Yesterday, the Chicago Bar Association (CBA) and the Chicago Bar Foundation (CBF) launched a joint task force to respond to the market failure in consumer legal services. In addition to addressing the gap in access to legal services, the CBA/CBF Task Force on the Sustainable Practice of Law and Innovation will address how lawyers are hampered and suffering under the current regime.
As CBF Executive Director Bob Glaves said at the kick off, “this new task force is dedicated to looking at how can we modernize the regulations governing the practice of law so that lawyers can practice in a more sustainable, innovative and accessible way for the public while optimizing the use of technology and other professionals.”
The task force’s website states:
“It is well documented that we have a huge access to justice problem in the United States, including in Illinois. Many thousands of Illinoisans who need or would benefit from legal assistance and can afford to pay something for it are not getting help from lawyers because they believe they cannot afford it, they do not know how to find it, or they do not even know that they have a legal problem in the first place.
At the same time, it is well documented that the economics of law have changed at a time when we have more lawyers than ever before. For a variety of reasons, it is more challenging than ever to run a sustainable law practice, particularly for lawyers serving the consumer market, and lawyers in all practice settings are struggling to adapt.
In short, we are experiencing a market failure in the market for consumer legal services. Because the legal market is shaped in large part by our Rules of Professional Conduct, we have an opportunity to take a fresh look at these Rules to spark innovation in the consumer legal market, promote the sustainable practice of law, and better serve people who need legal help.”
CBA/CBF Task Force Charter
I am one of 32 members of the CBA/CBF Task Force. Other members include lawyers in various practice settings, representatives of the Illinois Supreme Court Access to Justice Commission and the Attorney Registration and Disciplinary Commission, judges and Illinois Lt. Governor Julianna Stratton. The members are broken into five working committees, which include areas such as “Modernizing Lawyer Referral & Law Firm Models,” “Optimizing the Use of Other Legal Professionals” and “Partnering with Online Legal Service Providers and Other Businesses and Technology Entities.” A full committee list can be found on the CBF’s website.
The task force’s charter includes building on the knowledge and work product created by legal communities in other states. Therefore, a related National Advisory Council has been appointed, comprising 15 people from across the country and Canada who are involved in state or national regulatory reform efforts. Some attended yesterday’s meeting in person; others participated by webcast.
The task force committees will meet monthly, with draft recommendations anticipated to be submitted to the boards of the CBA and CBF in May 2020. A public comment period is expected during the summer of 2020, with a goal for submitting recommendations to the Illinois Supreme Court in September 2020.
In kicking off the CBA/CBF Task Force yesterday, Glaves exhorted that a healthy legal profession and improved access to justice for the public aren’t opposing concepts; instead, they’re inextricably linked.
Some out there view it as a threat to the profession to even consider regulatory reform of how the market is regulated. However, the real threat is doing nothing in the face of the reality that most people who need or would benefit from the help of a lawyer aren’t getting it.
During the meeting, I was asked to discuss the legal landscape and regulatory reform efforts being considered by other task forces. Here are a few highlights from my presentation.
Turning away from courts and lawyers
In Illinois and across the U.S. people aren’t filing civil court cases as much as they used to. And, when they do, they aren’t engaging lawyers to represent them as in the past.
In Illinois, as I’ve written before, civil case filings are dropping. According to the Illinois Supreme Court’s annual reports, filings declined almost 46% between 2009 and 2016. During that time, the number of cases in which lawyers represented both litigants have also been dropping. According to statistics from the Access to Justice Commission, in 2015, 93 of Illinois’ 102 counties reported that more than 50% of civil cases involved a self-represented litigant (SRL). In some cases, that number rose as high as 80%. This was consistent in jurisdictions across the state.
This has been happening around the country too. According to the National Center for State Courts, in 2015 only 25% of cases filed in state courts were disposed of by a judgment greater than zero. The median judgment was $2,441.
The same study reported that only 25% of cases had lawyers representing both parties and 75% had at least one SRL. Given the median judgment of $2,441, it’s not surprising that most cases involved at least one SRL. How many lawyers can sustain a litigation practice with that level of recovery?
Myriad studies generated over the last few decades document the fact that Americans go without civil legal services. Rebecca Sandefur, associate professor of sociology and associate professor of law at the University of Illinois at Urbana-Champaign and an American Bar Foundation faculty fellow, explains that cost isn’t the only reason; many people don’t recognize the problems they’re experiencing as legal or having a legal solution, or prefer to seek help from a family, friend or otherwise. This is occurring even though our profession exists to provide legal services, and law and regulation permeate our society more than ever.
