The Guild Strikes Back

The Story So Far….

The current monopoly on the provision of legal services held by lawyers has sometimes been analogized to the guilds of the middle ages. Like those organizations, the legal profession consists of skilled craftsmen who were given a monopoly by the state to practice their particular craft under the supervision and control of their fellow tradesmen. A member of the guild who was found to have cheated a customer faced banishment from the guild and the resulting loss of livelihood. The guild members chose who could be members of the guild and guild rules typically excluded women, immigrants, and non-Christians from being members of the guild. In the words of Wikipedia, the guild’s monopoly on the provision of services “reduced competition but sometimes resulted in good quality of work.”

The guild model for the provision of legal services has been under a sustained attack for several years from reformers who blame it for the high cost of legal services and “the justice gap,” the unmet need for legal services that the reformers ascribe to that high cost. The solution, according to these reformers, is the open up the traditional rules that preserve the monopoly enjoyed by lawyers, including rules that limit the ability of non-lawyers to provide those services or to have ownership interests in entities that provide those services.

The response from the lawyers is these rules are necessary to implement “core values” of the lawyer profession, including the independence of lawyers from the baleful influence of non-lawyers who might be only interested in making money and not interested in what is in the best interest of the clients. Lawyers, this argument goes, are not just providers of legal service but agents of justice itself, officers of the justice system who are are ultimately responsible to the courts, despite intervening layers of guild-like organization. In California, this view was supported by the “dis-unification of” the State Bar of California in 2018, when the guild-ish “trade association” functions were spun off from the regulatory functions into the new California Lawyer Association.

As has often happened in the history of the State Bar of California, proposed reforms followed in the wake of de-unification. Liberated from the “trade association” functions that were seen as too beneficial to lawyers for a regulatory agency, the State Bar looked for ways to expand its mission beyond mere regulation, ways consistent with new Business and Professions Code section 6001.1, effective January 1, 2019. which prioritized the State Bar’s mission:

Protection of the public, which includes support for greater access to, and inclusion in, the legal system, shall be the highest priority for the State Bar of California and the board of trustees in exercising their licensing, regulatory, and disciplinary functions. Whenever the protection of the public is inconsistent with other interests sought to be promoted, the protection of the public shall be paramount.

Emphasis added. Discipline is, after all, tedious law enforcement work, scut work best left to staff. The old pre-disunifcation State Bar was not particularly interested in it, except when it was criticized for being too lenient. For 30 and more years, the old State Bar Board of Governors was more interested in a succession of brighter and shinier objects, interest fueled by the annual ritual of electing a President from among the Governors, a President who would usually propose some sort of initiative to memorialize the glory of the tenure. These initiatives were typically forgotten by the time the next State Bar President was elected. One of the best parts of the recent wave of reform was replacing the elected Board members with appointed Board members, replacing the President with a Chair, and replacing the silly annual Board elections, including the election of the President.

But the wording of section 6001.1 opened the door to what might have been the brightest and shiniest object of them all: addressing the justice gap by deconstructing the guild.

Even before the section was enshrined in State Bar Act, the Board of Trustees had commissioned the Legal Market Landscape Report from Professor William Henderson of the Indiana University School of Law. His July 2018 report summarized the case for deconstructing the guild that many academics had been advocating for years:

From the report:

  • “Ethics rules and the unauthorized practice of law are the primary determinants of how the current legal market is structured. Under ethics rules, any business engaged in the practice of law must be owned and controlled by lawyers. This prohibition limits both the opportunity and incentive for nonlegal entrepreneurs to enter the legal market.” 
  • “By modifying the ethics rules to facilitate this close collaboration [of lawyers and nonlawyers], the legal profession will accelerate the development of one-to-many productized legal solutions that will drive down overall costs; improve access for the poor, working and middle class; improve the predictability and transparency of legal services; aid the growth of new businesses; and elevate the stature and reputation of the legal profession as one serving the broader needs of society.” 

Fired up with revolutionary zeal and unfettered by the need to continue to pretend to be a “bar association”, the Trustee created the Task Force on Access Through Innovation of Legal Services (ATILS) in July 2018.

