Don’t Show Us the Money, Legal Tech, Show Us the Data If You Want to Avoid Regulation.

My respected colleague and legal tech pioneer Richard Granat  fears that hundreds of new entrants to legal services markets may be at risk if subject to some of the proposed regulation outlined in an issues paper released last month by the ABA Commission on the Future of Legal Service, and available online here. The Commission asks whether regulation might be appropriate for some of the automated document services and other legal information services available online for use by consumers. Richard says no, and with good reason – regulation of legal information products like Nolo Press would run afoul of the First Amendment, while regulation of emerging legal start-ups might repel venture capital, and sink many of these companies before they can get off the ground. Thus, Richard urges the legal tech community to express their views to the Commission (comments are due April 28). But lawyers need to weigh in as well – and here are some of my thoughts.

Show us the data, legal tech! 

Leaving aside legal information products by Nolo which are a red herring (as Richard says, regulating information is unconstitutional), should other types of non-lawyer legal services providers — like automated document preparation or legal matching services — be subject to oversight by state regulatory bodies?  That’s a difficult question to answer – because unlike lawyers’ acts of malfeasance, which are religiously tracked and reported by regulatory bodies, there’s little information available on whether consumers have been harmed by non-lawyer providers. Sure, many lawyers will eagerly share how they make money off the backs of consumers screwed by companies like Legal Zoom. But is this information merely anecdotal — or are non-lawyer service providers causing harm to consumers?

As Peter Drucker says , “you can’t manage what you can’t measure.” If we don’t know whether non-legal service providers are harming consumers, how do we even know whether there’s a problem for regulatory bodies to manage.  The solution lies in data – and here, the legal tech companies hold the cards. So in the interest of transparency and data analytics (two hallmarks of the #altlaw movement), the Commission should ask legal tech companies to voluntarily report the following data:

• How many consumers use your product/website annually?
• What is the average per-consumer spend at your site?
• How many times have consumers complained about a product or asked for money back?
• How many times has your company been sued in connection with a product or service that you offer?

I can’t imagine that legal tech companies would have a problem disclosing this information. After all, legal tech companies routinely accuse lawyers of making the law inaccessible to consumers to protect their turf.  So here, legal tech companies could take the lead and make their data freely available so the Commission can determine whether a problem actually exists.

Let’s create an equal playing field

Both Richard Granat and many legal tech companies insist that the goal of legal innovation is access to justice. Fair enough. But if that’s the case, shouldn’t we have a level playing field that reduces barriers to entry for both lawyers and legal tech providers?  Thus, why not eliminate lawyer trust accounts  and relax rules on referral fees  so  lawyers can compete with Avvo , which as a non-lawyer entity, isn’t subject to either restriction . Why not subject both lawyers and non-lawyer service providers to a simple no deception standard in advertising instead of subjecting lawyers to ever-changing regulation that puts a chill on many solos or smalls who could lose their livelihood if they run afoul of advertising rules?   By creating a level playing field for legal tech and lawyers, clients benefit. And isn’t that the point of legal tech, after all?