The Legal Profession of the 21st Century:
Can Oklahoma Lawyers Meet the Challenges?
By Deirdre O. Dexter
In the world of law, it certainly can’t be disputed that “the times they are a-changin’.”1 Dramatic changes are occurring rapidly in the way legal services are provided. Even prior to the economic downturn in 2008, lawyers and law firms were beginning to experience change as corporate clients demanded detailed budgets and information regarding legal services performed and results achieved. The full impact of the downturn is now behind us, but the “more services for less cost” demand remains, and is now an expectation of all clients — whether that client is an individual seeking a divorce, or is a corporation seeking to enforce a multi-million dollar contract.
At the same time, many believe our justice system has failed to provide legal services to those in need, and the demand for better access to services for that underserved population is receiving increased attention.
This client demand of more for less, and the well-founded demand for a better way to provide legal services to low- and middle-income individuals, has had a profound impact on the cost and delivery of legal services and has led to the public’s increased reliance on “self help” solutions to solve legal issues. It has, in fact, opened the door to new entities like LegalZoom, Rocket Lawyer and other online businesses who profit by claiming to provide more affordable services to potential legal clients. This, in turn, creates major pressure for lawyers to change how we do business — both to provide access to justice to those in need and to survive in today’s business climate.2
THE ACCESS TO JUSTICE EFFECT
Earlier this year, the Oklahoma Supreme Court adopted rules creating the Oklahoma Access to Justice Commission, which will be codified at Part XI of the Oklahoma Supreme Court Rules.3 In the rules, the court directs the commission to “develop and implement policy initiatives designed to expand access to and enhance the quality of justice in civil legal matters for low-income” Oklahomans.4 Although the court focuses on providing increased civil legal services to low income individuals, it cannot be denied that the access to justice issue goes well beyond those who fall within this classification.
A recent study funded by the American Bar Foundation (ABF study) found not only that 80 percent of those classified as “low income”5 encountered at least one civil justice situation6 during 2013, but also that more than 60 percent of those considered “middle income”7 and “high income”8 encountered a civil justice situation in 2013.9 The study thus debunks the assumption that individuals who fall within the middle- and high-income categories recognize their legal issues, and have the resources to hire an attorney to represent them. Not surprisingly, the ABF study found that the cost of legal services was a predominant reason why more people do not turn to lawyers for help with their legal issues.10 Further, the study revealed that across all income levels, nearly 50 percent of those responding did not seek legal assistance, and even those who did seek assistance rarely went to attorneys.11 Instead, they turned to “self help” methods.12
THE LEGALZOOM EFFECT
New online services claim to bridge the gap between those who need help preparing certain legal documents, and the high cost of legal services to provide them. Since 2001, LegalZoom and others have capitalized on the fact that many people are a) willing to engage in “self help,” b) do not see document preparation as a “legal” issue and/or c) believe they cannot afford legal services.
As Internet use has grown, the use of such alternative providers has also grown exponentially. For example, a simple Internet search for “will” pulls up a number of sites which will provide customized documents, based on information input by the individual. This service is typically much cheaper than hiring a lawyer to prepare a will and, depending on the service, may be free.13
Assistance provided by these companies ranges from the incorporation of a business to the creation of a last will and testament. LegalZoom charges a flat rate, based on the services selected, and Rocket Lawyer has a seven-day free trial of its subscription services, during which time the documents are free. They cover preparation of documents and may include consultation with an attorney.
THE UNAUTHORIZED PRACTICE OF LAW?
An important issue is whether what these companies do and what they will do in the future crosses the line into the unauthorized practice of law. LegalZoom, in fact, has faced several lawsuits alleging that it has engaged in the unauthorized practice of law since it began providing services in 2001.
The unauthorized practice of law as it relates to LegalZoom is based on how the process works. Generally, a customer who wishes to use a LegalZoom document selects the type of document desired, and then answers online questions posed by the program. Those an-swers are put into a “template” used by LegalZoom to create the final document. According to LegalZoom, other than inserting the customer’s information into the template, the language of the template is static, and does not change based on the information provided by the customer.14 Likewise, according to LegalZoom, while an individual does proofread the template to check for any errors, it is not providing legal advice or services.
While LegalZoom and others characterize their services as filling in a “template” and analogize them to pre-printed legal forms, questions exist regarding the extent to which LegalZoom and other online providers bump up against unauthorized practice. For example, more than one online user has submitted a form and received a follow-up call from someone at LegalZoom regarding what action the users should take on the matter going forward.15
A recent situation in Oklahoma involved a customer who attempted to use LegalZoom to create a limited liability company. After checking the Oklahoma Secretary of State website to verify that the name chosen for the new entity was not in use, the individual used LegalZoom to set up the LLC. A few days later he received a call from a customer service representative at LegalZoom advising that one of the words used in the new entity’s name was already in use by two other companies registered in Oklahoma, and suggested that the name could be rejected by the Oklahoma Secretary of State’s office. This may be legal advice, or it may be part of the “proofreading” admittedly done by LegalZoom. While that is a question reserved for the courts, it does raise questions regarding the manner in which LegalZoom, as well as other online document providers, deal with their customers.
