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Future of the Practice – Part 2: How Can Lawyers Better Serve the Public?

To survive and thrive in the 21^st century, and to continue serving the public adequately, attorneys can no longer muddle through with business as usual.

Wide swaths of the public are unable to get their legal needs met. Innovations in technology and other changes in society continue to shift how legal services can be accessed and delivered. Bias, complexity, discrimination and lack of resources undermine the public’s trust and confidence in the justice system.

These were the top concerns raised a couple years ago by the American Bar Association’s Commission on the Future of Legal Services, which also made several recommendations on solving these conundrums that seem well worth considering. Doing so, the commission wrote, would bring about the “significant change … needed to serve the public’s legal needs in the 21^st century.”

Although there have been sustained efforts to expand access, most of those in poverty and the majority of moderate-income people cannot afford representation, the commission found. This means the public fails to obtain effective assistance and litigants come to court unrepresented, which adversely impacts all parties involved. At the same time, many lawyers, especially younger ones, are unemployed or underemployed, hemmed in by the traditional practice business model and the profession’s resistance to change, the ABA noted.

Technological and other innovations to assist the public in meeting their legal needs include experimental projects on the part of courts, bar associations, law schools and some lawyers, in areas like artificial intelligence, alternative billing and unbundled legal services. Against this backdrop, new providers of legal services continue to proliferate and create different choices for consumers and lawyers, the commission pointed out.

Public trust and confidence is undermined by the facts that the profession fails to reflect the diversity of the public, conscious and unconscious bias stands in the way of fairness and justice, the system’s functioning remains opaque to the average person, the criminal justice system is overburdened by mass incarceration and inadequate resources, and inadequate funding of courts on behalf of federal and state governments, the commission wrote.

The ABA Commission put forth a series of a dozen recommendations to help solve these stubborn challenges. For lawyers and law firms, these include supporting the goal of providing some type of effective assistance for all “essential civil legal needs” regardless of a person’s ability to pay, keeping abreast of relevant technologies, partnering with those in other disciplines and the public to gain insights about innovations in service delivery, and working to advance diversity and inclusion through updated policies, standards and practices.

To reform the court system, the commission recommended considering regulatory innovations such as exploring how legal services are delivered by Internet-based platforms and through alternative business structures. Courts also should become more accessible physically and virtually, through streamlined processes, multilingual materials and alternative dispute resolution systems, the ABA recommended.

Elsewhere in the public sphere, the commission recommended reforming the criminal justice system by decriminalizing minor offenses and adequately funding public defender offices, among other changes; vastly expanding resources to support longstanding efforts to successfully address the public’s unmet needs through legal aid and pro bono efforts; and measuring the outcomes of any established or new models “to evaluate effectiveness in fulfilling regulatory objectives.”

As for the ABA itself, the commission recommended that it establish a Center for Innovation, create guidelines for state bar associations and others to develop and administer “legal checkups” for attorneys and law firms, and, along with other bar associations, to “make the examination of the future of legal services part of their ongoing strategic long-range planning.”

Which seems wise, because however thoughtful and well considered, one bar association report is not going to singlehandedly change legal services delivery in a way that solves the access and trust problem while assisting unemployed and underemployed attorneys. But a persistent, strategic effort just might stand a chance.

Attorneys Should Do Homework About Cloud Security

Storing info in the Cloud can be dangerous.

Attorneys who do their due diligence need not be overly concerned about the security of storing their firm and client information in the online “cloud,” the network of servers that operate as a single entity, to which users connect through their computer, tablet, phone or other device.

That due diligence includes research into the various providers, asking questions about their business practices, choosing one with a track record, and potentially negotiating for certain standards and practices, such as those promulgated by the National Institute for Standards and Technology, a federal government agency.

Larger cloud providers are less likely to negotiate such details, but they are more likely to publish what they do provide, and they might be more reliable overall. Lawyers and firms should ask smaller companies detailed questions about security certificates, risk management programs and adherence to industry standards.

