On
February 2nd, The Economist published a series of articles,
including Guilty
as Charged and The
two-year itch regarding ways in which the cost of legal advice has
increased greatly as a factor of the increased cost of admission to the
practice of law, along with the limitations placed on the access to the right
to practice law. I was asked to comment.
The Economist articles
implicitly raise very serious concerns about access to justice, namely that
various limitations on the practice of law make access to legal representation
and thus legal assistance excessively expensive. I agree with the
articles' articulation of the problems needing confronting, but have slightly
different proposed solutions.
The
Economist points out that "America has more lawyers per person of its
population than any of 29 countries studied (except Greece), and it spends two
to three times as much on its tort system, as a percentage of GDP, as other big
economies (except Italy, where things are nearly as bad)." While
these statistics might suggest an overspending and overlawyering problem,
coupled with too large a legal community, it is also true that according to the
Legal Service Corporation’s October 2005 study, “Documenting the Justice
Gap in America," 50% of those who qualify for LSC funded programs are
turned away due to lack of resources and 80% of the legal needs of the poo go
unaddressed. At a recent conference of the DC Bar, I heard the Executive
Director of Philadelphia's Community Legal Services proclaim the continued
validity of these percentages.
One of
the Economist articles correctly points out that the high cost
of legal education and bar admission makes offering low-cost legal services at
affordable prices a near-impossibility for new lawyers who have large loans to
repay, coupled with existing living and family expenses. The article
effectively recommends that students be allowed to sit for the bar after two
years of law school, rather than three—which is currently the case. Another Economist
article recommends that non-lawyers be allowed own shares of law firms, claiming
that the current prohibition of non-lawyer investment "keeps fees high and
innovation slow."
Both
of these proposals are deserving of our attention. Legal education today
is outrageously expensive and time-consuming. It is particularly expensive for
individuals with family obligations and without financial resources to attend
law school. In the past few months, I have read numerous articles about
the sizable debt confronted by law school graduates. These
articles have been included in diverse publications as the magazine of the DC
Bar, the New York Times, and the Huffington Post.
It is
worth noting that neither of these articles references the suggestion by Milton
Friedman in Capitalism and Freedom, that occupational licensure as a whole be discarded.
Although the book was written in a prior generation, its points are
worthy of our attention.
In
Chapter 9 of Capitalism and Freedom, Milton Friedman argues that professional licensure does
not fulfill its intent to protect the public, but instead creates barriers for
individuals to engage in the professions they wish, serving as a barrier to the
public’s right to voluntarily engage economically with whom they wish.
Friedman
argues that although licensure regimes are designed to protect the public, the
process inevitably creates barriers to practice that are not relevant to
professional competence or the public’s legitimate concerns for safety, and
thus merely serves to restrict competition. He gives the example of
professionals in the early 1950s that required members assure that they were
not communists before being authorized to practice their craft.
Friedman
argues that the medical and law professions’ professional associations limit
access to participation by preventing practitioners who did not graduate from
an accredited professional school, an option only available to those who are
accepted into an accredited professional school, which thus requires graduation
from a recognized four year college. This problem is illustrated by
adults with requisite knowledge and sophistication to practice medicine or law
whose academic background prevents their admission into graduate school.
Friedman’s text gives the
example of political refugees who were experienced trained medical
professionals in their home countries, yet unable to practice their craft and
expertise here. Friedman additionally argues that there are restrictions placed
on doctors on how they may structure their practice, making it harder to offer affordable
medical care.
Friedman raises some
compelling concerns, but proposes an impractical solution. I’m sure we all can
think of examples of individuals suffering professionally due to these
restrictions. For instance, I know someone whose legal understanding is
superb but he is forever restricted in his ability to practice law because he
has not passed a bar examination, mostly due to test tensions that are
irrelevant to his desired transactional law practice. He then sought to open a
paralegal practice that sought to assist practitioners with writing, research,
and administrative matters, but found that he ran the risk of being accused of
practicing law without a license. Someone else I know is extremely
knowledgeable about law but the prohibitions against practicing law without a
license prohibit him from serving as counsel for those friends of his who need
legal help but don’t qualify for assistance from Legal Service Corporation
entities but yet can’t afford licensed counsel.
Friedman’s proposal to
discard law licensure altogether is extremely risky, as it would provide an
avenue for non-lawyers to parade around as lawyers. Friedman argues that
malpractice and fraud law are sufficient to protect the public, but he fails to
consider that tort law can only provide a remedy after a course of bad conduct
and damage, it can’t prevent bad conduct. Licensure, however, has the power to
interfere with the faulty economic relationship in advance. For instance,
absent a licensure system, what would be illegal about my opening a doctor’s
office and pretending to practice medicine based on folk cures and untested
hypothesis I might have about various healing methods? Recently I learned of a
case of a trained lawyer who repeatedly collected fees for services he did not
perform. Removal of his law license is a fairly effective means of
alerting the court and the public that he may not be trusted. Without law
licensure, a successful criminal fraud prosecution would be the only mechanism
available to arrest this person’s fraudulent behavior.
