The Blurry UPL Line

Recently Donna Seyle posted an article on the lack of a Bright Line for what is the unauthorized practice of law (UPL). I offer some additional thoughts on the subject here.

First off – the LegalZoom battle is a losing one for regulators. As noted in the article, this provider and others have been around for some time now. The only real recent issue is that the market for legal services has become truly competitive, so now lawyers are actually worried about competition. So crying wolf once it hits your pocket book, but draping your argument in the “sheep’s wool” of protecting clients seems a bit wrong to me.

LegalZoom’s argument that they are providing a service not previously offered by lawyers rings true to me. I worked for a mandatory bar and have some front-line knowledge on this subject. About 15 years ago a senior lawyer called me up all mad at the state courts since they had just released a document generation system for use in divorce matters – primarily targeted at low income citizens. He wanted me to have the Bar sue the courts for UPL. I understood his logic – as he was a self-professed “bottom-feeder” who served low income clients and saw this as a threat to his business.

I suggested it was unlikely the Bar would sue the Court. And I told him if he thought it was such a competitive and valuable offering, there was nothing stopping him from providing the same. In the end, he started sending clients to the court’s online system to generate their own filing documents. He would then give them advice and help make any needed changes to the document. I applauded him for being smart enough to realize he was a lawyer, not a software developer, and for finding ways to profit from the advance of technology instead of trying to fight it. He finally agreed that such a system was providing services to people who had not been getting them.

Towards the end of this dialog, I made the prediction that if a mandatory bar ever decided to pursue a case like the LegalZoom one, they should be prepared for a bad outcome. Even if the case is won, legislatures will not be warm to the idea of protecting lawyers’ market over the needs of constituents and businesses who generate jobs and valuable services. So you would expect some weakening of the laws that support the regulation of UPL.

With this rant behind me – I’ll move to what I consider to be the bigger question here: The Bright Line. Every state has different rules and very few resources to pursue UPL violations. This creates a very blurry line which is an open door for new competitors to enter the market. I have previously given examples in the IP Disputes market, but much broader and better funded providers have recently appeared and no one is raising the UPL flag.

Another prediction: no one will raise this flag until their business feels it and then it will be too late. Much like the LegalZooom situation, the market and government will ask why no one said anything before, and as a legal market our only fall-back will be some variation of clients being injured by the new providers. Too little – too late.

If lawyers want to protect their market they would do well to come up with a Bright UPL Line now. And as importantly, they should start innovating and finding ways to provide better, faster, cheaper services to preempt new competitors from entering the market. Without these two efforts, they can just sit back and watch the future happen around them, while their island of protected space grows smaller and smaller.

Back to my original story – that lawyer and I kept a dialog going on the topic for a few years. We finally came to the conclusion that the only real protected space for lawyers was court appearances since the courts can be an effective gatekeeper. Everything else was open to attack.