United States: ABA Model Regulatory Objectives: Why They Matter To You

Last Updated: May 10 2016
Article by Ronald C. Minkoff

ABA House of Delegates Resolution 105 (Resolution 105), which was narrowly approved by the ABA House of Delegates (HOD) at the mid-year meeting in February 2016 and adopts the ABA Model Regulatory Objectives (Model Objectives) as paradigms for regulating legal services providers, appears innocuous at first glance. It consists mainly of 10 general regulatory principles, all of which are so basic and unassailable that few would question them. Indeed, as we show below, many of these principles already serve as the foundation for lawyer regulation in every state. Nevertheless, Resolution 105 drew heavy opposition from a number of ABA Sections and state bar delegations, including New York's, and resulted in the most contentious debate at the HOD in at least a decade.

Why? Because Resolution 105 does not limit itself to lawyer regulation. It goes much further, covering what its proponent, the ABA Commission on the Future of Legal Services (ABA Commission), calls "non-traditional legal services providers." (We call them "Nonlawyer Providers" for the purposes of this article.) As the ABA Commission's December 2015 Informational Report to the ABA House of Delegates (Info. Rep.) made clear, this includes the "new providers" who are "emerging, online and offline, to offer a range of [legal] services" to the public in "dramatically different ways" than those lawyers have traditionally provided. Info. Rep. at 1; see also ABA Commission Report to House of Delegates regarding Resolution 105 (Resolution Rep.) at 3 ("the Commission believes the model regulatory objectives will be useful to guide the regulation of an increasingly wide array of legal services providers, not just lawyers"). Thus, the Resolution would provide recognition, rather than outright rejection, for such new, often web-based providers as lawyer matching services, lawyer ranking services, and legal writing, research and outsourcing companies.

As an even bigger burr to the organized Bar, the ABA Commission specifically included within its purview the continued study of "alternative business structures" (ABS), the latest in a long line of euphemisms — such as "multi-disciplinary practice" (MDP) and "non-lawyer ownership" (NLO) — for allowing non-lawyers to become equity owners and even managers of legal services providers, including private law firms. Id. at 3. A proposal along these lines had been soundly rejected by the ABA HOD in 2000, and an attempt to resurrect it in 2012 did not even make it past the proposal stage following threats by several Bar delegations to hold up several much-needed changes to the Model Rules of Professional Conduct if it was included. See R. Simon, New York Rules of Professional Conduct Annotated (2013 ed.) 1136, 1146 (West 2013).

Before going further, I have to make full disclosure. I was an author of the New York State Bar Association's (NYSBA) Comments on Proposed Resolution 105 (NYSBA Comments), which were developed by a small working group led by current NYSBA President David Miranda and Immediate Past President Glenn Lau-Kee. I was also a member of the NYSBA Task Force on Non-Lawyer Ownership, which in 2012 issued a report generally opposing the concept but recommending continued study to find a model that might work. See Report of Task Force on Non-Lawyer Ownership, reprinted in 76 Albany L. Rev. 865 (2013) I have, therefore, witnessed up close the fear and loathing — in some ways understandable, in others not — that ABS and the new Nonlawyer Providers inspire among Bar leaders and others lawyers around the country. Nevertheless, the views in this article are entirely my own, and are not entirely in sync with the NYSBA Comments. My goal in this article is to give a balanced (if abbreviated) portrayal of both sides of this important debate, a debate which will affect the future of each and every lawyer in this state.

Original Version of Resolution 105

We start with Resolution 105 itself. As originally presented to the HOD, it read:

RESOLVED, That the American Bar Association adopts the ABA Model Regulatory Objectives for the Provision of Legal Services, dated February 2016.

ABA Model Regulatory Objectives for the Provision of Legal Services

  1. Protection of the public
  2. Advancement of the administration of justice and the rule of law
  3. Meaningful access to justice and information about the law, legal issues and the civil and criminal justice systems
  4. Transparency regarding the nature and scope of legal services to be provided, the credentials of those who provide them, and the availability of regulatory protections
  5. Delivery of affordable and accessible legal services
  6. Efficient, competent, and ethical delivery of legal services
  7. Protection of privileged and confidential information
  8. Independence of professional judgment
  9. Accessible civil remedies for negligence and breach of other duties owed, and disciplinary sanctions for misconduct
  10. Diversity and inclusion among legal services providers and freedom from discrimination for those receiving legal services and in the justice system

FURTHER RESOLVED, That the American Bar Association urges that each state's highest court, and those of each territory and tribe, be guided by the ABA's Model Regulatory Objectives for the Provision of Legal Services when they assess the court's existing regulatory framework and any other regulations they may choose to develop concerning non-traditional legal service providers.

