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Friday, February 20, 2015
Alternative Business Structures: The Future of Legal Services?
Alternative Business Structures:
The Future of Legal Services?
Anna Blood, Intern
The Cochran
Firm
Many
Americans have never heard of an Alternative Business Structure (ABS), nor do
they know that it may soon be impacting the way they receive legal services. ABS’s
allow non-lawyers to have ownership interests in law firms and permits
multidisciplinary practices, which combines legal and non-legal services. For
example, why not have your accountant, business advisor and lawyer all under
one roof?
With today’s
technological advances and the globalization of the world market, clients will
likely continue to seek alternative, faster, and more convenient means for
obtaining legal services. Many people may feel that they have little options when
seeking fast and affordable legal services. This demand will likely continue to
fuel the demand for such business structures in the legal field.
ABS’s are
not new to the foreign market. For several years, ABS’s have been used overseas
in countries such as the U.K., Australia, Canada, Scotland, Germany and the
Netherlands. Multidisciplinary practices have been permitted in Ontario since 1999
and in British Columbia since 2010, with certain restrictions and regulation by
the Law Society of Upper Canada.
In 2007,
England and Wales approved the Legal Services Act, which allowed for the use of
ABS’s, permitting non-lawyer management and ownership, as well as multidisciplinary
practices. All ABS’s must be approved and are regulated by the Solicitors Regulation
Authority in the U.K.
Despite
this, there has been strong resistance to ABS’s from the American Bar
Association, (ABA) in the U.S. ABS’s conflict with the ABA’s Rules of
Professional Responsibility that regulate the practice of law in the U.S. Due to the ABA stringent rules some companies
offering legal services, such as Legal Zoom, and so American law firms, such as
Jacoby & Meyers are expanding business opportunities overseas where they
can operate under an ABS.
Companies
like Legal Zoom and Rocket Lawyer are providing legal services through online
legal document creation service. This service is easy to use and more
affordable than traditional legal services. However, these companies are also
facing negativity from the American Bar Association (ABA), which urges that they
may be participating in the unauthorized practice of law.
Under ABA
Rule 5.5, non-lawyers are prohibited from creating, owning or managing law
firms, either alone or in a partnership with lawyers, and are prohibited from multidisciplinary
practices. Under Rule 5.4, lawyers are prohibited from actively seeking clients
or advising them in states where they are not licensed. Additionally, the ABA’s Commission on Ethics
20/20 has been very skeptical, despite encouragement to amend some of the rules
that would permit the formation of ABS’s.
Nonetheless,
the ABA appears to be aware that an assessment of the efficiency of the legal
market is necessary. Since 2009, the ABA Commission on Ethics 20/20 has been
examining the impact of globalization and technology on the legal profession
and whether the Rules need to be amended to better serve the legal profession
and clients.
ABA
President William Hubbard stated that, “We have a huge gap in our justice
system, a justice system that is not accessible to a majority of the poor in
this country and an ever growing number of modern-income people.”
Despite
pressure to amend the ABA Rules, the District of Columbia remains the only
place in the U.S. that permits the use of ABS’s. Companies like Tandem Law in
D.C. are working as an ABSand advising clients not only on legal matters, but
also on business and growth capital. Additionally Tandem Law is allowing
clients to be shareholders in the company.
With this
perspective in mind, some may call the current legal industry a monopoly. While
the need to regulate the practice of law is justified and can provide peace of
mind to clients, the efficiency and cost of legal practices is open for review.
Many people may feel discouraged or even intimidated from seeking legal
services due to fears that they will be unable to afford it or may be taken
advantage of. Additionally, searching for a lawyer can be a daunting task,
especially for clients who live in rural areas or are unfamiliar with the legal
market.
In spite of
this, an ABS could provide some relief, and would be beneficial not only to the
client, but also to the growth of the legal market. For the client, it would
provide a one-stop shop for all business and legal matters, possibly saving the
client time and money. Additionally, allowing non-lawyers to have an ownership interest
in law firms would increase investment from other fields which would likely
lead to reduced costs for firms and lower fees for clients. An ABS would also
promote competition between attorneys, encourage innovation, and promote more
choices for clients.
Likewise, the
use of technology in an ABS can provide an effective and affordable way for
clients to search for attorneys when seeking legal services. Imagine how easy
it would be for clients to connect with their attorney via the internet and
have legal needs served from the comfort of their home. Further, this would
create cost effective solutions that would pass onto the client and allow
attorneys to serve clients in multiple areas.
With the
growing popularity of online legal services and the expansion of the legal market overseas, a change in the U.S.’s legal market may be
over-due. It is also clear that clients are ready for that change, as well as alternative
solutions to legal services. While the evolution of the legal market may be
eminent, the standards and values of the legal profession should be maintained.
posted by The Cochran Firm at 3:20 PM
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