliance adds cost and puts attorneys at a substantial disadvantage at a time when many consumers are turning to the internet to find lawyers. One rule ought to apply: is the communication deceptive, and leave it at that.

Create A Safe Harbor for Innovation – Many solos and smalls won’t dare innovate because the consequences can be draconian . Let’s give solos and smalls a safe harbor to innovate  – and if firms can demonstrate a good faith effort for undertaking an action, give them a pass if it infringes on ethics and doesn’t substantially harm consumers.

The bars have enough work to do in helping to make lawyers relevant again. They shouldn’t waste their resources trying to stop a train that’s already left the gate. Moreover, regulating non-legal service providers won’t make lawyers relevant – or bar associations either. Isn’t that what this proposal is all about anyway?

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