In recent years, the legal industry has reached a crossroads. Certain trends in law have questioned the degree of power a lawyer should have over the solicitation of legal services. The ethical line is increasingly blurred as more and more external investors are funding the legal services being used, posing a threat to the costly act of hiring a lawyer. The matter in question is whether the ownership of legal services should remain strictly to lawyers, or expand to non-lawyer ownership. Many lawyers argue in support of the latter, claiming that decreasing the restriction of ownership could open doors for increased innovation in the corporate legal market.
To further analyze this issue, a task force was created, backed by the State Bar of California. William Henderson, a professor at the Indiana University Maurer School of Law, studied the current landscape of the legal market. The conclusion he’s reached through his studies was that limiting outside investors will hurt the development of alternative solutions for their corporate clients. Moreover, these restrictions have also made the use of personal lawyers unaffordable for roughly 90 percent of the population across the United States.
These conclusions indicate that it is time for regulatory action to be taken, and fast. The best possible situation would be that lawyers and professionals make collaborative efforts at an equal position in legal service organizations. Henderson’s report encouraged the task force to consider implementing regulatory reforms, such as the delivery of legal services online, which promotes the principles of increased protection, access to information, and the right to justice. The task force approved Henderson’s proposal, and the agreed-upon reforms will be issued by the end of 2019. Currently, other industries are utilizing technology to ramp up their productivity and innovation, while the legal profession is still heavily dependent on humans. It seems that lawyers cannot automatically mass cater their services towards hundreds of clients at the same time despite the technologies arising.
Yet, there is another piece of information that stands out. In comparison to other person-reliant industries, the spending on legal services has heavily declined. In 1987, 435% of the consumer price index was allotted to legal services, and by 2016 that number had decreased to 245%. In his report, Henderson emphasizes that in order to fix these stats, lawyers and professionals should aim to work together in the same legal service organization to maximize ingenuity and efficiency. Moreover, Henderson claims that state bar bans on nonlawyer ownership, such as the ban in Israel, are creating the most pushback in legal productivity. While global trends request to remove barriers to the flow of knowledge and services, including legal services, Israel is sometimes lagging behind. The Israeli Authorities approach tend to claim that lawyers and jurists should be considered as “public resources” and thus, it is required from them to act according to the norms of public responsibility. Even though the Israeli Bar is remaining very independent and quite free from state regulations, the legal market is still in the market of the Select Few. The reasons for the limitations in the field of Legal services are maybe based on the complex history of Israel’s state bar.
Overall, while in California the purpose of liberalization these restrictions is to give a voice to a big percentage of individuals who cannot afford to hire lawyers, it isn’t sure that the Israeli decision makers are targeting a fee reduction in Legal market by changing the existing ban. Legal fees are still extremely low in Israel, and Israeli lawyers work the same long hours as their EU or US cousins and earn a third or even a quarter of the fees.