Although attorneys and firms who do not yet have a dedicated cloud provider are storing most of their information on a local server in their utility room or closet, even they are often using the cloud through Gmail, Yahoo or other web-based e-mail service.

Still others are using free services (at least, their basic versions are free) like Dropbox, Google Drive and Amazon Cloud Drive. Free services don’t typically provide the same level of security, though, so be sure to encrypt files.

Firms and attorneys might want to consider upgrading to a paid version of Dropbox, which provides 1 terabyte of storage for $100 per year, or a legal-specific service like NetDocuments, some of which only provide certain discrete functions—Clio and RocketMatter handle practice management and time-and-billing, for example—if you don’t want to dive in all the way.

Storage with cloud providers is relatively inexpensive compared with other line items in a law firm budget, and they are probably more sophisticated than all but the largest law firms in terms of keeping data secure, which is important as hackers continue to become more sophisticated.

But even larger firms might want to consider outsourcing, given the large number of staff and thus greater exposure to passwords being compromised, their sheer size, and the value of the data they hold being that much larger. Attorneys and law firms have become targets not so much for their own information as that of their clients, especially in industries like financial services or healthcare.

If your firm experiences a client data breach, whether on your servers or a cloud provider’s, you are legally obligated to notify clients promptly, although that doesn’t necessarily protect you from negligence or breach of confidentiality claims if your data is not properly encrypted.

The Rules of Professional Conduct do not differentiate between theft of electronic vs. paper files, and state bar ethics opinions have begun to delineate what constitutes a reasonable standard of care in choosing a provider, based on terms of services and policies and procedures.

While some states following the relatively permissive American Bar Association rules that say lawyers “shall not knowingly release” client data, Illinois continues to use an older version of the model rules that simply states: “Lawyers shall protect against disclosures of client confidentiality.”

The Illinois State Bar Association has issued an ethics opinion (ISBA Professional Conduct Advisory Opinion No. 16-06) affirming that it is ethical to store client information in the cloud so long as specific steps are taken.

Among those are the stipulation in Illinois Rule of Professional Conduct 1.1 mandating that attorneys stay abreast of modern security standards–and be conscious of whether their cloud provider uses them.

Another point of reference should be Illinois Rule 1.6(e), which says attorneys must undertake “reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to” confidential information.

Bottom line: As long as attorneys or firms act reasonably or competently to protect client data, they are not likely to be found to have acted unethically if a hacker steals confidential information.

Which means: DO YOUR HOMEWORK!

Attorneys Should Do Homework About Cloud Security

Bottom line: As long as attorneys or firms act reasonably or competently to protect client data, they are not likely to be found to have acted unethically if a hacker steals confidential information.

Which means: do your homework.

Third-Party Legal Services Hit Road Bump in Virginia – Could Illinois Be Next?

Is Avvo engaging in the practice of law? That is the question being played out in the Virginia state courts.

Avvo and other third-party platforms for the delivery of flat-fee, limited-scope legal services hit a stumbling block in the state of Virginia in late 2017. The Virginia State Bar’s Standing Committee on Legal Ethics voted to send Legal Ethics Opinion 1885 to the Supreme Court for adoption, a move that effectively blocks such services from operating in the state. Whether that becomes a trend that spreads elsewhere remains to be seen.

The ethics opinion does not name Avvo specifically, and the opinion does lay a path toward partial acceptance of such services while identifying what the state bar sees as several problems with the business model of third-party services, which the public has mostly accepted and which have helped increase access to justice among those with limited means.

The ethics opinion uses the term “attorney-client matching services” (ACMS) to describe Avvo and other similar for-profit services that provide online platforms leading to limited scope fee arrangements in which the client pays the full fee to the third party. The attorney does not negotiate either the fee or the scope of services, and they are not paid until services have been performed, at which time they receive their full cut of the amount.