In fact, LegalZoom has settled a number of the lawsuits filed against it.16 It recently, however, received a favorable ruling from the South Carolina Supreme Court, to the effect that the manner in which it does business with its customers does not constitute the unauthorized practice of law.17 While the South Carolina ruling gave LegalZoom cause to celebrate, a Superior Court judge in North Carolina, less than two weeks after the South Carolina ruling, refused to rule on whether Legal Zoom’s activities amounted to the unauthorized practice of law, and required the parties to provide it with a more extensive factual record.18
THE EFFECT ON OKLAHOMA LAWYERS
For now, at least, there has been no final determination that LegalZoom and similar entities have engaged in the unauthorized practice of law, which means they can and will continue to prepare and provide legal documents to Oklahoma citizens. So what does that mean for lawyers in Oklahoma?
First, it may dramatically im-pact lawyers who make a living by preparing wills and trusts, assisting clients to form limited liability companies and prepare other corporate documents, and providing other document-intensive legal services that can be achieved by utilizing the document preparation software provided by LegalZoom.
Indeed, competing in this “new” legal market has become increasingly difficult for lawyers practicing law in the traditional way. Clients are rejecting the concept of hourly billing and de-manding greater cost savings and efficiency, including the use of technology and alternative service providers. This “decomposing and alternative sourcing,” as it is termed by Richard Susskind,19 will require lawyers to determine which tasks in a particular project truly require the knowledge and expertise of a lawyer, and which tasks can be outsourced to save time and expense. Lawyers must create sustainable cost advantages through their own use of technology and new processes.
There are several ways to do this. Lawyers, for example, can encourage consumers using online document services like LegalZoom to utilize the lawyer’s services to review the documents that are created, at a reduced or even free cost, in order to ensure that the client’s interests and intent are, in fact, protected and reflected in the document. In the event errors are found which must be corrected, this can also be done for a regular or reduced fee.
A lawyer could also include an intake form on his or her website that the client could fill out for a template, much like LegalZoom, but with the benefit of having a lawyer review the document. The lawyer could then determine what additional information is needed in order to protect the client’s interests.
Finally, it is important for lawyers to recognize that changes in how clients are purchasing legal services and engaging legal professionals are not limited to the preparation of legal documents by LegalZoom-type entities.
Consider the comprehensive list of “New Law” tools and sites one legal blogger, Jordan Furlong, has recently published.20 Mr. Furlong uses the term “New Law” to describe “any model, process, or tool that represents a significantly different approach to the creation or provision of legal services than what the legal profession traditionally has employed.” Within two overall categories, first, “Applying Technology to the Performance of Legal Tasks,” and second, “Aligning Human Talent with Legal Tasks,” Mr. Furlong lists an extensive number of sources, just a few of which are listed in the side bar.
To remain competitive, Oklahoma lawyers must look for new ways to reach legal service consumers, and emphasize the value and professionalism that lawyers bring to this ever more crowded legal market. Consumers need to know that there are many situations where an online service is not the right tool, and that a lawyer’s ethics, expertise, professionalism, integrity and reliability are necessities.
PROTECTING THE PUBLIC
Finding ways to compete is not the only issue facing lawyers with respect to new legal service entities. Issues related to lawyer independence, competence and ethics, all of which are designed to protect the public in dealing with legal issues, must be considered. It is imperative that the public be protected.
Currently, protection comes through lawyer self-governance, something that is unavailable to those utilizing alternative service providers.21 In fact, the legal profession has often been criticized when challenging entities such as LegalZoom, because it is perceived that the protection efforts are for the benefit of attorneys rather than clients.22 Lost in such criticism, however, is the fact that the practice of law is regulated in order to protect the public.
With the traditional delivery of legal services, a lawyer will ultimately be held accountable for the work product that is performed by a non-lawyer within a law firm, or for work that is outsourced:
“[a] lawyer is duty-bound to supervise the work done by law personnel and stands ultimately responsible for work done by the entire non-lawyer staff. The work of unlicensed personnel for a lawyer is done by them as agents of the lawyer who employs them. It is the lawyer who must exercise complete, though indirect, professional control over the actions of the employees.”23
Similarly, if a non-lawyer acting on behalf of a lawyer violates ethical rules governing lawyers, it is the lawyer who is held accountable.
