Recently the Germans came out saying the Americans should align with them against the UK Legal Services Act (LSA) initiative. This caught my attention as I have been giving quite a bit of thought to the whole LSA issue based on a presentation I did at the ILTA conference. The presentation was actually not on the LSA, instead it was on out-sourcing and the emerging role of Legal Process Outsourcers (LPOs). One of my observations about LPOs is that I believe they are now in direct competition with law firms. In other words:
LPOs hire lawyers and sell services directly to clients.
It was my understanding that you needed to be a law firm in order to sell legal services directly to clients. So in preparing for my out-sourcing presentation I did some homework on the subject. A conversation with a Bar executive from a mandatory bar left me perplexed. The outcome of that conversation was shades of gray. With lawyers providing the services it is not the Unauthorized Practice of Law (UPL). Online research turned up opinions from the ABA and several other bars on the subject. There is apparently no clear regulations barring companies from hiring lawyers and selling services, provided the client has licensed in-house counsel who “adequately supervises” the final work-product. So LPOs may be in the clear. As long as some lawyer is clearly the buck-stop player and the Bar knows whose bar license to go after, then things may be OK.
So I guess this means 3 Geeks can hire lawyers and start selling services to clients, provided the clients have their own lawyer(s) to supervise the work product. Stretching this idea only a bit further, if the client does not have a lawyer, we just need to make sure they hire one independent of us to serve as their contract in-house counsel for final review.
Even to me this sounds like quite a stretch, but help me out here. What is stopping 3 Geeks or anyone else from doing this? We would be functioning just like the current slate of LPOs.
One argument I received when I surfaced this idea over drinks at the ILTA conference was that the work LPO lawyers do could be done by paralegals or other non-lawyers, so it’s not crossing the practice of law line. Past conversations with Bar regulators suggest this argument will not stand. A legal judgment task performed by a paralegal (document drafting, document review, etc.) becomes the practice of law when performed by a lawyer.
And it’s not just LPOs: as far back as the 80s there were US-based legal research companies that employed lawyers providing “legal services” to law firms and clients.
So perhaps in the US instead of fighting for or against an LSA-type, deregulated landscape, we can just sit back and let non-law firms (I love typing that term by the way) raise capital, hire lawyers and provide legal services. Think of the competitive position such an entity could take in the market, driving down costs and increasing quality by using process and technology. Come to think of it, we may already be seeing just such companies emerge – ala Axiom and Clearspire.
Perhaps I should add IPO to my acronym mix.
To be clear, I am not saying LPOs are good or bad. I am merely raising the issue. In fact this may be an excellent catalyst to get law firms off of their collective rear-ends and actually engage.
Perhaps the reasonable market response from law firms will be to renounce their law firm status and become LPO-like entities.
Perhaps the legal industry in the US is already deregulated.
Ah – the future is interesting indeed.