Ethics in a Changing Profession

Michael Kennedy, Esq.Kevin Ryan, Esq.

June 24, 2015

A Changing ProfessionCBA Legal Futures Report:4 drivers of change in the profession:

1. globalization -- geographic borders, place, & physical distance less meaningful

2. technology -- new tools, new players3. changing client expectations 4. lack of access to legal services

GlobalizationDeclining importance of geographical lines in an interconnected, “flat” world

● state of residence less important in terms of who and how you practice

● business & associated legal problems transcend boundaries

● technology permits (and clients increasingly expect) distance to be no barrier

“New Law”● automated document assembly● expert systems (e.g., automated processes

that generate legal conclusions after users answer a series of branching questions)

● knowledge management (e.g., tools that enable lawyers to find information efficiently within a lawyer’s own firm)

“New Law”● legal analytics (e.g., using “big data” to help

forecast the outcome of cases and determine their settlement value) -- predictive coding

● virtual legal services ● cloud-based law practice management● all organized through legal project

management and process improvement techniques

Ethics and New Lawclient expectations

● companies are starting to do “technology audits” of law firms○ Do they make effective and efficient use of

available technologies (e.g., word processing and spreadsheets)?

○ Are they willing to adopt new, cost-saving technologies?

Ethics and New LawNot (yet) ethically required to use these tools & techniques

● BUT rapidly becoming essential to remain competitive -- even in Vermont (because big & mid-size regional firms will use them)

● and to use them effectively and ethically, lawyers must understand them

New Players: Self-Navigation“Self-navigation” -- Who needs a lawyer?

● legal advice, legal forms, and legal research all available online for free (or at very low cost)

● web-based legal research: GoogleScholar ○ find answers to your own legal questions

● web-based dispute resolution○ Modria, Fair Outcomes, Inc., CompleteCase

(divorce), SquareTrade (protection plans & claims), VirtualCourthouse, & many others

New Players: Other Providers● web-based legal services providers:

○ LegalZoom, Rocket Lawyer, Cooley Go (interactively created legal documents)

○ WeVorce (online family law service) ○ Shake (tablet-based contract app)○ Law Help Interactive (generates completed legal

forms at no cost)○ Neota Logic (creates interactive systems that

answer legal, regulatory, and compliance questions)

What Happens to Lawyers?. . . and the disappearance of the old players?

F. Daniel Siciliano (Stanford Law School):“In 15 years, two-thirds of lawyers won’t practice law, at least not the way they practice now. Many won’t be lawyers at all.”

The Evolving ProfessionRichard Susskind

5 steps of evolution of the legal profession:1. bespoke2. standardized3. systematized4. packaged5. commoditized

Beyond the Artisan GuildGrowth is in “systematized” & “packaged” sectors:

(1) Multidisciplinary teams ● in-house vertical integration● NewLaw (Axiom, Novus Law)● LeanLaw (Seyfarth)● TechLaw (knowledge management & analytics vendors)● PeopleLaw (Modria, Legal Force)

Beyond the Artisan Guild(2) Low-cost providers

● e-discovery vendors● legal publishers (LegalZoom, Rocket Lawyer)

Ethics and the New PlayersEthical requirements re Internet-based suppliers

● Can they do business?● Can lawyers work for them?● Can lawyers recommend their products to

clients?

Ethics and the New PlayersHow much value can lawyers add to the forms and the advice available for free?

What are the ethical limits when “adding value”?

New PlayersAlternative legal service providers

● LLLTs (Washington & elsewhere)● paralegals (enhanced or otherwise)● various other providers (e.g., in VA

system, for elderly) who help complete forms

New Players● LPOs

○ send large chunks of work, often requiring legal judgment, to service providers abroad or domestically

○ e.g., Pangea3 and Integreon

● the rise of artificial intelligence○ “AI could cause ‘structural collapse’ of law firms

by 2030”

Ethics and the New PlayersSupervision or employment of alternative legal service providers

● Washington LLLTs● others (e.g., VT)

What do Rules 5.1 & 5.3 require? Should it change?

Ethics and the New PlayersShould we insist on “working under the supervision of an attorney”?

Or can they provide their services independently or on a contract (in association with) basis?

Ethics and the New PlayersWhat are the ethical implications of LPOs?

● UPL?● can you work for them?

What are the ethical implications of the implementation of AI in legal work?

● regulation of robots?

