State Bar proposals: A clear and present danger

The State Bar is examining restructuring the legal profession as we know it.  Several of their proposals present a clear danger to the practice of contingency fee law. Nearly all of them could find their way into legislation that would have to be fought in the statehouse. Up for consideration and open for public comment are proposals to: 

1.   Permit non-lawyers to hold ownership interests in law firms.

2.   Allow non-lawyers to provide specified legal services as an exemption to the UPL.

3.   Amend the Rules of Professional Conduct to permit fee sharing with non-lawyers.

4.   Create a new regulatory structure for non-lawyers or entities that are authorized to provide legal services.

One of their proposals would allow prelitigation entities and tech companies to offer services to quickly resolve cases before litigation ensues. Sounds simple, right? Well here are just a few ways this could detrimentally affect consumers:

  • App-based legal tech services may mistakenly assume injured people know their rights. Consumers do not know what liability arguments and damages they can and should claim.   Just plugging in co-pays and out-of-pocket costs into an app also used by the insurance company and then resolving the case could lead the consumer to waive rights to compensation they are not even aware of. "Resolution" is reached by data entry and not the full damages including how the tortfeasor harmed their life.
  • The only weapon the injured person has is the right to a jury trial, so if a consumer uses this tech service/app before litigation to settle the case, the insurance company will know they are not intending to file the lawsuit and will undervalue of the claim.  Essentially, this proposal is chipping away at the right to a jury trial.
  • Using these services also directly impedes a hallmark of our civil justice system - the attorney-client relationship. Even if non-lawyer tech company apps have rules to follow as to confidentiality, how will this be regulated if the State Bar gives up that power to a newly formed entity?


If this seems personal, it's because it is. As attorneys we are fiduciaries of the highest order. We maintain our duty to our clients, and help people in their most difficult, life-altering times. We are problem solvers, informed by experience, education and ethics. So yes, it is personal for us. We need to have our voices heard and let the State Bar know that access to justice should not leave us blind to corporations promising to help the indigent and poor. As a Bar we have a duty to our profession and the public to offer solutions to the access gap. We should be part of the conversation, rather than being seen as the problem.Ensuring access to justice are goals we work towards everyday as contingency fee attorneys. But the majority of the State Bar proposals will simply allow large businesses, hedge funds, franchisors, and holding companies seeking to undermine small existing law firms and the historic structure of contingency fee practices.

Even allowing non-attorneys to hold equity positions in law firms could fundamentally affect how consumers are represented. Although many larger law firms currently have non-attorney managers, those attorneys cannot ethically allow managers to direct what the lawyers do, and those managers also cannot have any ownership interest or fee split. If the proposed rule comes into effect, we may see larger businesses and hedge funds buying law firms and making changes to the way those firms practice. Shareholder interests and quarterly earnings reports could dictate the practice of law, not the client's best interest.

The task force has since commenced a 60-day public comment period, asking to hear from members of the Bar like you. Here is a link to submit your own written comment before the September 23rd deadline:

https://fs22.formsite.com/sbcta/mqyizfkspe/index.html

Please also share your comments with CAOC by emailing them to jserna@caoc.org. CAOC is working on a formal written comment, which we will circulate to other CAOC members as well.  You can help amplify that by adding your own personal comments. The more the task force hears from all of us, the better.

At the end of the comment period, the Task Force will prepare a report setting forth its recommendations which will be submitted to the Board of Trustees no later than December 31, 2019. Our lobbying team has already started to meet with key legislators and staff. CAOC President-Elect Micha Star Liberty testified at the State Bar Public comment hearing earlier this month.

About 95 percent of the State Bar proposals would require legislative and statutory changes. CAOC will be aggressively involved. Aside from working with us to thwart these proposal at the State Bar level, please also consider assisting in our political efforts to send civil justice lawmakers to Sacramento.

Please feel free to contact Nancy Drabble (nancyd@caoc.org) or Jacquie Serna (jserna@caoc.org) for more information.