The Virginia state bar committee objected to the facts that:

(1) the client fee is held by a third party rather than in an IOLTA account;

(2) the lawyer cannot refund unearned fees since he has no access to the money until he is paid in full by the service;

(3) the lawyer might end up violating ethics rules around inappropriate or inadequate services provided or fees not commensurate with the value of said services, since he does not negotiate the scope or fee;

(4) the payment of the marketing fee to the ACMS means sharing a legal fee with a non-provider; and

(5) payment of that fee amounts to payment for recommending the attorney’s services.

The ethics opinion provides guidance for surmounting at least some of these concerns. Attorneys can participate so long as they consult with the client beforehand and fees assured that services could be performed competently and ethically, and that the fee involved would be reasonable under the rules. This would involve some tweaks to an ACMS platform, for example including a phone call upfront between the potential attorney and client before the client’s payment is made. Platforms like Avvo already provide the ability to agree on scope and description of services, and the marketplace should help guard against excessive fees.

But the ethics opinion does not resolve the ethical issues around the payment of fees in online platforms, and in fact the state bar committee saw multiple problems with the client paying fees to a third-party ACMS. Since an ACMS is not a law firm, it does not have an IOLTA and cannot hold client fees in trust; the lawyers cannot hold the fees, either, because they are not provided to him; and lawyers have an obligation to return unearned fees when a matter concludes.

While fees could be transferred into a lawyer’s account at the outset, it could still be an ethical problem that the fees pass through the third party at all, for any period of time, while platforms like Avvo might not accept being paid at the conclusion of a matter.

Then there’s the matter of fee splitting. “The fact that the ACMS executes a separate electronic debit from the lawyer’s bank account for its ‘marketing fee’ following the firm’s electronic deposit of the full legal fee to the lawyer’s bank account does not change the ethically impermissible fee-sharing character of the transaction,” the state bar committee wrote.

So the fact that the marketing fee is tied to the amount of the legal fees means the arrangement constitutes fee-splitting, the opinion held. But if the lawyer’s fee were tied to something else, such as the number of clients they obtain through the platform or the number of inquiries or clicks on their profile, this might provide a workaround.

In its public comments on the matter, Avvo compared prohibiting a service consumers might like to use in the name of protecting the consumer, to requiring that an extra layer of sugar be served on Virginia ham—despite a consumer preference for less sugar.

This is an issue that will be played out in every state, including Illinois, which prohibits the same conduct that is described in the Virginia courts. Illinois laws on the unauthorized practice of law are enforced by the Illinois Attorney General, and it will be interesting to see how the Illinois AG tackles this issue and an entire industry that has sprouted under the free-wheeling business activities on the web.

The Failure of Law Schools

Today’s lawyer needs to have a basic understanding of how technology works. Law schools teach the law, but nothing about technology.

I recently interviewed a recent law school grad – from a city law school – to work with my team on litigation matters. When I asked what courses he studied on computer structure, electronic record storage, record retrieval, or e-discovery, he stated that he had taken no such courses and did not even know if courses such as those were offered. I would think that in today’s technology driven business world law schools would educate future lawyers on computer basics.

The Illinois Code of Professional Responsibility provides in Rule 1.1(a) that “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation necessary for the representation.” Comment 8 states “To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject.”

Thus, lawyers must understand the technology relevant to the representation of the client. This also increases the risk of malpractice. So, are law schools failing to adequately train lawyers.

A California ethics opinion from 2015 goes even further and requires lawyers to maintain competence as new technologies develop and become integrated with the practice of law. And for litigators it requires an understanding of issues relating to e-discovery and the discovery of electronically stored information (“ESI”).

Even if law schools are failing, a lawyer must educate themselves on evolving technologies as part of their continuing legal education obligations, and to avoid malpractice claims. Businesses are changing just to survive in this new tech world, and in the business of law, the same must be true. Adapt or perish.

Is the Future of the Practice of Law in Jeopardy?

Is the Future of the Practice of Law in Jeopardy?

Technology is affecting every part of our lives and the legal world is not immune to the changing world. The practice of law as we know it will be unrecognizable in the next decade. Technology is the biggest threat to the legal paradigm as it currently exists. The legal establishment is complacent and unwilling to accept its ebbing grip on the legal market.