It is hard to argue with Objectives (A) through (J) as guidelines for regulating legal services providers. As the debate unfolded, these remained unchanged, except for a reference to lawyer assistance programs being added to Item (I). The second clause of proposed Resolution 105, however, proved far more controversial, as it suggested that courts across the U.S. adopt these Objectives not just to "assess the court's existing regulatory framework" — the regulation of lawyers — but "any other regulations they may choose to develop concerning non-traditional legal service providers." (Emphasis added.) The italicized phrase understandably rang alarm bells among lawyers concerned about the competition from, and the quality of services provided by, on-line legal document providers such as LegalZoom, legal matching services like Avvo, and a host of others of their ilk.

ABA Commission & the Reasons for Resolution 105

Nevertheless, the Resolution's focus on Nonlawyer Providers is a natural extension of the ABA Commission's mission. As explained in the Informational Report, the ABA Commission was formed in 2014 with the goal of "solicit[ing] comments from the legal profession and public" in order "to propose new approaches that are not constrained by traditional models for delivering legal services and are rooted in the essential values of protecting the public, enhancing diversity and inclusion., and pursuing justice for all." Info. Rep. at 2. The reason: the perceived failure of the legal profession, using its traditional business and legal services models, to meet the needs of many members of the public, particularly the poor and the middle class. In the ABA Commission's words: "[L]egal services are growing more expensive, time-consuming and complex. Many who need legal advice cannot afford to hire a lawyer and are forced to represent themselves. Even those who can afford legal services often do not use them or turn to less expensive alternatives." Id. at 1; see also ABA Commission Issue Paper Concerning New Categories of Legal Services Providers, dated Oct. 16, 2015 (Issue Paper) at 1–2 (describing the "access to justice gap in the United States").

I reported on this "justice gap" in an earlier article, "Bridging the Justice Gap: Access to Justice and a New Definition of Professionalism." See NYLER, September 2015. That article described the tens of thousands of litigants who appear in New York's Housing Courts, Consumer Debt parts and Matrimonial Parts without lawyers, either because they cannot or will not pay for them. Many of these litigants, as well as those who need but cannot afford transactional lawyers, are turning to online legal services providers for help, either to match them with cheaper lawyers or to provide legal documents they can use.

The ABA Commission was set up to address this reality and anticipate future trends as well. To do so, the ABA Commission, among other things, looked to the experience of common law jurisdictions throughout the world, many of which had recently adopted regulatory objectives to guide regulation of their own legal professions. Indeed, as the ABA Commission noted, "nearly two dozen jurisdictions" including Australia, Denmark, England, India, Ireland, New Zealand, Scotland, Wales, and several Canadian provinces have adopted regulatory objectives or have proposals pending. Resolution Rep. at 2. The Commission cited five benefits of such objectives: (1) they "definitively set[] out the purpose of lawyer regulation and its parameters" in order to guide regulators; (2) inform those affected by a regulation why the regulation is adopted and enforced; (3) make those promulgating lawyer regulations more accountable to specific guidelines; (4) help define public debate about lawyer regulations; and (5) help set parameters when the legal profession is negotiating with governmental agencies about regulation. Id. at 3, citing L. Terry, S. Mark & T. Gordon, Adopting Regulatory Objectives for the Legal Profession, 80 Fordham L. Rev. 2685, 2686 (2012) (Terry/Mark/Gordon).

In addition to these abstract concerns, the ABA Commission made a more practical point: "the model regulatory objectives will be useful to guide the regulation of an increasingly wide array of legal services providers, not just lawyers." Resolution Rep. at 3. In other words, because those regulated will include Nonlawyer Providers, who generally are not subject to the ethical rules and other lawyer regulations, the need for regulatory guidelines espousing at least some core values and client protection goals was deemed necessary. Resolution 105 was the result.

Notably, the regulatory objectives adopted or proposed by other jurisdictions are at least as abstract and general as those proposed by the ABA Commission — in many cases far more so. See Terry/Mark/Gordon at 2697-724 (providing numerous examples). In the ABA Commission's view, the goal is not to be concrete, but to create something akin to the Preamble to the Model Rules of Professional Conduct. Just as the latter offers "guidance as to the foundation of" the black letter lawyer regulations, the Model Regulatory Objectives would set forth "the purpose of and context within which any new regulation should be developed and enforced" as to Nonlawyer Providers. Resolution Rep. at 4.

There is yet another purpose Resolution 105 would serve. Whether courts, as opposed to legislatures, will or even should regulate Nonlawyer Providers is by no means obvious. Indeed, in many jurisdictions outside the U.S., such regulation (as well as regulating lawyers) has become in whole or in part a legislative function. See, e.g., Terry/Mark/Gordon at 2697-701 (showing how, in England, legislature adopted regulatory objectives to guide administrative agency tasked with regulating lawyers). This is why Resolution 105 was directed only to "each state's highest court, and those of each territory and tribe." The ABA Commission hopes that "if supreme courts are more expressly guided by regulatory objectives, U.S. jurisdictions may be more successful in retaining judicial control over the regulation of legal services than has been true elsewhere." Id. at 3 (emphasis added).