LegalZoom-type providers, however, have no such regulation. In fact, these entities typically include a disclaimer stating that they are not providing legal services, and attempt to limit their liability to the amount received for documents provided. It is easy, however, to imagine a situation where a consumer has prepared, for example, a trust instrument using an online legal document provider, only to learn that significant tax ramifications or other adverse, unintended consequences have defeated the very purpose for creating the trust. Without the potential malpractice liability which protects clients when dealing with lawyers, the consumer’s recovery will be limited.
Another issue is client confidentiality. While lawyers are subject to strict rules regarding client confidentiality,24 alternative service providers are not. The potentially sensitive business information that a consumer may need to share in order to obtain the desired services may be at risk from the use of online services. The hacking and hijacking of information from online computer systems seem to be a daily occurrence.
Potentially more significant is the fact that information provided through an online system is available to people who are unknown to the consumer. While the odds of one or more persons using sensitive information in an unauthorized or improper way may be small, the effects of just one violation could be devastating to the consumer, depending on the nature of the information.
Another concern related to online legal service providers involves conflicts of interest. As is the case with confidentiality, lawyers are subject to strict rules governing conflicts of interest,25 with the corollary duty to exercise independent professional judgment.26 These issues would not appear to apply to online document providers. If such providers do perform legal services for consumers,27 however, the question arises whether they should also be bound to follow conflicts of interest rules.
Similarly, when attorneys are working for companies that are not subject to the ethical rules governing lawyers, there is always a risk that non-lawyers may seek to direct or regulate the attorneys’ professional judgment in violation of Rule 5.4 of the Rules of Professional Conduct.28
Finally, in addition to regulations regarding conflicts of interest and confidentiality, required training of online providers should be considered to ensure a certain level of competence.
ALTERNATIVE BUSINESS STRUCTURES — THE LIBERALIZATION AND GLOBALIZATION EFFECT
A final change concerns the alternative business structures law (ABS) which has been adopted in England and Wales.29 The specific intent of the ABS law is to permit non-lawyers to hold joint ownership and management of entities that may engage solely in legal services, or engage in legal services in combination with other, non-legal services.
The development and use of alternative business structures represents the liberalization and globalization of the legal profession.30 It allows firms to explore new ways to organize their businesses to allow for external investment and to be more cost-effective by, for example, permitting different kinds of lawyers and non-lawyers to work together.31 Although the structure created for England and Wales falls under very a detailed law, and is still in its infancy, interest in ABS as an alternative to traditional law firms is on the rise.
The potential for globalization of legal services through use of ABS, and the flexibility it provides financially and in the ways legal services are delivered, could create great economic challenges for lawyers and great risk for the public. Ontario, the first jurisdiction in North America to regulate non-lawyer providers of legal services by use of independent paralegals, is currently studying such issues, including a study of limited non-licensee ownership of law firms, and the current rules governing legal business structures, such as the ban on fee sharing.32
Although ABS will not make entry into the states so long as the bans on fee sharing and forming legal partnerships with non-lawyers remain in place, some states are taking steps to liberalize rules, including those prohibiting the unauthorized practice of law. For example, the Washington (state) Supreme Court recently adopted a court rule authorizing and regulating non-lawyers who deliver legal services in a limited fashion.33 The court rule followed a study commissioned by the court in 2003, which found that access to justice was being denied to a significant portion of the population. Under the new Limited License Legal Technician Rule, certain individuals are authorized to deliver legal services in a limited scope in specific Supreme Court-approved practice areas.34
Irrespective of the forms that changes in the law may take in the months and years ahead, making certain that those who seek to provide legal assistance to the public are competent, and can be held accountable to their clients, is crucial. As recognized by the Washington Supreme Court, it is important to set standards for those who are authorized to represent clients in legal matters, even when the representation is limited. It is imperative that lawyers and non-lawyers alike be accountable to the consumer, whose life, well-being and/or finances may be harmed by the action or inaction of the provider. In dealing with online service providers, this could potentially be accomplished through mandatory insurance coverage, invalidation of limitation of liability clauses or a combination of the two.
Change is coming, much faster than we may realize. Now is the time to embrace that change and move from the “traditional” practice of law into the 21st Century. However, as we do so, it is important that we never lose sight of the need to provide access to justice for all and to protect and safeguard the public. Lawyers must be more efficient and make greater use of technology in order to compete in the legal profession today — for the times they are a-changin’.
1. Bob Dylan, The Times They Are A-Changin.’
2. Author Richard Susskind has warned that significant change is coming to the legal profession and that one of the drivers of that change is what he calls the “‘more for less’ challenge.” Richard Susskind, “Tomorrow’s Lawyers,” 39 ABA Law Practice Magazine 4 (2013).
