Following a call by the American Bar Association (ABA) for 'regulatory innovations' to improve access to justice, Hook Tangaza director Alison Hook reviews the regulatory landscape in the world's largest legal market and assesses the prospects of radical reform taking root

There has been a flurry of consultations and reviews in the US over measures that could broadly be describes as encouraging ‘new law’. Can you sum up this activity?

There have been many US state level consultations and reviews relating to regulatory innovation in the legal sector over the last year or so - from California and Utah through to Chicago and Washington DC.  They all relate to a relaxation of the attorney’s monopoly on giving legal advice in some form or other. In some states this is manifesting itself as a review of fee sharing between lawyers and non-lawyers while in other states there are moves to develop new para-professional qualifications or categories of ‘limited licence legal technicians’. Elsewhere, there are proposals to facilitate lawyers’ use of technology, e.g. by changing the rules to permit attorneys to offer their services via online marketplaces.

What has been the spark for all of this activity? Which are the key bodies and who are the key figures?

The common driver for these projects is not an interest in ‘new law’ as such, but a recognition that the existing system is failing to serve the justice needs of US citizens. Although this is a universal problem, it is particularly egregious in the US where the qualification system creates lawyers who are too expensive and for whom practising law that serves ordinary citizens’ needs is not financially viable.

Perhaps the most important driver for change is the Conference of Chief Justices (CCJ), the forum through which state supreme court justices come together to discuss their shared concerns and develop shared positions. A growing number of think tanks and academic centres are also making important contributions to the debate by convening discussions and providing insights from elsewhere. These include the Institute for the Advancement of the American Legal System and the Centre for Public Interest Law at the University of San Diego.  

The state bars and court agencies, which currently regulate attorneys, have found themselves to be followers rather than initiators of this debate in most cases.  However, the State Bar of California commissioned a seminal report from Professor Bill Henderson of Indiana University on the legal landscape in 2018 which provided it with the factual basis on which to proceed with its own state review.

On Monday (17 February) the ABA’s House of Delegates approved resolution 115 – what is it and what will its impact be?

The resolution encourages regulators to consider ‘innovations that have the potential to improve the accessibility, affordability, and quality of civil legal services’. The ABA is not the force it once was. Its membership is in decline and it is more common than it once was for states to depart from the ABA model rules for professional conduct. That said, ABA encouragement for states to look at reform is something that will help to shift the dial. However, the version of the resolution which has passed was watered down from its original form and now includes the crucial qualification that nothing in it should be interpreted to mean a change in the model rules relating to unauthorised practice of law or fee-sharing with non-lawyers. This could have consequences as it could make it easier for states that do not depart from the model rules to discriminate against lawyers and law firms from those states that do.

Why was the resolution met with opposition?

As in the UK and Australia, there are those who dispute the proposition that there is anything wrong with the self-governing model for the legal profession, or with the inflation of education and training costs, lack of investment in technology and absence of client focus it promotes. Sadly, there are many in the legal sector in the US who are wedded to an early twentieth (some might even say nineteenth) century way of delivering legal services and they often find their voice when ABA resolutions addressing change are introduced.

What are the next steps in the debate? Are there any key reports or decisions to look out for?

The outcome of the California State Bar Innovation Task Force’s work at the end of March will be very interesting to watch. The precise timelines for reform are difficult to predict but I don’t anticipate they will be quick.

The Australia and the UK are often cited as the legal markets with the most liberal legal practice rules. What are the key measures or institutions that have driven change?

It pains me to say it, but in both cases the initial driver for change came from government, driven by frustration at the self-governing legal profession’s inability to police itself effectively. It engaged the interest of competition authorities to report and make recommendations for reform.

The most significant move in both cases was a change in the governance of the legal sector which brought greater independence from professional self-interest into regulation. This has allowed regulators in England and Wales and the states of New South Wales and Victoria in Australia to evolve their approaches, which weren’t quite right in their first iterations.

In other jurisdictions such as Ontario in Canada or Denmark forms of non-lawyer ownership have been technically adopted but with almost no take up. Legislation supposedly introduced to enable non-lawyer ownership has been implemented in a protectionist fashion under the oversight of a self-governing legal profession.

What is the consensus on the impact they have had?

I’m not sure one can talk confidently about consensus, since there are always those who would like to put a different construction on developments. But the evidence suggests the liberalisation of ownership rules in these jurisdictions has successfully promoted the role of the entity in delivering legal services.

Even within the traditional legal sector there is much more emphasis on the management of law firms as businesses. Law firms have adopted limited liability forms and solo practice has been made more viable because individuals can get spouses or other professionals into their businesses as partners.

However, it is hard to point to step improvements in access to justice, which is what is driving the US debate. To be fair, this was never front and centre of the objectives in the UK or Australia.

How likely is it that the US will ultimately take a similar path? And, if not, what will the medium-term outcome be in your view?

It will take decades, if ever, for the US to take the same path. There is one fundamental difference between the US and the UK and Australia and that is the fact that legal services in the US sit outside the purview of legislation. Without external agencies, change is almost impossible to effect from within. It will therefore be interesting to watch the parallel, though less widely reported debate which is taking place in some parts of the US about membership of state bars and whether it should be mandatory for representative purposes.