How the Legal Profession’s Views of its “Ethics” Rules Effectively Protect its Markets: Two 2020 Developments (Part 1 of 2)

THE POINT

In February of this year the American Bar Association took action that illustrates how attorneys’ views of their “ethics” rules can have the effect of shutting down innovation in the delivery of legal services, thereby protecting their incomes from unwanted competition.

DISCUSSION

It’s impossible to prove what someone has intended by an act on their part.

But the ABA’s February action had the effect of protecting their lawyer-members from unwelcome competition by shutting down consideration of changes in the “ethics” rules proposed for consideration by the ABA Center for Innovation and four of the ABA’s standing committees.

In February, the American Bar Association, acting through its House of Delegates, considered an ambitious proposal of its ABA Center for Innovation and four standing committees relating to innovation in the delivery of legal services. Here “innovation” meant opening doors to possibly better and cheaper ways to serve clients.

The ABA did not vote on the proposal. The ABA rewrote the proposal, and then approved what one commentator called the “defanged” version.

That original proposal by the ABA Center for Innovation and those standing committees had been written under the leadership of Professor Daniel B Rodriguez, former Dean of Northwestern University’s Pritzker School of Law, and was based on a report of the ABA Center for Innovation, chaired by Professor Rodriguez. It recommended that state bar authorities consider the following departures from the ABA’s current Model Rules of ethics:

1. Allowing new categories of legal services providers in addition to lawyers,

2. “Experimenting” with variations to the rule that bars lawyers from partnering or sharing fees with anyone who is not a lawyer — the rule that, for instance, bars Big 4 accounting firms in the U.S. from including legal services in their offerings, and

3. “New approaches to the unauthorized practice of law”: Rules in the 50 states are worded — and administered by bar authorities — “in such an ambiguous way that prospective innovators do not want to risk developing new services and face allegations that they are engaging in” the unauthorized practice of law.

As Bob Ambrogi observed in his thoughtful article published on the day of the ABA’s action:

” … With the changes adopted … today, the House of Delegates has made clear that no such innovations will be made in the Model Rules [of legal ethics], at least for now.”

Writing in a prominent Canadian legal magazine, Jason Morris, in an article entitled, “On Gut Punches and Optimism” highlighted and criticized the ABA House of Delegates’ move to substantially rewrite the ABA Center for Innovation’s proposal — rather than simply vote against the original proposal in a straightforward manner:

“But how does it justify asking the Center for Innovation to change its report after it has been published? That’s the part I can’t wrap my head around.

“Forcing the report to agree with the amended resolution injures the credibility of the Center for Innovation as an organization that can speak truth to protectionists. The Center for Innovation’s mandate is access to justice. Of course it’s going to occasionally disagree with the establishment represented in the governing bodies of the ABA. Why pretend otherwise?

“Evidently some people inside the ABA felt that doing something, and doing it in a unified way was more important than intellectual honesty ….”

Mr. Morris did not confine his opinion to the effect of the ABA’s action:

“I also think it’s motivated by protectionism.”

… 

One might simply believe the ABA’s idealistic defense of existing “ethics” rules as sincere protection of clients’ interests from those who would defraud or abuse those clients. Or one might view the ABA, in its February action, as having been motivated by protectionism.

But it’s hard to dispute that the ABA’s February action had the effect of reducing business clients’ options for legal help rather than expanding them.

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