I have long thought that archaic US rules that govern lawyers serve as a barrier to legal innovation such as new law firm business models or the adoption of time-saving and quality-improving technology. 

The recent LegalZoom case, publicized elsewhere, about allegations of unauthorized practice of law, illustrates the problem. In my opinion many ethics rules are irrational because they are based on suppositions, not on evidence. In the LegalZoom case, as I read it, the concern was based on a theory of possible or potential harm. Moreover, the regulators appeared not to weigh potential benefit versus potential harm.

Today, the New York Law Journal provides another illustration of irrational rules. The good news here is that a US Federal Court found a rule to be unconstitutional. Out-of-State Attorney Office Rule Found Unconstitutional (9 Sep 2011) explains why a federal judge found the requirement that a NY licensed lawyer living out of state maintain an office in-state.

The legal reasoning here is necessarily is narrow but the factual analysis is noteworthy: the judge considered how the real world works:

“Judge Kahn said it is illogical to believe that convenience to legal clients plays a part in New York’s rules about where lawyers are situated. An attorney based in northern New Jersey, for instance, is much better able to service a client in downstate New York than is an attorney based in Syracuse or Buffalo, he said.”

Law firm managers and CIOs must stay attuned to the shifting regulatory landscape. Legal de-regulation in the UK, about to get underway, may well have an impact in the US. As regulators, legislators, or judges apply reason and fact, long-standing rules may well fall. When that happens, it creates opportunities for alternative providers to deliver legal services in new ways. And smart large law firms can also take advantage of future rules changes.