I am at the College of Law Practice Management Futures Conference in Chicago. Stephen Mayson, Director and Professor of Strategy, Legal Services Institute, London, is the keynote presenter. His topic: The Future of Law: Who Will Perform It? Who Will Regulate It? (This is a live post, please forgive any typos or lapses.)
May some things that many lawyers will find heretical – about how we practice, how we train lawyers. Will address three themes today:
- What is law for.
- What are lawyers for?
- What is the future of law?
1. WHAT IS THE PURPOSE OF LAW?
It is to advance the public interest, but a very particular interpretation of public interest: how we maintain, protect, foster society. It is the framework for social and human existence. The fabric of society requires citizenship participation, structure around relationships between and among individuals. We need access to justice to address problems when relationships do not work out as expected.
A subsidiary question is who is law for? It’s for society and citizens – not for lawyers. Law needs to be as accessible and simple as possible to achieve this goal. Government and lawyers around the world are losing sight of the purpose of law.
2. WHAT ARE LAWYERS FOR?
Short answer: to further law’s purpose. It is about creating, supporting, sometimes challenging legal rights and obligations. Doing this is a privilege that comes with responsibilities. Of course lawyers must be competent. But technical competence alone is not enough. The application of law to help people is critical. Firms must be run effectively and lawyers must practice ethically.
There is an asymmetry between what lawyers and their clients know. This is true of most specialties. The asymmetry gives rise to the need for protection. Lawyers must help society and citizens – but we must make sure that lawyers fulfill their role. And that’s what lawyer regulation should be about.,
But let’s look at the real world. Is what lawyers do what they must or should do? Short answer is no. Lawyers have carved out territory beyond what they must and should do. In the UK, the “reserved activities” of lawyers is must smaller than in the US. Nonetheless, UK lawyers also do much more than what they must do.
So we have a society where lawyers do more than they need to do and most do. They make more law more complex than is necessary – this keeps them busy. But it may not be consistent with what lawyers must or should do. This creates an artificial model with too may lawyers and a suspect business model, protected by a suspect system of regulation.
Lawyers and their regulators have lost sight of what lawyers are for.
3. WHAT IS THE FUTURE OF LAW?
Demand for over-lawyering is declining. We need a re-start – to re-connect with the fundamental purpose of law. Connect lawyers’s work with clients’ best interest and what clients truly value. We need to re-calibrate public, client, and lawyer interest to re-join and align them.
The traditional model of legal practice is fatally flawed. Four things have gone wrong
- Lost track of how to create value. The billable hour is fundamentally flawed way of creating value. “Alternative fees” is an odd way of talking about what the right way to create value is. “Alternative” suggests more and less than it should. We need to look at the essence of advice and how we create value as lawyers. This may mean new ways of working or lawyers working more closely with other professionals – legal solutions
- How we resource legal services and law firms is broken. There is too much emphasis on having lawyers do everything. This frames everything in terms of lawyers, leaving the rest to pejorative “non-lawyers”. Need to consider alternative resources, better processes, and more technology.
- How we finance own and structure law firms is broken. Historically, regulations requires that only lawyers be owners but prevent access to capital. Reason for restriction: “non-lawyers” cannot be trusted to deliver quality or behave ethically. Self-interested protectionism is very dangerous place to be for any profession.
- Broken business model. The reward system that pays out too much, too quickly, to the wrong people, for doing the wrong thing. We do not look correctly who has created the real value. Separately, taking out all the returns as income makes no sense. We take out as income what should be a capital return, accelerating its return. The model skews toward immediate returns for a select few. In a real market – as opposed to artificial, regulated market – the rewards would be much different.
These are the factors that drove England to change the regulatory rules to allow alternative business structures, which mean ownership of law firms is no longer restricted to lawyers. An ABS allows a business consisting of people who are NOT lawyers to behave in many ways like a law firm.
In the first year of ABS (2012), 40 licenses for ABS issues. In 2013, about 200 issued. Increase reflects both acceleration of regulatory process and growing business interest in the market. Many of the ABS licensees are law firms. At small end of market, some firm become ABS so that owners family members can participate in ownership. At high end, publicly traded Australian law firm Slater & Gordon acquired a UK firm under ABS structure. This illustrates that a better regulatory approach allows more normal capital transactions. The news system of ABA has not given rise to any new or unusual complaints.
Stopping anyone from coming into a market to prevent harm is not the right way to regulate. Regulate behavior and activity, not people. One regulatory scheme requires much upfront qualification and hurdles. Or we can regulate after the fact. One is about prevention, the other about ‘putting things right’. The former is the much more expensive approach.
The US approach of the unauthorized practice of law (UPL) is the very expensive approach of all the regulation and prevention at the outset. Stephen would regulate after the fact.
The interesting question is who should be regulated at the point of entry. One case of this is for the public good. So supports point-of-entry regulation for courts and pursuing litigation. This is the “public good” justification.
The other reason is if the after-the-event redress is to severe: loss of liberty, life, all wealth. So those who advise on matters that, if they go wrong, it’s too late to put right, then regulate at the outset (point of entry).
So how to regulate and who? Saying that law is a profession and not a business is ridiculous on its face (my words but close to import of speaker). Stephen would let clients decide who to use. Let the market regulate lawyers in most circumstances.
The future of law is dependent on new balance among public, client, and provider interests.