California dreaming.

As promised, I’m not done writing about the ATILS initial recommendations that have been put out for public comment in California.

In fact, I’m here in San Francisco for the next few days at the APRL meeting where there will also be a public forum about the recommendations on August 10.

The public comment period continues until September 23, but if the sentiment that gets expressed at the hearing is anything like the feedback during the public comment period, there may be pitchforks and torches.

It should come as no surprise to those paying attention but California lawyers are scared and uninterested in embracing reform of the way legal services are delivered. While I cannot find anywhere online to actually read the comments that have been submitted so far, you can access something of a spreadsheet here that is a tally of favorable or opposed submissions. People so far even have overwhelmingly commented against doing the easy stuff I mentioned in my prior post.

Nevertheless, let’s talk about a piece of the ATILS recommendation because I still think reform has to happen … one way or another.

The piece I want to talk about today is the proposed recommendation about changing RPC 5.4 in terms of prohibiting partnerships between lawyers and non-lawyers. This is an issue that the APRL Future of Lawyering project is also tackling but California has more quickly made tangible proposals. They’ve done so in the alternative offering a proposed recommendation 3.1 and an alternative proposed recommendation 3.2.

3.1 – Adoption of a proposed amended rule 5.4 [Alternative 1] “Financial and Similar Arrangements with Nonlawyers” which imposes a general prohibition against forming a partnership with, or sharing a legal fee with, a nonlawyer. The Alternative 1 amendments would: (1) expand the existing exception for fee sharing with a nonlawyer that allows a lawyer to pay a court awarded legal fee to a nonprofit organization that employed, retained, recommended, or facilitated employment of the lawyer in the matter; and (2) add a new exception that a lawyer may share legal fees with a nonlawyer and may be a part of a firm in which a nonlawyer holds a financial interest, provided that the lawyer or law firm complies with certain requirements including among other requirements, that: the firm’s sole purpose is providing legal services to clients; the nonlawyers provide services that assist the lawyer or law firm in providing legal services to clients; and the nonlawyers have no power to direct or control the professional judgment of a lawyer.

3.2 – Adoption of an amended rule 5.4 [Alternative 2] “Financial and Similar Arrangements with Nonlawyers” which imposes a general prohibition against forming a partnership with, or sharing a legal fee with, a nonlawyer. Unlike Recommendation 3.1, the Alternative 2 approach would largely eliminate the longstanding general prohibition and substitute a permissive rule broadly permitting fee sharing with a nonlawyer provided that the lawyer or law firm complies with requirements intended to ensure that a client provides informed written consent to the lawyer’s fee sharing arrangement with a nonlawyer.

Now, my quibbles with either proposed amendment to RPC 5.4 would be at the margins. I think what is missing from the second alternative is that also there would need to be protection that the nonlawyer have no power to direct or control the professional judgment of a lawyer. As to the first alternative, my only real quibble is that I think the second alternative is better on substance.

I understand why a lot of lawyers would get queasy at the second alternative, but I’m at something of a loss to see how – other than based purely on either pure self-interest or “guild” protection – lawyers can wield torches in response to the first alternative. Very weirdly there has (so far) been more opposition to 3.1 than to 3.2.

To some extent recommendation 3.1 is not strikingly different than what D.C. already permits and it embraces the reality of what is (or at least with respect to Avvo “was”) already happening online when it comes to business providing marketplaces to pair willing attorneys with interested clients.

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