Legal Innovation Regulatory Survey

An overview of the legal regulatory landscape related to legal innovation and access to justice.

State Changes of Model Rules

Methodology

With regard to rules of professional conduct, the rules in every state and the District of Columbia were compared to the ABA Model Rules in six discrete areas. If the text matches the ABA Model Rules but the numbering is different, it is assigned the label “minor clerical changes.”  If a jurisdiction changes the text of the Model Rules, it is noted as a “significant change.” If a state has not adopted a given Model Rule or portion thereof, it is assigned the label “does not have”.  Commentary, cases and statutory changes affecting the interpretation of a rule are listed.

Overview of Rules

Rule by Rule Comparison

ABA Rule 1.2(c) (Limited Scope)

ABA Model Rule 1.2(c) says: “A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.”  Limited scope representation is seen by some as a way for lawyers to assist people who might not otherwise have representation. Depending on the jurisdiction, limited representation can take the form of ghostwriting documents for pro se individuals, an agreement to represent an individual only in a certain portion of a dispute, among other discrete services.   As seen in the below chart, 35.4% of the states have adopted significant changes to Model Rule 1.2(c). 

ABA Rule 5.4(a) (Fee-sharing)

In most jurisdictions, the rule analogous to ABA Model Rule 5.4 is titled “Professional Independence of a Lawyer.”  This rule prohibits the sharing of lawyer fees with non-attorneys. Many of the changes and exceptions made to this rule are for lawyers to be able to pay the estate of a deceased attorney if the deceased attorney contributed to the client work in any way.  In Washington, however, attorneys are permitted to share fees with the Limited License Legal Technicians (LLLTs). This is codified in Washington Rule of Professional Conduct 5.9.

ABA Rule 5.4(b – d) Non-lawyer ownership

The second half of ABA Model Rule 5.4 is concerned with the ownership of law firms and businesses by people who are not lawyers. In some countries, such arrangements are known as Alternative Business Structures (ABS). ABS has been allowed in Australia, the United Kingdom and other nations for several years, but it is generally prohibited in the United States. Washington, D.C. is one notable exception, allowing limited forms of ownership of law firms by people who are not lawyers. Additionally, Washington State allows for Limited Licensed Legal Technicians to have a minority ownership stake in law firms. As seen in the below chart, 47.1% of the states have adopted significant changes to Model Rule 5.4(b – d). 

ABA Rule 5.5 (UPL)

Rule 5.5 is titled the “Unauthorized Practice of Law,” but it primarily addresses issues relating to lawyers practicing in states where they are not licensed. With regard to innovations in this area directly affecting lawyers, some states have adopted the ABA’s “Model Court Rule on Provision of Legal Services Following Determination of Major Disaster,” which allows out-of-state lawyers to provide legal services following a disaster.

Rule 5.5 does not address whether other kinds of legal services providers, such as online legal document assembly services, constitute the unauthorized practice of law. Rather, those issues are left to states to regulate outside the rules of professional conduct, such as in statutes or court rules. (The American Bar Association has not defined the practice of law.)

There are two ways in which jurisdictions have liberalized the law in this area that relate to the delivery of legal services by providers other than lawyers. Some states, such as Arizona, California, Nevada, New York and Washington, have expressly authorized new kinds of professionals (e.g., LLLTs and document preparers) to perform actual legal services. Utah is joining them in 2019 with Licensed Paralegal Providers.   

The second type of innovation liberalizes unauthorized practice of law provisions to allow for a wider array of legal services providers. For example, in Texas,Title Two, Chapter §81.101(c) provides a carve out for print and electronic self-help tools and specifically grants a waiver to Unauthorized Practice of Law claims as long as the tools state that they are not a replacement for the assistance of an attorney. North Carolina addresses similar issues bystatute .

There are two other states that are considering rules and statutes that would affect online legal service providers, and they take very different approaches to the issue.  The Tennessee legislature is currently debating a bill that would regulate and strongly restrict the creators of legal software.  Washington, on the other hand, isconsidering a rule that would exempt online legal service providers from unauthorized practice of law claims. As seen in the below chart, 96.1% of the states have adopted significant changes to Model Rule 5.5. 

ABA Rule 5.7 (Law Related Services)

Lawyers increasingly deliver a range of law-related services to clients. This rule guide lawyers on when the Rules of Professional Conduct apply to those services. Approximately 30% of jurisdictions have declined to adopt this rule in any format. As seen in the below chart, 13.7% of the states have adopted significant changes to Model Rule 5.7.

ABA Rule 6.5 (Court annexed/Non-profit limited scope)

This rule guides lawyers who provide assistance to clients through limited scope services, clinics or help-desks, such as “Lawyer in the Library” events.  This rule relieves the burden of performing conflict checks for these limited service engagements unless lawyers know that their firms are already representing one of the client’s adversaries. As seen in the below chart, 25.5% of the states have adopted significant changes to Model Rule 6.5. 

ABA Rule 7.2(b) (Lawyer referral)

The rule affects how lawyers market their services to the public. With limited exceptions, it prohibits lawyers from providing anything of value in exchange for a referral. Florida, Oregon and North Carolina have modified this rule to make it easier for for-profit legal referral services to operate. Illinois is in the process of rule change proposal. As seen in the below chart, 72.5% of the states have adopted significant changes to Model Rule 7.2(b). 

Cloud Computing

Cloud storage of information as well the utilization of cloud-based Software as a Service (SaaS) has become a common business practice for many industries and professions.  Given lawyers’ somewhat unique obligations with respect to the maintenance and protection of their clients’ data, many lawyers may not utilize these cutting-edge technologies due to concern over whether doing so will enable them to meet their ethical obligations.  In 2017, the American Bar Association issued formal Ethics Opinion 477R to provide guidance to lawyers on transmitting client data over the Internet as well as storing client information in the cloud.  Currently, 22 jurisdictions have issued an ethics opinion on a lawyer’s use of cloud computing services in connection with their representation of clients.  Given that cloud computing has the capacity to lower costs and increase ease of access by a client to their information, these opinions can lead to increase innovation by lawyers in how they deliver their services. 

Technological Competency

In 2012, the American Bar Association approved a change to comment 8 of Model Rule 1.1 (Competence). It states: “To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology…” (Emphasis added.)  This amendment reflected the idea that lawyers must remain competent with regard to technology if they are going to deliver legal services in the way that the public increasingly expects and demands. Approximately two-thirds of states have adopted this or similar language. Two states have mandatory technology continuing legal education. They are Florida, which requires three hours every three years, and North Carolina, which requires one hour every year.

To tackle the Access to Justice crisis, some states are allowing non-lawyer “court navigators” to assist Self-Represented Litigants through the court system. A detail analysis of court navigator programs can be found in Mary McClymont’s recent report. Currently 16 states have courts with navigator programs.