A US case offers a possible roadmap for responding to electronic platforms as regulators struggle to find a solution.
For those suffering from Brexit overload, here is something different. To my great surprise, the world has continued to turn on its axis. Electronic platforms have continued to offer unregulated legal services to citizens in many countries.
The Legal Services Board has - this is a real shock - continued to cheer on such providers from the sidelines without offering proposals for what to do next. Well, a new model for regulating such platforms has emerged in one US state.
I wrote almost exactly a year ago about a Supreme Court case in the US (North Carolina State Board of Dental Examiners v Federal Trade Commission), which caused LegalZoom, the unregulated legal services platform, to sue North Carolina State Bar for banning it.
That case was settled last year, and now there is legislation in North Carolina based on the settlement. The law has the support of both LegalZoom and the North Carolina State Bar.
The North Carolina law is called ‘an act to further define the term “practice law” for the purpose of protecting members of the public from harm resulting from the unauthorised practice of law by a person who is not a trained and licensed attorney’.
It is a very short act, and its main clause expands what is NOT the practice of law, by saying that a website ‘that offers consumers access to interactive software that generates a legal document based on the consumer’s answers to questions presented by the software’ is not the practice of law, provided that a number of conditions are satisfied, including that:
- the consumer can see the whole form before deciding whether to go ahead and buy it;
- a regulated lawyer has reviewed every part of the blank form in advance, and the name and address of that lawyer is made available on request to the consumer;
- the provider tells the consumer that the forms are not a substitute for a lawyer’s advice;
- the provider discloses its legal name, physical location and address;
- there is no liability disclaimer by the provider, including limiting the recovery of damages;
- the venue for settlement of disputes is North Carolina;
- there is a consumer satisfaction process, and questions regarding the unauthorised practice of law are referred to the bar;
- the provider registers with the bar prior to launching the service, and renews registration annually;
- the bar may not refuse registration, and its fees are limited to $100 (£75) on registration and $50 on renewal.
What strikes me as particularly interesting about the law’s passage is that the Federal Trade Commission and the Antitrust Division of the US Department of Justice wrote a long joint letter (12 pages, with many footnotes) to the North Carolina legislature before the passage of the bill, supporting it wholeheartedly.
Their letter is a clear explanation of the competing interests at stake: the need to protect consumers through the use of regulated lawyers, and the need to deal at the same time with the severe problems of access to justice. Here is an example of their approach:
‘The Agencies believe the definition of the practice of law should be limited to activities where: (1) specialised legal skills are required, such that there is an implicit representation of authority or competence to practise law, and (2) a client relationship of trust or reliance exists.’
You can agree with their definition or not, but it has led at least to some regulation being placed on electronic platforms. The North Carolina system would not work for us in the same way, because we do not have the same rules on the unauthorised practice of law.
Our reserved activities are much, much narrower, meaning that in England and Wales anyone can already do more or less anything, apart from call themselves a solicitor or barrister and practise in the few reserved areas. But North Carolina provides a possible model nevertheless, to be adapted to our circumstances.
There are criticisms to be made. It opens the floodgates. It provides a very limited and flimsy regulatory regime on the provider. It offers a possible solution to only one kind of activity offered by unregulated providers, that of an interactive online form, which is by no means the only kind of online legal service, and probably not the one which most threatens the principles which must be maintained for client protection.
But, on the other hand, it is doing something, opening up a possible roadmap for more. It must be a better alternative to the current responses, which lie at either end of the extremes: do nothing, or sue everyone.
Ah, what a refreshing break from arguments over what is the least-worst next step for a future Brexit.
Jonathan Goldsmith is a consultant and former secretary-general at the Council of Bars and Law Societies of Europe, which represents around a million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs