Rules buttonThis is the next post in my mid-year “check in” as to the state of the legal profession. My last article looked at recent actions by the ABA which may be hurting attorneys‘ ability to earn a living. By giving a new law school provisional accreditation the American Bar Association is helping to increase what is already an oversupply of lawyers. While private companies realize that they need to close stores when they have an oversupply, the ABA’s recent actions are equivalent to opening more locations when one can’t sustain the locations they already have. Last time I checked, such actions don’t end well. In this article I’ll dive into why recent actions by various State Bars also spell bad news for practicing attorneys.

In June of this year the New Jersey Supreme Court recently found that AVVO’s “Adviser” service violates ethical rules on fee splitting. Specifics on the finding can be found here. For those unfamiliar with the program, it is essentially a service where a person receives a fifteen minute telephone conversation with an attorney in exchange for a small fee. AVVO deposits the fee into the attorney’s bank account and then withdraws a percentage. Again, this was found to be impermissible fee sharing. I’ve written before on whether attorneys should use directory listings from AVVO or other services which the company provides, but the recent actions in New Jersey speak to an entirely different issue. The issue with the Court’s opinion is that it is symbolic of the legal profession’s refusal to acknowledge that the world is changing. Industries which ignore such changes don’t end up in a good place. Let’s look at why.

We’ve heard a lot about the word “disruption” in recent years. The bottom line, however, is that disruption is nothing new. The automotive industry “disrupted” the horse and buggy industry. Now ride sharing and driverless technology are both on the verge of disrupting the automotive industry. Television networks disrupted radio networks, cable companies disrupted television networks, and now internet based services such as Netflix have disrupted the cable companies. The list goes on. The important thing for an industry is to respond to disruption, rather than acting like it doesn’t exist. Unfortunately, the legal profession is doing the latter.

Much of the value one gains from a law degree is knowledge and information. In years past the only way for a layperson to get that information was to call an attorney. That new-fangled world wide web, however, has given laypeople increased access to legal information. This means that the information gap between attorney and layperson has decreased. This decrease in relative levels of knowledge and access to information, in turn, makes a lawyer’s time less valuable. The right way for the profession to deal with this phenomenon is to increase the extent to which attorneys can provide information and services to the public and not insist that the public simply follow the traditional way of doing things. This means that State Bars should be passing regulations which give attorneys more flexibility in how they deal with the public, not less. For example, attorneys should be permitted to partner with non-lawyers in many different situations, certain rules on fee-splitting should be relaxed, etc. Instead, however, the profession is insisting that things can be done the way they always have. Let’s look at a recent example of how that worked out.

It goes without saying that companies such as Uber and Lyft have upended the taxi cab industry. As someone who regularly rides with Lyft I’ll say that the experience of getting a ride, as well as the quality of the ride itself, is much, much, much (much) better with these services then it is with a traditional taxi. And, oh by the way, these ride sharing services are cheaper. The taxi cab industry could have said “how do we make our product better?” The taxi industry could have developed new apps to more quickly connect passengers with drivers, to remove cash and debit cards from the equation, to let a passenger know in advance how much their fare would be, etc. Instead, the industry lobbied regulators to shut down services like Uber and Lyft. While those fights are still going, it’s now fair to say that Uber and Lyft are here to stay and that taxi cabs will lose this fight. In other words, trying to rely on regulators to maintain a less efficient model tends not to work out well for industries which are opposed to change and unwilling to acknowledge innovation.

It’s important for the profession, and the State Bars who set the rules, to understand that efficient models will always win out in the end. Did you know that Yahoo had the opportunity to buy Google’s technology, very early on, for a relatively small amount of money. Yahoo passed on the opportunity because they thought Google’s technology was “too efficient.” How did that work out for Yahoo in the end? Alternative ways of solving legal problems are going to be created. State Bars can work to ensure that innovation occurs in a way which helps legal professionals or they can try to hang on to outdated models which will put many attorneys out of business. Given how resistant the legal profession is to change, my money is on the latter scenario being the one that occurs.

What’s your opinion on whether State Bars should be more receptive to alternative service models and online services? Please chime in through the comment form below.