On the new business structures in the market of legal services

 A few days ago I reported that the era of non-lawyer owned firms is here, now that Arizona and Utah have approved some version of such an alternative business structure.  

As I have written elsewhere, the debate on whether this is a good idea is not new. (See here, for example).  What is new is that these two states have decided to give it a try.  And, not surprisingly, this has reinvigorated the debate again.

One of the main arguments used to justify opening up the practice of law to non-lawyers (whether by allowing non-lawyers to provide some types of legal services or by allowing lawyers to get capital from and to partner with non-lawyers, or by allowing non-lawyers to “own” law firms) is that it will provide more “access to justice.”

This notion of “access to justice” is, of course, a misnomer, since there is no guarantee of that.  What we should be asking is whether the new regulatory system will provide more access to legal services, or, better yet, to affordable legal services.

Unfortunately, there is no evidence that it will, and if we go by the experiment with Legal Technicians in Washington state, there is evidence that it won’t work. 

Although the new business models may provide more access to consumers, they won’t necessarily reduce the cost of legal services, prevent conflicts of interest or guarantee competent representation.  That is so because the new non-lawyer owners of the law firms are in the business to make a profit.  They need a good return for their investment and that margin is likely to come out of the difference between costs to provide the services and the fees that can be generated.  

Unfortunately, maybe this means that companies more interested in making a profit than in providing wide ranging legal services will devote their attention to reviewing would be clients’ claims in order to find only high value cases, while the others will be swept aside or will not be given the attention they deserve.  Thus, depending on how the new model is structured, it may result in clients with smaller cases actually getting less access to legal services.

But, let’s not rain on the parade.  We won’t know how it will work until we try it so let’s see what happens in Utah and Arizona.  Maybe they can make it work better than Washington could. I am sure we will be talking about this for a long time.  And, as some have said, maybe this is an inevitable shift in the legal services market, in which case, just wait, it will soon be coming to a jurisdiction near you.