It would be great if it were true, but in reality deregulating your legal market and allowing ownership of legal businesses by people who are not lawyers does not guarantee increased access to justice (A2J). This matters even more now as the US, see the recent example in Utah and elsewhere, is working on the assumption that it’s some magical panacea that will right the wrongs in their legal system. But, the truth is: it may not change very much at all.
What Non-Lawyer* Ownership Really Means
While much has been said about allowing people other than regulated lawyers to own, co-own, or invest in, legal businesses, it primarily does two things:
- Allows new funding channels to keep a legal business supplied with cash, e.g. in the UK you can list a law firm on the stock market to get new cash that way. This doesn’t make the lawyers better, or more accessible, or less expensive, or more efficient, or more likely to use technology. It just gives that legal business better access to capital that they can use to grow the business, such as via opening new offices and hiring new people.
- It also allows professionals of different varieties to share costs and profits, e.g. an accountant could join a small high street law firm as a partner and together with the lawyer equity partners they co-own the business and share costs, clients and any profits that come from this sharing system. But, again, this doesn’t make any of the professionals’ services more affordable, although it may be a little more convenient for clients to get accounting and legal input from the same shop front. That said, the convenience gained is marginal.
The key point is that just because you allow a new type of corporate structure for legal businesses that offer regulated services, doesn’t guarantee that there will be any real changes in how those services actually take place:
- A law firm owned by a supermarket (e.g. the Co-Op in the UK) does not mean the lawyers giving advice are automatically cheaper or using the latest technology to help clients.
- A law firm that is listed on the stock market (e.g. as was the case of Slater & Gordon in the UK) doesn’t mean that the new flow of capital changes the delivery of legal services. In the UK, law firms with a focus on consumer needs have used the ability to gain outside capital to invest in swathes of advertising, as we saw with Slater & Gordon and its massive TV campaign. It continued to offer no-win/no-fee arrangements and didn’t become any more, or less affordable. I.e. nothing really changed for consumers, they just saw more adverts.
Non-Lawyer Ownership Doesn’t Mean Not Needing Lawyers
One accidental assumption that sometimes gets mixed in with the ‘deregulation magic’ theory is that it will also automatically allow people who are not regulated lawyers to handle what are normally costly legal procedures, and so increase access to justice.
In this case the answer is ‘it depends’. In the UK – and before the Legal Services Act that freed things up – they created Licensed Conveyancers, who were a special strand of the legal profession, separately regulated, who did just one thing – helped consumers to buy and sell houses. The limited scope of the role, less extreme qualification routes and hence lower salary expectations, and a high level of commoditisation, meant affordable conveyancing costs.
But, creating new streams of legal professionals like this that don’t have to follow the regular lawyer route is not always in the jurisdiction’s deregulation plan. And if it isn’t ‘regular lawyers’ won’t get any less expensive – (unless you made legal education and qualification much, much easier and cheaper – but that’s another subject).
I.e. things that cost a lot to make, such as a lawyer that can give useful legal advice, cost a lot to buy.
Lawyers (For Now) Always Tend To Be Expensive
The fundamental reason for a lack of access to justice is not a lack of new corporate structures, it’s the fact that lawyers are – at least currently – still too expensive for most people to use, (except where there is legal aid; no-win/no-fee deals; or where something has been heavily commoditised e.g very simple wills and there is price competition from other sources, such as on-line will systems).
It costs a lot of money to become a lawyer. It costs more money to train them once they start in a legal business. And, until the crisis hit, there was more demand for legal services than the lawyers in the market could supply. So, when they could, law firms charged as much as they could…because, well, they’re businesses that seek to make as much money as possible. And if they can, they will.
(We could also add in the strange mystical and self-perpetuating belief that ‘professionals’ deserve to be expensive, which has its roots in the socio-economic, class-orientated evolution of civilisation, but let’s leave that one for now.)
To put it simply: lawyers remain expensive even if they are in a new and complex business structure. Deregulation doesn’t automatically change that, whether they work in New York for Goldman Sachs, or provide advice on housing law.
‘Technology Somehow Has Something To Do With Deregulation‘
Another myth is that deregulation allows better use of tech to provide A2J. It might, if your country banned the use of things like DIY legal document platforms, or forbade factual expert systems that gave people basic legal information, or things like DoNotPay that helped people with some of the admin tasks in consumer rights battles.
But, even in the US these things are not banned. So……how does deregulating help the use of tech to improve A2J…? It doesn’t.
99.9999% of legal technology doesn’t need any deregulation, or at least any more regulation than already exists.
We’d only need some special regulatory deal if people had software that purported to be giving actual legal advice, i.e. as a simulacrum of what a lawyer does. And they’d be right to regulate that. But, only people who are confused about what’s happening with tech assume software in the market at present is giving actual legal advice.
So, tech + deregulation also does not mean better A2J, as there is little to change there.
What gives a society better access to justice, i.e. more attainable legal advice and representation from trained lawyers, is not deregulation per se, but making those services more affordable, i.e. making lawyers less expensive. It’s as simple as that. There is no rocket science here.
You want to sell more of something? Then give it a price most people can pay for it.
A new ownership structure does not automatically achieve this. What makes lawyers more affordable is:
- Using technology to reduce all the costly ‘legal admin’ work they do that adds to the bill.
- Create new streams of lawyer-type roles, e.g. licensed conveyancers, that can offer consumers less expensive services because their training and salary expectations are lower, and because they focus on a very specific need where there is sufficient demand to partially commoditise that work and reduce its price.
In this case, only the latter would demand any regulatory change for most countries.
To sum up, if oranges cost $25 each, very few of us would drink orange juice. The same is true for legal services.
If you want to increase uptake of a product or service the fundamental way to do this is to reduce its cost. And that doesn’t always mean deregulating.
Last word, in the UK, which has been a pioneer in deregulation, the impression here is that access to justice has not massively increased, in fact one could argue it’s now worse today than in the past. Many lawyers outside of the legal aid world are more expensive than they were a decade ago, meanwhile legal aid itself continues to be eroded. Use of tech to enable consumer legal services to be offered more affordably also remains at the early stages. In fact, areas that have helped access to justice, such as courts in the UK allowing digital transmission of documents for no-contest divorces didn’t need any deregulation at all – but arguably has helped people who normally may have felt the need to ask for a lawyer to help to handle the bureaucracy, which would have made things more expensive.
So, the UK experiment shows that there is no magical solution to access to justice. It can help in certain areas, for sure, but betting everything on deregulation to solve your access to justice challenge is misguided.
By Richard Tromans, Founder, TromansConsulting & Artificial Lawyer, August 2020
[ * Non-lawyer – I don’t like the term when used to describe everyone else who works in a law firm. But, in this particular regulatory context, it does make sense, as it’s all about very specific professions that can or cannot own certain types of business. ]