Alternative StructuresABS . . .● publicly traded law firms

○ Firms being publicly traded in Australia, UK, & elsewhere

○ permitted in Washington, DC, where lobbying firms can have nonlawyer principals (since 1994!)■ no problems

○ proposed in Georgia and Canada

New StructuresAxiom

● not a law firm (so they say), but a “legal services firm” ○ say they don’t give “legal advice”○ not a legal staffing company or LPO

● combine lawyers with other professionals to provide insourcing, outsourcing, project help -- hired by in-house counsel

New StructuresMultidisciplinary practice (MDP)➔ Picture an Axiom-like firm aimed at

clients in small and mid-sized communities● legal services provided by lawyers and

nonlawyers● business advice● financial analysis

Ethics & Business StructureWhat are the limits of nonlawyer ownership and alternative business structures?

● Rule 5.4 -- can’t share legal fees with nonlawyers○ what are “legal fees”?○ does this rule make any sense in today’s

market? what’s the goal?

The Presence of the Future ● law firms that work for insurance companies● practice management professionals at large

firms● in-house counsel & public sector law

departments● litigation finance companies -- e.g., Burford

Capital

Regulating the ABS1. same fiduciary, ethical, candor, and conflicts obligations

2. must advise clients solely in their interest

3. supervision & control of non-lawyers by lawyers?

4. the ABS, its owners and shareholders, may not access client info w/o express client consent & in client’s interest

5. malpractice insurance to same extent as for lawyers

Regulating the ABS

MDPs and other forms of ABSs should be permitted to deliver non-legal services together with legal services [as long as the same client , confidentiality, and other ethical protections are in place]. If the public interest demonstrably requires that some non-legal services should not be provided together with legal services, the rules should so provide. Otherwise there should be no restrictions.

Regulating the ABSDon’t forget: the lawyers in these organizations are subject to the existing regulatory system

Plus: entity-based regulation (Australia, UK, Nova Scotia) subjects the entire firm to regulation

Is Geocentrism Viable?● The geocentric model

● What should state lines mean in terms of geographic scope of practice?

● Should we permit multijurisdictional or regional practice?

Virtual Law PracticeNot the “mobile lawyer” w/o an office, doing business in the coffee shop

VLP delivers legal services online ○ legal advice○ creation, assembly, & review of legal documents

and forms○ lawyer-client discussions

Virtually EthicalEthical requirements:

● a secure web space -- a “client portal”○ accessible only with a username & secure

password○ communications are encrypted & protected

Changing Technology● blogs, websites, and social media ● global legal outsourcing● electronic filing● web-based conferencing● electronic document search● instant communication via text, web, email

Technological CompetenceRule 1.1

● New comment [8]○ cybersecurity○ electronic discovery○ specific practice areas & Internet-based

investigations○ Internet-based marketing○ leveraging new and established legal technology /

innovation

CybersecurityLawyers store a range of information in the “cloud” (both private and public) as well as on the “ground” (smartphones, laptops, tablets, flash drives)

● easily lost or stolen● accessed without authority (e.g., through hacking)● intercepted while in transit● accessed without permission by governments

CybersecurityRule 1.6 -- Confidentiality

Rules 5.1 & 5.3: Responsibility for the competence and actions of others

CybersecurityModel Rule 1.6(c): must “make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.”

ReasonablenessWhat is reasonable?

● Factors to consider (not exclusive):○ sensitivity of the information○ likelihood of disclosure if additional safeguards

not employed○ cost of employing additional safeguards○ difficulty of implementing the safeguards○ extent to which safeguards adversely affect the

lawyer’s ability to represent clients

What Leads to Ethical Problems?

By not understanding:

1. strong passwords2. encryption (both in cloud & on ground)3. multifactor (or two-factor) authentication4. metadata and how to get rid of it5. how to avoid phishing scams6. risks of public computers & public WiFi7. risks of file-sharing sites8. how to protect devices against malware

By failing to supervise staff“Law firms routinely resist training employees on safe computing and social engineering, partly due to the training cost and partly due to the loss of productivity of their people. On both counts, they are fools. The risk of being compromised is now so high that annual training is simply a cost of doing business. And clients will love firms for doing it, as will their insurance companies.”

Sharon Nelson

SupervisionPhishing, spear phishing, whale phishing, malware

● do you understand the risks? do you have an office policy?

● do your employees and clients understand the risks? have you trained your office staff?

A Changing ProfessionSea change in how lawyers store and transmit client data.