The recent ISBA report regarding the future legal practice[1] world severely underestimates the cataclysmic, exponential changes technology will have on the paradigm of legal practice. The legal community has turned a blind eye to technological tsunami hitting our society and affecting inside and outside the legal profession for years, even now disregarding its most potent threat staring it in the face. In their current state, the framework of law firms and schools are sorely underprepared to deal with the tsunami of technological changes and the non-legal alternatives it has created.

Within the lifetime of this year’s newly sworn attorneys, automation will radically change the legal profession. This may sound extreme, but once the dots are connected, anyone can see the domino effect on the legal structure. For instance, self-driving cars are a not-so-distant reality. The idea of not having to drive yourself to the office seems like a dream, but in reality it will dramatically change the practice. If vehicles are completely controlled by a computer, human error will be removed from driving, resulting in near eradication of accidents. Of course, accidents will occur, even with autonomous cars. However, when these accidents occur, will lawyers have the technological competence to interpret the computers that drive the vehicles? Accidents involving autonomous cars will create a plethora of new legal issues and standards lawyers must be prepared to address.

In 2005 alone, 35% of the 26,950 civil cases that reached disposition stemmed from motor vehicle collisions across the nation.[2] This seems insignificant, until compared to the 7.4 million civil cases filed around the nation in the same year.[3] If the claims filed are representative of the cases that reached disposition, roughly 2.5 million claims caused by motor vehicles reached an out of court resolution, settlement or otherwise. The harsh reality is that accidents create work for attorneys. Although the shift to autonomous cars will be gradual, it is obvious the lawsuits arising from accidents will decrease towards non-existence.

Autonomous cars will cripple the existence of solo-practitioners and big law firms alike. With lack of accidents, the need for auto insurance will become obsolete. The purpose of auto insurance is to cover the driver from any damages they may cause while operating a vehicle. If vehicles are operated by computers, the driver has no liability, and no reason to purchase auto insurance. If auto insurance is no longer needed, auto insurance companies’ revenue will plummet. These companies will either adapt to the change, providing coverage for self-driving vehicles at a highly-reduced rate, or cease to exist. Regardless, there is one clear outcome for attorneys employed by insurance companies: their jobs are in jeopardy. With less income, insurance companies will be less willing to employ big law firms for representation. Insurance companies may not be able to afford in-house counsel, eliminating the position entirely.

A decrease in accidents will also cause a decrease of injuries requiring hospitalization. When there are less patients in the hospital, one can assume a proportional reduction of medical malpractice claims will occur. Just like the insurance industry, attorneys on either side of medical malpractice claims will suffer from technological advances.

The effect of automation is not limited to the civil arena. Cars that are self-driving cannot violate traffic laws, notwithstanding maintenance issues such as a dead brake light. A computer cannot be inebriated, which will virtually eliminate DUIs. Additionally, if there are no traffic violations, there will be less arrest resulting from routine traffic stops, lowering the case load of public defenders, and in turn, reducing the amount of employed public defenders. Fewer accidents means less work for au
to body shops and a change in the auto insurance business.

Is technology really a threat?

Non-legal for-profit companies like LegalZoom and Avvo have been around for decades. These businesses provide do-it-yourself guides for a variety of legal actions, easily accessible and competitively priced. By paying a small fee, LegalZoom provides its customers with questionnaires, using the answer to fill out and file the required legal forms for the requested service. Additionally, it provides a year of unlimited attorney consultations, with an option to keep these services for a monthly fee. Recognizing consumers desire convenience and price transparency, LegalZoom assisted 1 million customers in the first 10 years of its creation in 2001. Since then, LegalZoom has assisted another 2.5 million customers in 7 years, and that number will only continue to grow in the state of the current legal paradigm. This flat-fee pricing is arguably the biggest draw to these types of technological services.

