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Solos & Smalls – Time to Weigh in On Changes to California

Last week, the State Bar of California released for public comment several proposals for regulatory reforms developed by the California Task Force on Access Through Innovation of Legal Services. Designed to spur innovation and expand access to justice options, the task force proposed three key reforms

  • Narrowing restrictions on the unauthorized practice of law (UPL) to allow persons or businesses other than a lawyer or law firm to render legal services, provided they meet appropriate eligibility standards and comply with regulatory requirements;
  • Permitting a nonlawyer to own or have a financial interest in a law practice; and
  • Permitting lawyers to share fees with nonlawyers under certain circumstances and amending other attorney rules regarding advertising, solicitation, and the duty to competently provide legal services.

Not surprisingly, California’s proposals have solo and small law firm attorneys running scared. On various solo and small Facebook groups and list serves, lawyers have expressed concern that non-lawyers who lack adequate knowledge and training will lead clients astray. To be fair, these concerns aren’t entirely unfounded. After all, California itself was home to massive foreclosure scams including one involving a company that marketed foreclosure and eviction delay services to homeowners and then had them sign fake deeds to suggest that the properties had been conveyed to fictional third parties. However, California’s proposed reforms deal with these potential dangers head on by proposing to subject non-lawyer providers to some degree of regulation (As an aside, the appropriate amount of regulation is one of the subjects open for comment – in my own view, some kind of sliding scale is appropriate to avoid saddling smaller and individual non-lawyer providers handling tiny law matters with onerous and costly compliance requirements).

Others raise different concerns about the California initiative. ATL Solo and Small Firm Columnist Steven Chung questions whether the proposed rules will actually increase access to justice and reduce legal costs, or instead encourage venture backed firms to come in with services or Uber-type bidding platforms designed to target those clients who can afford legal services but don’t want to pay exorbitant fees. And while I’ve always been suspicious of the motives of for-profit legal tech companies that raise the A2J flag as a marketing device, the fact of the matter is that many legal services are too costly for the value provided. Should consumers – even those who have the money – have to pay upwards of $5000 or more for a relatively uncomplicated divorce or estate plan when the work can be done through forms and automation? In today’s world, we lawyers must constantly prove our value – and there’s nothing wrong with that.

I don’t necessarily agree with all of the proposed reforms. My main beef is that the proposals focus too much on creating new categories of providers without also examining ways to loosen up regulations on solo and small firm lawyers (specifically, trust accounts and onerous advertising regulations and bonafide office rules) so they can compete and offer services at lower costs. That was the topic of my talk at 2 Civility which should soon be available online.

Moreover, at some point, California and other states that implement reform will have to come to grips with the reality that non-lawyers’ inability to bring cases to court can force opponents to take advantage of them in some cases. In my practice area, I often work with a land company that helps landowners negotiate easement rights and charges less than the fee that an eminent domain attorney would take. The system works great if the parties can reach settlement – but often, once a pipeline realizes that the land company can’t defend a suit in court, it will up the ante. These problems can also be solved – indeed, allowing for fee splitting between lawyers and non-lawyers can give non-lawyers incentive to team with lawyers if they find themselves in a pinch. But again, the potential for unequal bargaining power when a litigant is represented by a non-lawyer against a well-heeled firm can’t be discounted entirely.

These critiques aside, I strongly disagree that the California initiative will harm solo and small firm lawyers and our clients. To the contrary, the proposed reforms create enormous opportunities for us to develop new services that make our legal services more relevant and convenient to our clients’ lives. Imagine, if a family law attorney could share fees with a social worker and offer some kind of combined divorce+wellness product. Or if a tutoring company could make lawyers available to its clients to handle special education cases through some kind of fee sharing arrangement? There are so many ways that we as solo and small firm lawyers can make ourselves more relevant and in doing so, more sustainable. That’s reason to celebrate, not to cower.  

Most importantly, no matter where you are licensed or what your position is concerning the California proposal, it is critical for solo and small firm lawyers to make our voices heard. Whether you have real stories about how your clients were harmed by non-lawyer providers or services or how you developed an innovation that was stymied by bar rules, you should share your experience with the State Bar. Tech companies and vendors of legal services will be weighing in to defend their interests, and as solos and smalls, we must make our voices heard.  Deadline for comments on the California Proposal is September 23, 2019 and they may be emailed to E-mail: atils-pc@calbar.ca.gov