: Cloud storage: Wireless Transmissions

Reasonable Cloudiness● Private cloud -- consult with competent

experts● Public cloud -- appropriate security

protocols● How familiar with TOS, EULA, etc., do lawyers need

to be?● What are you reviewing? What are the red flags?● Who will provide lawyers with this knowledge?

E-DiscoveryLitigators must have a good grasp of the basics of ESI or collaborate with someone who does

● Mass. lawyer disciplined for failing to prevent a client’s spoliation of evidence○ violated 1.4, 3.4, and 1.1

● New York mandates e-discovery competence

E-Discovery● California ethics opinion

○ not just competence○ improper handling of e-discovery “can also

result, in certain circumstances, in ethical violations of an attorney’s duty of confidentiality, the duty of candor, and/or the ethical duty not to suppress evidence.”

Social Media Ethics: Old Style

Research using social media● Is it publicly available?

● Or does it require a request for access?■ e.g., “friending” the target of the investigation

Rules 4.1, 4.2, and 4.3 implicated

We’ve Come a Long Way, Baby

Settled law that lawyers can look and must advise their clients that opponents are looking

New ethical questions:● can lawyers advise clients to change privacy settings,

remove posts, etc.?● how can a lawyer advise clients if the lawyer doesn’t

know how social media platforms work?

It’s All OnlineCompetence in specific fields of practice

● criminal law● family law / domestic relations● workers comp / employment● estate planning (digital property, e.g.)● personal injury

Internet-Based InvestigationsCompetence in Internet usage & research

● Iowa lawyer who didn’t spot the Nigerian scam (in 2013!)

● Maryland: “[i]t should now be a matter of professional competence for attorneys to take the time to investigate social networking sites.”

Internet-Based MarketingSocial media

● blogs● Facebook● Twitter● LinkedIn

Pay-per-lead & pay-per-click services

The Ethical DimensionIndiana case -- pay-per-lead service did not conform to rules of advertising

● need to understand how these services work & how client leads are generated

Inadvertent creation of attorney-client relationship (Rule 1.18)

Internet-Based MarketingUnauthorized practice of law (Rule 5.5) -- when marketing attracts clients in states where lawyer is not licensed

Allegations of improper solicitation (Rule 7.5)

See newly adopted comments to Model Rules 1.18 & 7.3

Leveraging Legal Tech For practical & ethical reasons, lawyers:

● need to leverage “New Law” – technology and other innovations that facilitate the delivery of legal services in entirely new ways

● need to make better use of well-established technologies (e.g., word processing)

Leveraging Legal TechPractical: To compete. Clients expect efficiency and technological competence.

Ethical: Competence, reasonable diligence.

Changing Client ExpectationsConsumers look for alternatives to lawyers because:

● can’t (or think they can’t) afford rates charged by lawyers

● can’t budget for legal costs & fear unpredictable, high fees due to billable hour -- don’t like hourly rates

Changing Client Expectations● lawyers inconvenient & inefficient to use● lawyers slow delivering a legal service --

lag behind technologically

Changing Client ExpectationsWhat do consumers want from lawyers?

● information on what their case will cost● an idea of how long their case will take● progress updates on their case● prompt response to letters, emails, and

phone calls● prompt response to their complaints

Changing Client ExpectationsWant legal services to be delivered:

● online, by phone, and even by text● out of hours● linked with related services, such as the

purchase of a home● with unbundled and “do it yourself” legal

services -- blended model

The A2J Dilemmaa contradiction at the heart of today’s profession:

unemployed lawyers and law graduatesvs.

high percentage who lack access to justice

Access to JusticeAccess to justice:

● cannot find or afford lawyers (or think they can’t)

● otherwise lack access to the legal system● lack access to basic legal information

Access to JusticeAccess to justice -- our profession’s highest cause

● 80% of poor people and people of modest means do not get civil legal assistance they need

● in some states, in 95% of family court cases at least one party is not represented

Access to Justice● half of those who apply for legal aid are

turned away because of lack of resources● US ranks 27th in civil justice among 99

countries in World Justice Project’s 2014 Rule of Law index○ behind the majority of developed countries in

North America and Western Europe (18th of 24)

Access to Justicewhat changes in ethical rules can help address the tremendous unmet need for legal services?

● other providers of legal services● alternative business structures● unbundling● increased pro bono expectations /

requirements?

And in the End . . .

Questions?

Thank you for being here