To secure passage by its House of Delegates, the American Bar Association might have diluted a bold recipe for shaking up how the profession is regulated. But even the leader of the ABA body that laid out the call for states to innovate daringly said Monday's vote isn't the "main event." Want to weigh in? Email me here. Want this dispatch in your inbox every Thursday? Sign up here.

Talkin' 'Bout Deregulation

February might be just the second month of the year, but paradoxically, it appears to be a significant one for "mid-year meetings."

This year, two early observers of the year's midpoint also used the opportunity for some legal industry self-reflection. It just happens that the American Bar Association and the Conference of Chief Justices are on a similar schedule—and both organizations have a stake in the question of how the legal profession is regulated.

I've talked about the ABA here before. The organization's House of Delegates shot down the last significant push towards liberalizing the legal industry in 2000 when it rejected recommendations that would have allowed multidisciplinary practices.

Now, with a vanguard of states pushing fee-sharing and outside ownership of law firms as part of the solution to the nation's access to justice crisis, the ABA has returned to the issue. Its Center for Innovation in December released a resolution aimed at encouraging jurisdictions across the U.S. to experiment with new regulatory models aimed at increasing access to legal services.

Included in that December draft: a quote from U.S. Supreme Court Justice Neal Gorsuch's recent book, "A Republic If You Can Keep It," illustrating how entities subject to a new regulatory scheme in the U.K. were succeeding in serving the poor and the middle class.

A group of state bar groups decidedly opposed to the prospect of outside ownership were not fans of the resolution. And before it went to a vote at the ABA's meeting in Austin, Texas earlier this week, sponsors agreed to make some significant revisions. In the end, an overwhelming majority of the House of Delegates supported a measure encouraging state regulators and state bar associations to explore regulatory innovations that could improve access to legal services, but one that also explicitly said it should not be construed as recommending any changes to the ABA Model Rules of Professional Conduct, as they relate to non-lawyer ownership of law firms, the unauthorized practice of law, or any other subjects.

I'm not sure what the impact of this vote is going to be. Looking across the U.S., it's easy to slot jurisdictions into three baskets. There are states like California, Arizona and Utah that have jumped head first into regulatory reform. East of the Mississippi, state bar associations in New York, Ohio, New Jersey, Pennsylvania and Delaware have made it clear that "outside ownership of legal providers would present a minefield for the profession." The largest basket holds the states that are sitting on the sideline and watching. It's difficult to see how they are spurred into action.

"It makes it a very vanilla resolution," said Holland & Hart partner Cory Talbot, who has been involved in Utah's reform efforts.

Nonetheless, it's more than the ABA was able to agree on two decades ago. And, as ABA Center for Innovation chairman Daniel Rodriguez told me, even with the compromises made to get the resolution past the finish line, the organization is not standing in the way of more radical change.

"I read the resolution as urging states to experiment in a blue sky way," the Northwestern University law professor said Thursday, having weighed the subject after declining to comment immediately after the vote. "I wouldn't read regulation as constraining me or dissuade me from considering non-lawyer ownership of law firms or practice by non lawyers. At the end of the day, states are going to do what they're going to do."

In the end, the other recent mid-year meeting might exert a little more influence. A week before the ABA got together, the Conference of Chief Justices met up in Honolulu. Between tropical drinks and beach time (at least as I'm imagining it), the leaders of state supreme courts agreed on their own resolution addressing regulatory change and access to justice. Alongside encouraging regulatory innovation, there's an explicit recognition that this means considering new categories of legal service providers, alternative business structures, and reexamining provisions related to the unauthorized practice of law.

Let's not forget that, when it comes to making these changes, state supreme courts have the final word. We'll soon get to see how the California Supreme Court feels about recommendations coming from that state's Task Force on Access Through Innovation of Legal Services, and the Utah Supreme Court has let the way in the creation of a regulatory "sandbox" in the Beehive State.

Justices, and bar groups, in other states will be watching these outcomes carefully.

"There has been a lot of hesitancy to consider this issue generally," Talbot said. "Now that states have at least started to overcome that hesitancy, I think you're going to see a lot more movement in other jurisdictions."

That's why even Rodriguez acknowledges that his group's resolution is largely a symbolic measure. "It's not the main event," he said.

An even more consequential role for the ABA would be to help evaluate the experiments that are bound to come from multiple laboratories. Then, if the data favors bold reforms, it might embrace these changes. I'll give Rodriguez the last word:

"The ABA could play an important role in that regard, but it remains to be seen when it will."

In the News

➤➤When talking about those businesses that aren't law firms but play a supporting role in performing legal work, I find that I shuffle between "alternative legal service providers," "new law," and "law companies." My colleague Frank Ready took a careful look at how these entities themselves view the question of nomenclature.

➤➤Our Hong Kong bureau chief Anna Zhang has been marooned with her family in mainland China, stopped from returning because of the coronavirus. That didn't stop her from filing a story on the Big Four's surge in Asia. They're "on a tear," she says. Revenues are rising and they are actively hiring lawyers away from law firms.

➤➤"Does anyone actually say disrupt with a straight face anymore?" I still stand behind the title for this briefing. But the Atlantic dug into the emptiness of corporate buzzwords, and I felt a jolt of recognition. Nevertheless, I hope you find the Law Firm Disrupted impactful, and if not, feel free to circle back before the next installment in one week.

You'll hear from me again next Thursday! Thanks again for reading, and please feel free to reach out to me at [email protected]. Sign up here to receive The Law Firm Disrupted as a weekly email.