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.
So what is a reasonable response?
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.
  • I agree with your views; as an enterprenuer. In my particular line of business – a consultancy, we simply have to reinvent ourselves every 3-6 years, depending on my target market, its needs, and my competition. There are new opportunities. Firms have new opportunities, while previous lines of business wither and become obsolete.
    I was sitting with about 9 managing partners from firms size 800 lawyers and up (one of which was over 2000 lawyers) – what's interesting were the clients they invited to this event. And their clients (GCs representing a huge telco, very large financial institution and a multi national mfg.) told them about business opportunities they did not even think about to date. Including why they should/can compete for business that giant consultancies/accounting firms currently land.

  • Given that both UPL and lawyer regulation are still matters of state law, no national bright line is on the horizon. I agree with your general sentiments, Toby, see e.g my recent piece on legal fee deflation — But there are legitimate policy reasons for limiting what non-lawyers can do to more than just not representing someone in court — both to protect consumers and to sustain an independent legal profession that for all of its tarnished reputation still serves vital societal interests. We shouldn't forget them just because some lawyers attack new entrants out of knee-jerk turf protection instincts.

  • Toby we have just gone through a period where mortgage brokers and bankers defrauded the American consumer wholesale and the response has been to increase regulation of these professions, because it was obvious that without regulation there were widespread abuses. Now you want to let anyone give legal advice, draft legal documents, negotiate agreements, etc. With what result? UPL should not be so broad that activity that is not obviously the practice of law, such as software that does legal work, or so narrow that it wipes out the legal profession. Lawyers have been slow to respond the nonlegal providers like LegalZoom, but today they can offer a better service at the same price point. The technology is now available and at a lower enough cost so that law firms can offer legal forms bundled with legal advice for a fixed price. Legalzoom claims that you can thousands of dollars but that is like comparing apples to oranges, because there is a fundamental difference between the services and the outcome.

  • Richard – thank you for the comment. I should clarify I am not proposing we open the doors to non-lawyers, but instead establish better lines for UPL. That being said, and after 18 years at a mandatory bar, I'm not seeing the harm to consumers for LegalZoom-like providers. The Missouri case (to my understanding) is not claiming harm, but only UPL.

    The harm I see is that lawyers have not been providing affordable access to their services. The last survey I saw showed 50% of adult Americans do not have a will or estate plan in place. I agree that tools (like the ones you use) are readily available and have been for years. However, lawyers have not embraced them on a broad scale. LegalZoom has instead filled this void.

    My point to lawyers and the profession is that suing a competitor should be the final option. The first ones should be getting your house in order (defining UPL more consistently) and being proactive in meeting the market needs.

    I would personally much rather see lawyers filling the needs that LegalZoom is meeting. I just don't see them stepping up to do that.