by Mark Britton
As the founder and CEO of Avvo.com, I recently spoke on a panel at Stanford’s FutureLaw Confer- ence. Rather than at- tending only my session,
I decided to hang around to hear others’
ideas regarding the future of law. There
were a number of expected themes: The
rise of the Internet, cloud-based computing, document automation, etc. But the
unexpected star of the show was “
unauthorized practice of law” (UPL) restrictions. I believe I was the first speaker
to conjure this well-known ghost, but it
wove itself through the day like a spectral smoke refusing to be ignored.
The FutureLaw conversation gravitated towards two closely related UPL
restrictions: non-lawyer legal services
and fee-sharing. In other words, those
who are acting like lawyers and those
who are simply trying to share in lawyers’
income. I believe these topics are getting
more attention because so many lawyers
are struggling to stay in business these
days. Moreover, never has there been
more competition from non-lawyer legal
services like LegalZoom, RocketLawyer
and Nolo, which all give consumers myriad opportunities to avoid lawyers.
The UPL rules purportedly exist to
protect the unwitting legal consumer.
The justification for restrictions against
non-lawyer services is essentially that
carpet-bagging non-lawyers are more
likely than law-school-trained lawyers to
deliver substandard or fraudulent legal
services. Similarly, the justification for
restrictions on fee-sharing is that non-lawyers (usually money-grubbing businesspeople) are likely to prioritize profits
over quality legal services.
While each of these UPL arguments
has theoretical merit, lawyers are being disingenuous if they don’t admit a
vested and possibly primary justification of restricting potential competitors.
Lawyers are panicked that anyone who
spends much time at the regulatory table (accountants, insurance brokers, or
mortgage brokers — just to name a few)
might take a bite out of the lawyer pie.
They are similarly concerned that those
money-grubbing businesspeople might
introduce streamlined operations or
artificial intelligence that could further
shrink the pie.
At the FutureLaw Conference, Stanford law professor Norman Spalding
called this spade by name and suggested
that we might commend lawyers for being so business-savvy in keeping their
competition at bay. While I believe that
Professor Spalding made this amusing
observation to stoke debate, I assure you
that many lawyers support this thinking.
Not only have hundreds told me as much,
but the proof is in the litigation pudding
and the plethora of state UPL advisories.
Unfortunately, I cannot agree. The
more time I spend both inside and outside the profession, I am increasingly
convinced that UPL is hurting lawyers
more than it is helping them.
How UPL is Hurting Lawyers
Let’s start with fee-sharing. My primary
argument against restricting fee-sharing
is that it keeps businesspeople and their
innovation out of the legal profession by
not giving them any incentive to partici-
pate. Let’s face it, monetary gain drives
innovation. The father of economic theo-
ry, Adam Smith, put it very simply in his
1776 book, An Inquiry into the Nature and
Causes of the Wealth of Nations. He said:
Every individual necessarily labours
to render the annual revenue of the
society as great as he can. He gener-
ally neither intends to promote the
public interest, nor knows how much
he is promoting it . . . He intends only
his own gain, and he is in this, as in
many other cases, led by an invisible
hand to promote an end which was
no part of his intention.
The UPL rules tie the “invisible hands”
of businesspeople interested in the legal
profession. The only free hands belong to
the lawyers, and they have shown little
interest in using them. Innovation and
business excellence in the legal industry reside somewhere between stunted
and non-existent. It is one of the reasons
LegalZoom so easily acquired 70 percent
consumer brand awareness: they had
Lawyers’ lack of business intelligence also drives my arguments
against restricting non-lawyer legal
services. Put simply, by restricting non-lawyers, lawyers are reducing the size
of their addressable market. Currently,
lawyers service only roughly half of
the high-income U.S. population and
less than one-fifth of the low-income
population. Principal factors in these
low rates are that consumers don’t understand the value of legal services and
don’t believe they can afford a lawyer.
In other words, everyday people don’t
understand what something as simple
as a will could do for them — they just
understand it will be really expensive.
To the extent that non-lawyer services
can work with these consumers to help
them enter the legal market, this is great
for lawyers who will have a larger addressable market for their more sophisticated legal services in the future. Lawyers should dream of an exponentially
larger addressable market — where legal
advice is as accessible as travel advice,
where a legal check-up is as common as
the medical one. Non-lawyer legal services can help realize this dream.
I’m aware that while non-lawyer
services can help expand lawyers’ future addressable market, they can also
shrink it by competing with lawyers. In
many ways, it is already happening with
LegalZoom and its non-lawyer brethren
unabashedly positioning themselves as
faster, cheaper, and simpler than lawyers.
But I still think the opportunities present-
Hurting Lawyers More than Helping