Friedman does, however,
make a great point that only modest corrective measures might not achieve a
sufficient result. I believe Friedman would argue that decreasing the
cost of law school by one-third would only decrease the severity of the
problem, not address it. While a one-third cost reduction would certainly
assist any individual student, failing to address the larger problem of the
hyper-inflation of the cost of law school would require us to repeatedly revisit
this problem very shortly.
Although I would be
uncomfortable with abolishing state-recognized licensure altogether, I would be
comfortable with the reintroduction of the practice of allowing individuals who
did not attend law school to sit for the written bar exam or be examined orally by senior members of the profession, much as President Lincoln
received his law license in September 1836 after an oral examination by a panel
of practicing lawyers. I would also be comfortable with an expanded use of the
pro hac vice process to allow non-lawyers to serve as legal representatives on
a case-by-case basis. My proposal has the benefit of retaining our trustworthy
bar admission methodology, retaining our rules against nonlawyers advertising
as lawyers, while allowing for individuals to obtain legal assistance from more
educated non-lawyers. By making the standard law school optional, yet requiring
potential legal practitioners obligations to obtain certain knowledge
before practicing commercially, this would open the door to diverse legal
education options in addition to the existing 3 year model. I personally would
like to see a reintroduction of law school options that revolve around training
in the context of a series of public interest fellowships, analogous to the
former Antioch College, or a program revolving around the discussion of great
cases, which is what I imagine would be the case in St. John’s College
(Maryland/New Mexico) had a law school.
A third Economist
article The
case against clones, references a lawsuit by a Jacoby &Meyers, LLP
(Jacoby & Myers Law Offices, LLP v. The Presiding Justices of the
First, Second, Third, and Fourth Departments et al., 11:11-cv03387)
designed to permit itself to obtain outside capital "to upgrade technology
and take advantage of scale." The lawsuit seeks a ruling that the First
Amendment (incorporated to the States through the Fourteenth Amendment)
protects the rights of non-lawyers and lawyers to partner or invest together in
the formation of a law firm. Currently, most States' Rules of
Professional Conduct prohibits sharing legal fees with non-lawyers, and
effectively prohibits any professional partnership with a non-lawyer.
On January 9, 2013, the Second Circuit Court of Appeals remanded
the case to the lower court for a determination on the Constitutionality of the
relevant provisions of the Rules of Professional Conduct. To the best of
my knowledge, this case is still pending at the lower court.
I believe a ruling
favoring Jacoby & Meyers, LLP would forever alter the legal profession,
in some good ways and in some bad ways. For instance, if lawyers and
accountants could partner, the tax field would become more effective. If law
firms could invite non-lawyer investors, it might be easier for new lawyers
with good ideas and no cash available to locate start-up capital. Furthermore,
partnerships with non-lawyers would allow attorneys to partner with and offer
stock options to long term paralegals and secretaries, many of whose work is as
essential to a law firm’s profits and success as that work which is
billable.
In the Jacoby and Meyers
case, the Defendants argue, in part, that the limitations at issue “are to
protect the lawyer’s professional judgment” and “to minimize the number of
situations in which lawyers will be motivated by economic incentives rather
than by their client's best interests.”
In my opinion, the most
compelling argument available to Defendants, which is raised in their motion to
dismiss the suit by Jacoby and Meyers, is that law firms run by business
executives are not necessarily bound by the Rules of Professional
Conduct.
Under the Rules of
Professional Conduct, there are numerous professional obligations incumbent on
lawyers that are not required of business owners not engaged in the practice of
law. Defendant’s brief states: “Should a partner …violate the Rules
and cause the lawyer to act against his client’s interests, the partner would
himself be subject to discipline by the state judiciary and risking his license
to practice. …There is no similar deterrent in place to prevent a non-lawyer
investor from attempting to influence a lawyer’s professional judgment for
financial gain (and the reality of the market all but ensures that such
pressures would shortly be brought to bear once the restriction on investment
is lifted).” The brief points to other professional obligations not legally
required of non-lawyers. These positive aspects of professional licensure
should not be thrust aside without care for the consequences.
Friedman makes the
argument that these rules limit the opportunities for individuals of different
expertise to creatively cooperate to make their respective professional
services less expensive to the general public. For instance, as I say above,
the tax field could be more effective if lawyers and accountants partner in a
joint enterprise. Perhaps a family law firm would do well to partner with
a social worker or psychology practice.
As I would be
uncomfortable completely abandoning the professional conduct rules that would
prohibit the situation where a business professional has an economic incentive
to dictate a lawyer’s conduct, much as it appears that insurance companies and
other business professionals have incentives to limit medical professionals’
professional options in treating their patients, I think there is plenty of
room for allowing small partnerships and other inter-professional business
relationships in situations where each professional maintains professional
independence while cooperating economically.
In conclusion, the
Economist writers are correct to raise the cost of legal education and certain
limitations on practice as economic factors that impact the cost of legal
services, and these problems should not be brushed aside but addressed in a
serious manner, perhaps as a discourse essential to preserving the esteem in
which society holds the profession. I hope that regardless of whether my
perspective presented here is adopted by others, it will at least encourage
others to consider their perspectives on what areas of the legal profession
contribute to its services being outside the economic scope of so many
Americans.