Facts on the Ground

Resolution 105 and its supporting Resolution Report both come across as wooly and academic. But the ABA Commission, though more elliptical than it perhaps needed to be, was trying to address a real phenomenon in the marketplace: potential clients using (or needing) Nonlawyer Providers instead of lawyers to provide them with legal services. Indeed, at approximately the same time as it proposed Resolution 105, the ABA Commission issued an "Issue Paper Concerning New Categories of Legal Services Providers," detailing such programs as Washington's Limited License Legal Technicians and New York's Court Advocates that involve trained nonlawyers providing limited types of legal services to underserved members of the public, sometimes with limited or no lawyer supervision. See Issue Paper dated Oct. 16, 2015 at 3–8 (describing programs in six jurisdictions, including in federal bankruptcy and immigration proceedings). Many of these programs are experiments or stop-gap measures aimed to ameliorate the worst aspects of the "justice gap." But these programs are real, and the clients they serve have to be protected. This is one reason for the regulatory objectives in Resolution 105.

But it is not the most important reason. In the for-profit private sector Nonlawyer Providers' presence is growing and gaining traction. In recent months:

  • LegalZoom settled a long-running battle with the North Carolina Attorney General, who had accused it of engaging in the unauthorized practice of law. The dispute ended with a whimper: the Attorney General agreed to allow Legal Zoom to provide both online document services and a prepaid legal services plan to North Carolinians without paying any penalties. See "Settlement Allows LegalZoom to Offer Legal Services in N.C.," 31 Law. Man. Prof. Conduct 676 (11/18/15).
  • Avvo started "Avvo Legal Services," a service in which a client with a legal need signs into Avvo and is matched with a lawyer in a practice area to meet that need. The price for the service is pre-set, and the client pays Avvo that price up-front. Avvo keeps it until the service is done, when the entire amount is paid for the lawyer. In a separate transaction, the lawyer pays Avvo a marketing fee, which varies depending on the amount paid for the service; Avvo takes the money directly from the lawyer's operating account, to which the lawyer gives Avvo access. Avvo's model is similar to that approved for legal matching services 15 years ago in Nassau Co. Bar Op. 01-04 (2001 though it has some differences as well (particularly the variability of the marketing fee). Legal matching services like this, including Rocket Lawyer, Total Lawyers, Priori Legal, and others, are becoming ubiquitous.
  • The ABA started a similar lawyer matching service with Rocket Lawyer called "ABA Law Connect," under which "[c]ustomers would pay $4.95 to ask an ABA-member lawyer a question online and a follow-up question," with the client and lawyer then free to negotiate for further services. In the aftermath of the Resolution 105 debate, and a threat by the Pennsylvania State Bar to "withdraw from the ABA" if the service continued, the ABA dropped the program. S. Beck, "ABA Abandons Rocket Lawyer Venture Amid Attorney Backlash," The American Lawyer, Feb. 18, 2016. The fact that the ABA would even consider such a program shows how much the marketplace is changing. The fact that the Pennsylvania Bar would make such a threat indicates how deep-seated the resistance is.

These are just a few of the myriad services that Nonlawyer Providers are offering — and more are being devised constantly. In the ABA Commission's view, this phenomenon is not going to stop, and the legal profession can neither wish it away nor rely on existing lawyer conduct rules to regulate it. In that context, the ABA Commission viewed attempting to create a structure to regulate these activities as better than doing nothing, leaving the public entirely unprotected.

NYSBA Response

The NYSBA, and a host of other State Bar groups and ABA Sections, did not see it quite the same way. In the interests of brevity, I will focus on the NYSBA's Comments: While they do not include all of the objections articulated to Resolution 105, they do present the most important technical and ethical concerns with the ABA Commission's proposal.

On the technical side, the NYSBA identified two central concerns. First, as noted, Regulatory Objectives had been used in other jurisdictions to guide legislatures engaged in lawyer regulation, not courts. The Objectives might be useful in that context: Legislators are not all lawyers, and rarely if ever engage in the complex balancing of policy objectives involved in regulating the legal profession (duty to clients vs. duty to courts vs. duty to adversaries, etc.). By specifically directing the Regulatory Objectives at courts, the ABA Commission both went too far and not far enough. On the one hand, courts do not need a specified set of Regulatory Objectives to make rules governing the profession: They have been doing it for years, and are well aware of all the factors that go into that process. NYSBA Comments at 1. On the other hand, regulating Nonlawyer Providers will not necessarily be the job of courts; legislatures might also be involved. Id. In the first week of March, for example, the New York Senate Judiciary Committee approved a bill (A3683/S1636) that would allow the use of nonlawyer advocates from an organization called CASA to help guide parties in Family Court proceedings. See J. Stashenko, "Bill Seeks to Establish CASA Program Under State Judiciary Law," N.Y.L.J., March 7, 2016. As of this writing, this bill has not yet come up for a vote.