Solos and small firms struggle financially
Most U.S. lawyers work in solo or small firms. According to the latest American Bar Association data, about 48% of private practitioners are solos. Adding to the solos, those in small firms of up to 10 lawyers account for 70% of attorneys in private practice.
The Internal Revenue Service collects income data on sole practitioners. James Grogan, former deputy administrator and chief counsel at the Illinois Attorney Registration and Disciplinary Commission, explained at The Future Is Now 2.016 that sole practitioners have experienced a 30% decrease in income over the past 25 years (adjusted for inflation). In 1988, the average sole practitioner earned almost $71,000. In 2013, however, sole practitioners earned just over $49,000 (adjusted for inflation).
The reasoning behind this loss in income came to light when Clio, a cloud-based legal management platform, released its Legal Trends Reports in 2016 and 2017. Prior to this, much of the research on the legal profession was self-reported and from larger firms of 50 attorneys or more. However, Clio’s reports are based on comprehensive, anonymized billing from solo and small firm practitioners.
The data revealed that, assuming a (relatively relaxed) workday of eight hours, attorneys only generated 2.2 hours of billable time and, after discounts and write-offs were applied, only billed 1.6 hours to clients. Moreover, lawyers had a collection rate of just 86%, which means they received the equivalent of 1.4 hours of their eight-hour workday. Jack Newton, CEO of Clio, discussed the implications of the 2016 results at the Commission’s The Future Is Now conference in 2017.
In 2017, Clio conducted a survey to determine what happened to that missing six hours a day. They found:
These data show how lawyers are spending that missing six hours; more than 80% of it is spent on obtaining clients or running the business. These are skills that were taught in law school. This means lawyers are spending roughly the same amount of time looking for legal work and running the business as they are performing legal work for clients.
Regulatory Reform Nationally
In addition to the CBA/CBF Task Force, several states and national organizations are considering whether amending some of the Rules of Professional Conduct could reduce the access to legal services gap and the pressures on solo and small firm practitioners who tend to serve moderate-income individuals. As I have reported before, here and here they are:
- Utah: The Utah Supreme Court adopted the recommendations of a work group. The Court has directed implementation of amendments to certain Rules of Professional Conduct and the formation of an independent regulator under the Court to conduct a “sandbox” for innovative customer-facing solutions.
- California: The task force has issued recommendations and held public hearings and a public comment period. It’s now in the process of evaluating the comments with a goal to submitting a final report to the Board of Trustees by December 31, 2019.
- Arizona: On October 4, 2019, the task force issued a lengthy report recommending the elimination of restrictions on referral fees, multi-disciplinary practice and outside investment in law firms and related amendments to other rules. It also recommends further exploration of appropriate regulation of entities that include professionals other than lawyers. The task force report will be presented later this month to another Arizona Supreme Court oversight group. If that body approves moving forward, the recommended rule changes would be published for public comment.
- APRL: The Association for Professional Responsibility Lawyers formed a Future of Lawyering Committee over a year ago. The committee is considering comprehensive reform of ethics rules and regulation that may provide a national template on these issues. An interim report is expected by the end of 2019.
- IAALS: The Institute for the Advancement of the American Legal System, a legal think tank located in Denver, is exploring rule changes and new regulatory models including entity (in addition to individual) regulation. This month, Scott Bales stepped down as Chief Justice of the Arizona Supreme Court to take the executive director position.
The twin problems of the public’s access to legal services and small practitioners’ ability to enjoy a sustainable practice have worsened over time. There’s no proof or expectation that changing the Rules of Professional Conduct alone will solve either of these problems. What is clear, however, is that the various initiatives proposed to date have been inadequate.
I echo this sentiment from the Arizona Task Force report:
Lawyers have the ethical obligation to assure that legal services are available to the public and if the Rules of Professional Conduct stand in the way of making these services available, then the Rules should be changed, albeit in a way that continues to protect the public.
And also this sentiment from Illinois Supreme Court Chief Justice Lloyd Karmeier in the new three-year strategic plan of the Illinois Judicial Conference:
If the courts are to continue to make good on the promise of equal justice under law in this new and challenging environment, we must be proactive. Waiting for problems to develop and then responding will no longer do. Rather, it is critical that we anticipate the difficulties ahead and prepare for them in a reasonable and coordinated way…
What are your thoughts on the CBA/CBF Task Force on the Sustainable Practice of Law and Innovation? Please share below.
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