Regulators are poised to consider radical rule changes that could decisively open the way to allowing non-lawyers into the legal profession of the US’s most populous state.
The State Bar of California voted earlier this month to accept a report from legal academic Professor William D. Henderson calling for structural reforms to the way the market is regulated. The bar’s board of trustees further resolved to authorise a taskforce to study and come back with recommendations for reforms that balance the goals of public protection and increased access to justice.
The taskforce proposals - not expected until 2019 – could pave the way for a version of the alternative business structure regime in the UK and Australia, allowing a system where non-lawyers are able to own law firms and legal businesses are able to take on external capital investment. Despite repeated attempts to encourage liberalisation in the US – and not withstanding sporadic examples of legal markets opening to outsiders – the US profession has overwhelmingly resisted emulating England and Wales.
In his report, Prof Henderson cited the problem of ‘lagging legal productivity’ and that, in contrast to medical care and higher education, a growing proportion of US consumers are choosing to forgo legal services rather than pay a higher price.
With the profession at an ‘inflection point’, the report states that lawyers now need to work closely with professionals from other disciplines but are prevented from doing so by ethics rules.
‘To the extent these rules promote consumer protection, they do so only for the minority of citizens who can afford legal services,’ added Prof Henderson, who is based at the Indiana University Maurer School of Law.
The author suggests that modifying ethics rules to facilitate greater collaboration across law and other professions will drive down costs, improve access, increase predictability and transparency of legal service, aid the growth of new businesses, and elevate the reputation of the legal profession.
Based on historical precedent, the report concludes, California is the most likely jurisdiction to take the lead on legal services reform. It adds: 'The public policy that underlies the legal ethics rules is one of consumer protection. Legal regulators should take a capacious view of this policy and acknowledge the harm that occurs when ordinary citizens cannot afford cost-effective legal solutions to life’s most basic problems, such as sickness, housing, old age, family planning and access to government benefits.
‘The law should not be regulated to protect the 10% of consumers who can afford legal services while ignoring the 90% who lack the ability to pay.’