In short, Resolution 105 provides guidelines to those who need it least. And it does so explicitly for the purpose of ensuring that U.S. jurisdictions "retain[] judicial control over the regulation of legal services." Resol. Rep. at 2. But as just noted, legislatures are not necessarily willing to wait — and will have no guidance when they do act.

Second, the NYSBA noted that Resolution 105 did not make clear that all lawyers and Nonlawyer Providers will "be required to adhere to the Rules of Professional Conduct." NYSBA Comments at 2. This would require a small wording change to the Resolution, and would be consistent with RPC 5.3(b), which requires lawyers to ensure that the conduct of their nonlawyer employees conforms to the RPCs. See also RPC 5.3(a) and (c) (requiring lawyers to supervise nonlawyer personnel to ensure adherence to ethical standards), 5.7(a)(2) (lawyers who provide "Law-Related Services" have to adhere to RPC in certain circumstances, even though legal work was not involved). This assumes, of course, that all Nonlawyer Providers are practicing law, and many of them (in particular many legal matching services) are not. But because many such Providers come close to or cross the line, the need for them to affirm adherence to the RPC remains.

But these technical concerns paled as compared to the more policy-oriented objections. Nothing in proposed Resolution 105 ensured that lawyers and Nonlawyer Providers would have to "exercise independent professional judgment on behalf of their clients." NYSBA Comments at 2. "This is the primary purpose behind Model Rules 5.4(a) (lawyers shall not share legal fees with nonlawyers), 5.4(b) (lawyers not forming partnership with nonlawyers), and 5.4(c) (lawyers may not be directed by third-parties paying their fees)." Id. The specter of the so-called "Walmart Model," in which a large corporation hires lawyer employees to provide legal services to its customers — imagine a small law office open in a Walmart store — while putting profits ahead of professional values has driven the resistance of the NYSBA and many other Bar Associations to MDP and NLO for almost 20 years. Those organizations are not going to abandon those concerns now.

Closely related is the worry that Nonlawyer Providers — whether large Internet companies like Avvo or individual court advocates or licensed paralegals — will not adhere to the "core values of the legal profession, as set forth in ABA Resolution 10F adopted by the ABA House of Delegates on July 11, 2000." Id. "As the needs of the legal marketplace and the technology and providers (legal and nonlegal) available to meet those needs evolve, we must remain as vigilant as ever to ensure adherence to the basic principles that undergird our profession: client confidentiality, lawyer independence, the duty of loyalty to our clients, and the other values set forth in Resolution 10F." Id.

In short, the NYSBA Comments reflect the concern that, in its haste to keep pace with change, the legal profession will throw the baby out with the bathwater, abandoning the most basic professional standards to accommodate the perceived needs of the marketplace — and the economic interests of nonlawyers seeking to profit from them.

Final Resolution 105

The HOD debate on Resolution 105 at the mid-year meeting was highly contentious. After an effort to adjourn consideration of the Resolution for further study was narrowly defeated, a compromise was reached. In addition to adding the phrase asserting the importance of lawyer assistance programs to the new Regulatory Objectives (mentioned above), an important proviso was added to the Resolution:

"FURTHER RESOLVED, That nothing contained in this Resolution abrogates in any manner existing ABA policy prohibiting nonlawyer ownership of law firms or the core values adopted by the House of Delegates."

The upshot: The ABA has recognized that the legal profession must address the changes occurring in the legal marketplace, not just ignore them. These changes will affect — indeed, are already affecting — each and every lawyer in the profession, either by engendering competition with nonlawyers (as with nonlawyer court advocates), providing new marketing opportunities (as with Avvo and other legal matching services), or commoditizing their services (as with LegalZoom and other online document providers). The legal profession either recognizes and tries to control these changes, or it will get left behind. But at the same time, Resolution 105 now emphasizes that any attempts to regulate Nonlawyer Providers must preserve lawyers' professional independence and core values.

In short, both sides got a little of what they wanted. But therein lies the potential trap: That traditionalists will continue to wield core values and professional independence to choke off innovative business models that may provide working class and middle class people with the legal help they need. Yet while not always open-minded, the traditionalists are also not always wrong: Our core values remain the greatest protection the legal profession provides the public. How to balance these values against the desire to ensure that the legal needs of poor and working class people are met, and how to do that at a time when legislatures lack the resources or political will to fund legal services programs, is the most important question we face in protecting the rule of law in the 21st century and beyond.

Originally published by the New York Legal Ethics Reporter

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