Unfortunately, these for-profit companies are not the only threat to the legal community. In New York and London, DoNotPay.co.uk assists users with a “robot-lawyer” chatbot. Through a series of questions, the chatbot determines if an appeal is possible, and if so, guides users through the appeal process. In the 21 months from it’s creation, DoNotPay has taken on 250,000 cases, winning 160,000, giving the program a 64% success rate. This sophisticated program, which provides a simple process for appeals, was created by 19-year-old college student. An individual with no legal training created a simple step-by-step online guide to traffic tickets. This traffic ticket “robot” gives a clear warning to the legal field: Adapt or Die. The reason these services are such a threat to the legal community is their pricing. These easily accessible sites provide flat fees and a well-defined service. Customers know the exact price for what they are paying.

The opposite is known for the legal field where the adage “a lawyer’s stock in trade is his time” has governed our fee structure since Abraham Lincoln rode the circuit in the 1850’s. Lawyers need to bill hours to make money, and thus strive to have more hours at the expense of efficiency. This common knowledge, combined with a general public lawyer stigma, causes consumers to be uncomfortable not knowing the actual price of legal counsel until a matter is resolved. The billable-hour mentality prevents law firms from adapting to the changes of technology. Sacrificing efficiency for profit is hurting the legal field. Lawyers have known that technology can threaten the practice since the early 2000’s. It was possible for a firm to automate a 65 page lease template, which generated leases in a mere 15 minutes, as opposed to the 4 hours it would take to generate manually. The project was scrapped because based on the billable-hour model, the revenue expectations would be cut in half.[4] By refusing to incorporate this technology, lawyers are willingly losing clients to non-legal companies.

Technology is leading to the downfall of the billable hours framework and is establishing a flat-fee structure. Technology will automate or replace many of the traditional, billable functions performed by lawyers. Some technology has become accepted within the legal field, particularly with document review and e-discovery. With globalization of work, work usually done by junior associate and paralegals is being outsourced to companies in different countries for a fraction of the cost.

Is the legal job market still stagnant?

The legal field has yet to recover from the Great Recession in 2008, nearly a decade later. Due to the escalating need for sophisticated legal representation prior to 2008, legal firms structured themselves to handle prodigious amounts of work while simultaneously training sophisticate business lawyers. Post 2008, the need for representation plummeted, and firms have attempted to adapt, “reducing the number or entry-level lawyers, turning the traditional pyramid structure into a diamond with many senior associates and nonequity partners composing the broad middle.” Unfortunately, “the short-term needs of established law firms to generate higher revenue and profits to retain the firms’ biggest rainmakers are at odds with long-term needs to invest in a more sustainable business model tied to the changing demands of its clients.” [5]While the industry attempts to shed the training costs of entry-level lawyers, it will eventually produce as shortage of mid level attorneys and higher labor costs to stave off unwanted attrition.

Despite law school enrollment and graduate numbers falling, the available jobs for new attorneys has decreased. Law school enrollment in 2016 has decreased from 5% from the class of 2015. The graduating class of 2016 dropped 9.2% from the previous years numbers. In addition, so did the number of entry level legal jobs, dropping 8.6%. Although the ABA reports a climbing employment rate of 86.7% for the classes of 2014 and 2015, only 62.4% of 2015 graduates and 64.1% of 2014 graduates obtained employment that required Bar passage.[6] [7] For those 83,816 graduates, only 53,000 were employed in positions that requires passage of a bar exam.

The 2014 OOH predicted 74,800 new lawyer jobs through 2022. Between 2014 and 2024, the agency now estimates, the number of lawyer positions will grow from 778,700 to 822,500, adding just 43,800 jobs—a plunge of 41 percent. [8]

Although the disproportionate number of entry level jobs to recent graduates has been known for years, the disproportionality will only increase with incorporation of technology into the legal practice. New legal technology will equivalently decimate the work load of entry level associate positions, document drafting and reviewing used to hone their skills will be outsourced to third parties or technology. Although this will bring down the cost to consumers and increase efficiency, it will lower total billable hours available and drive down profits.

Are law schools preparing lawyers for the future?

In addition to the radically changing legal field caused by technology, law schools are stifling the job market. Law schools have become cash cows, churning out inexperienced lawyers with crippling student loans who are as effective as a paralegal after graduation.

