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 expertise and use of surveys and studies was that limiting outside investors will hurt the development of alternative solutions for their corporate clients. Moreso, these restrictions have also made the use of personal lawyers unaffordable for roughly 90 percent of the population across the United States.
These conclusions might just 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.
Henderson explains that he had no intention of swaying the California Bar in any way; he simply submitted his report on the current legal market with objective data and stats. Evidently, the market spoke for itself, as the facts demonstrated the need for legal service policy expansion.
Currently, the legal profession is at a standstill. Other industries have utilized technology to ramp up their productivity and innovation, yet the legal profession is heavily dependent on humans. Because lawyers cannot automatically mass cater their services towards hundreds of clients at the same time, they have the right to increase their rates.
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 percent of the consumer price index was allotted to legal services, and by 2016 that number had decreased to .245 percent. Henderson blames this downturn on the high prices. Even corporations have transitioned from using law firms to in-house lawyers.
Henderson continues to emphasize that state bar bans on non-lawyer ownership is creating the most pushback in legal productivity. Lawyers and professionals should aim to work together in the same legal service organization to maximize ingenuity and efficiency. He notes that alternative legal service providers, namely Axiom and UnitedLex, are doing well, as they specialize in more systematic, higher volume services.
Overall, the liberalization of these restrictions purpose is to give a voice to the 90 percent of people who cannot afford to hire lawyers. No amount of pro bono cases in the world could not compensate for the economic gap in the industry. The aim is to restructure the legal market through these policies to reverse inefficiency.