3. See In re: Establishment of the Oklahoma Access to Justice Commission, 2014 OK 16.
5. “Low income” households, for purposes of the study, are those eligible for federal funded civil legal services or households at 125 percent of the poverty level or below. “Accessing Justice in the Contemporary USA: Finding From The Community Needs And Services Study,” Figure 3, Notes, at p. 9, authored by Rebecca L. Sandefur and released by the American Bar Foundation on Aug. 8, 2014.
6. For purposes of the study, civil justice situations were matters involving one of the following: money, debt, rented and owned housing, insurance, employment, government benefits, children’s education, clinical negligence, personal injury and relationship breakdown and its aftermath. Id. at p. 7.
7. “Middle income” households, for purposes of the study, are those between 126 percent of the poverty level and the 80th percentile of the national household income distribution. Id., Figure 3, Notes, at p. 9.
8. “High income” households, for purposes of the study, are those whose incomes are in the top 20 percent nationally. Id.
9. See “Accessing Justice in the Contemporary USA: Finding From The Community Needs And Services Study” supra, Figure 3 at p. 9.
10. See “Accessing Justice in the Contemporary USA: Finding From The Community Needs And Services Study” supra, at p. 16.
11. Id. While a small number of the situations encountered involved some kind of court involvement, even then only 42 percent of those responding sought advice or assistance from attorneys. Where the situation did not involve the court system, only 5 percent of those responding sought assistance from an attorney.
12. Id. at pp. 11-12.
13. Interestingly, LegalZoom sued its main competitor, Rocket Lawyer, alleging that Rocket Lawyer statements that it provides “free” documents are false.
14. LegalZoom, Inc., v. The North Carolina State Bar, Case No. 11 CV 15111, Superior Court Division, North Carolina, Order March 24, 2014.
15. See, e.g., Gene Quinn, “LegalZoom Sued in Class for Unauthorized Law Practice,” IPWatchdog, Inc. (Feb. 9, 2010).
16. For example, lawsuits filed in Washington, California and Missouri have been settled and another lawsuit, filed in Arkansas, has been ordered to arbitration.
17. Medlock v. LegalZoom, Inc., Case No. 2012-208067, Supreme Court, State of South Carolina, Order March 11, 2014.
18. LegalZoom, Inc., v. The North Carolina State Bar, Case No. 11 CV 15111, Superior Court Division, North Carolina, Order March 24, 2014.
19. See “Tomorrow’s Lawyers,” note 12, supra.
20. “An Incomplete Inventory of NewLaw,” by Jordan Furlong, http://goo.gl/4QyoIy May 13, 2014.
21. See, e.g., Latson v. Eaton, 1959 OK 124, ¶6, 341 P.2d 247 (the practice of law is regulated to protect the public, which might be injured if unskilled and untrained persons are permitted to practice the duties of the legal profession); accord 2006 OK AG 27, ¶26-27.
23. Oklahoma Bar Association v. Martin, 2010 OK 66, ¶12, 240 P.3d 690.
24. See Rule 1.6 of the Oklahoma Rules of Professional Conduct.
25. See, generally, Rules 1.7 through 1.13 of the Oklahoma Rules of Professional Conduct
26. See Rule 5.4 of the Oklahoma Rules of Professional Conduct.
27. Rocket Lawyer includes legal services as part of its subscriptions plans. LegalZoom has also expanded into the prepaid legal services market, currently providing prepaid legal services plans in 41 states.
28. This is not, of course, a situation unique to an online service provider. As is recognized by Rules 1.13 and 1.16 of the Rules of Professional Conduct, there is an inherent risk that a non-lawyer may attempt to direct or control the professional judgment of a lawyer, particularly where the lawyer is representing a corporate or governmental entity or is being paid by someone other than the client.
29. See Legal Services Act 2007.
30. See, e.g., “Tomorrow’s Lawyers,” note 12, supra.
31. See Legal Services Act 2007.
32. Jordan Furlong, “ABS in Canada? Closer Than You Might Think,” The Lawyers Weekly (Oct. 25 and Nov. 1, 2013).
33. Steve Crossland, “Restore Access to Justice Through Limited License Legal Technicians,” 31 GP Solo Magazine 3 (2014).
34. Among the stringent requirements adopted by the court, in order to be authorized to practice with as a limited license legal technician, an individual must pass an examination; engage in continuing education; follow the rules of professional conduct; and show proof of financial responsibility. Id.
ABOUT THE AUTHOR
Deirdre Dexter practices in the Tulsa metro focusing in arbitration, mediation and employment law. She is a member-at-large on the OBA Board of Governors and serves on the OBA Awards, Law Day and Women in Law committees. She is a past president of the Tulsa County Bar Association, Tulsa County Bar Foundation and is a member of the Creek County Bar Association. She graduated from the OU College of Law with highest honors in 1984.
Originally published in the Oklahoma Bar Journal, OBJ 85 2261 (Nov. 1, 2014)