Foremost is the weight of the student debt most law school graduates incur. Ten years ago, law school cost half the amount it does now.[9] Historically, law school tuition has doubled every 10 years, roughly three times the rate of inflation. But this is not limited to law school, because newly admitted law school students are most likely carrying over debt from undergraduate colleges which are facing the same problem. It is not unheard of for a law school student to graduate with $250,000 of debt, a great place to start in a struggling job market.

Further, law schools do not adequately train their students in a variety of aspects that are necessary to provide effective legal representation. Law students are not required to take courses that teach marketing or business, nor are students required to learn about practical legal practice. Most law students don’t know how to properly fill out and file motions in court, some have never even stepped foot in a court room. In order to gain this legal experience through law school, a student must take specific courses, sacrificing opportunities to study other areas of law. Unfortunately, most students don’t even realize they need this practical knowledge until they have graduated. Additionally, courses on how to market yourself or run a business, which is essentially what an attorney does, are almost non-existent.

Of course, law students may be able to gain some practical knowledge through legal externships, but many times the work is limited to drafting, document review, and research. However, many an externship can consist of busy work, filing papers in an office. Although these externships can help students gain practical experience, they must seek out these positions themselves. Law schools do little more than provide information on where these externships may be sought. Compare this placement to other professional education. Medical students must participate in residencies where they hone their skills before beginning practice on their own. Speech-language pathologists, or SLP, are required to participate in at least 9 months of medical “placements,” working with patients under the supervision of licensed therapists. Specifically, in the SLP field, the schools assign each each student placement facilities. In these fields, this practical training is required before you can receive a license to practice. Although relatively inexperienced, this practical knowledge allows these students to have a level of competency before receiving licensure. In the legal field there is no such requirement, many young attorneys learn on a trial-by-fire basis. These student’s laughable experience, combined with a dismal job market, does not bode well for those who seek to practice in the legal field.

Technology is changing the legal paradigm and there is nothing that can be done to stop it. Throughout history, technology has been adapted to innumerable industries, changing them entirely. In the not so distant past, vehicle manufacturing was entirely changed by automation. Technology decreased the labor costs by replacing humans with technology, making cars more affordable to consumers. Today, technology is threating threatening the legal market in the same way. This is not speculation; todays business giants are warning of the effect of technology. Bill Gates, Mark Cuban and Elon Musk have recently warned of the impending displacement of human jobs from automation. But don’t take their word for it, just ask your travel agent how their business survived technological advances.

In Summary:

The ISBA Report recognizes some of these issues, but instead of helping lawyers deal with the changing landscape, the report focuses on providing legal services to the mass of people who do not have access to legal services. We need to start taking care of our own. We are a trade association with selfish interests. Lawyers must showcase the value of legal expertise, differentiating ourselves from do-it-yourself websites. As as the legal paradigm shifts towards speed and efficiency, we must address the inherent clash of the billable-hour framework with the forced efficiency of technology. To insure the existence and profitability of the legal practice, we must adapt to survive.

~ George S. Bellas (www.attorneyscreativeroundtable.com)

[1] https://www.isba.org/ibj/2017/01/seeingandshapingthefuture

[2] https://www.bjs.gov/content/pub/ascii/cbjtsc05.txt

[3] https://www.bjs.gov/content/pub/ascii/cbjtsc05.txt

[4] http://www.americanbar.org/publications/gp_solo/2014/may_june/how_technology_changing_practice_law.html

[5] http://www.americanbar.org/publications/gp_solo/2014/may_june/how_technology_changing_ practice_law.html

[6]http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/reports/2015_law_graduate_employment_data.authcheckdam.pdf

[7] http://www.nalp.org/1216research#table1

[8] http://taxprof.typepad.com/taxprof_blog/2016/01/government-cuts-projection-of-2014-2024-lawyer-jobs-by-41-16k-lawyer-jobs-for-37k-law-grads-each-yea.html

[9] http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/statistics/ls_tuition.authcheckdam.pdf