Delacroix Liberty Leading the People By Eugène Delacroix (1830) Erich Lessing Culture and Fine Arts Archives via artsy.net, Public Domain, https://commons.wikimedia.org/w/index.php?curid=27539198

In due course, ATILS produced its final series of recommendations in March 2020, including:

4. Direct the anticipated State Bar Paraprofessional Working Group to consider the key
principles of a licensing program that authorizes eligible nonlawyers to provide limited
legal services developed by the Task Force.

5. Form and appoint a new working group to explore the development of a regulatory
sandbox that can provide data on any potential benefits to access to legal services as well
as the potential for consumer harm if prohibitions on unauthorized practice of law, fee
sharing, nonlawyer ownership, and other legal restrictions are modified or completely
suspended for authorized sandbox participants.

“Sandbox” is computer programing jargon for a security protocol for testing unproven or untrusted software code. The use of the word emphasizes the tech-heavy orientation of ATILS. It also emphasizes the lack of empirical data showing that non-lawyer ownership would have any significant impact on the “justice gap.” It confirmed the fears of ATILS critics that the tech entrepreneurs were more interested in applying their disruptive business models to the legal services marketplace to make a lot of money, not to advance the cause of justice.

The ATILS recommendations were relatively cautious compared to some other states. Utah, not known for revolutionary zeal, forged ahead with its own regulatory “sandbox” in August 2020. That same month, Arizona eschewed the “sandbox” approach entirely, making radical changes endorsing non-attorney ownership of law firms through the “Alternative Business Structure” (ABS) model. Utah and Arizona are relatively “small lawyer” states with only 8,468 and 15,926 respectively (California has about 170,000 active lawyers.) These changes were adopted by the Supreme Courts in their respective states with no involvement by the Legislatures in either state.

To further study the ATILS recommendations, the Board of Trustees established the Closing the Justice Gap Working Group (CJGWP) in March 2020 with a long timeline: the final report not due until September 2022. At the same time, the Board charged its already existing Paraprofessional Program Working Group (PPWG) to come with a plan to license new classes of non-lawyer legal service providers by September 2021.

In light of events in Utah and Arizona, momentum seemed on the side of the reformers. PPWG reported to the Board in September 2021 and its plan was put out for an unusually long public comment period, until January 12, 2022. CJGWG continued to meet and work on its proposals in the fall of 2021. And then, abruptly, in December 2021, the wheels came off.

The Girardi Effect

On December 7, 2021, the Chairs of California Senate and California Assembly Judiciary Committees sent a letter to the Chair of the Board of Trustees Ruben Duran expressing “legislative concerns over regarding the Closing the Gap Justice Working Group.” The letter must be read in full to be truly appreciated.

Not mentioned in the letter but certainly lurking in the background is the State Bar’s unprecedented admission that it made “mistakes” in its handling of the many complaints against Tom Girardi going back 40 years.

Specifically mentioned is a critical State Auditor’s report issued in April 2021 that found the number of cases in the discipline backlog, defined as cases that have been pending more than six months. The same auditor’s report noted that the State Bar, while employing more staff than anytime in its history, is actually disciplining fewer lawyers than ever before. While the reasons for this are not known, it seems unlikely that lawyers are becoming less likely to commit misconduct.

Especially telling in the Stone/Umberg letter is the statement that any proposal that would alter “sacrosanct” principles of the attorney-client relationship would be closely scrutinized and the suggestion that the State Bar would do better to examine “proven” approaches to improving access to justice. The guild’s “core values” argument in a nutshell, now repeated through the most powerful megaphone around.

Some guy once those “who cannot remember the past are condemned to repeat it.” This latest fiasco shows that the State Bar, perhaps because cannot remember its own history, including the fundamental fact that the State Legislature created it in the first place. We are not Utah or Arizona, where the lawyers are scarce and the Supreme Court calls the shots. Any path to reform must go through the Legislature.

In the wake of the Stone/Umberg letter, all work on the CJGWP has come to halt while the State Bar re-assesses. The PPWG proposal remains out for public comment but its future doesn’t look bright. The cause wasn’t helped by comments from State Bar Executive Director Leah Wilson blatantly lobbying for the proposal. The PPWG proposal would impose new responsibilities on the State Bar’s discipline prosecutor, the Office of Chief Trial Counsel (OCTC) to regulate the non-lawyer providers, at a time when the Girardi fiasco and low discipline numbers have some critics questioning whether OCTC can do the job it already has.

Now comes word that the Florida Bar Board of Governors has halted work on its version of the sandbox, {mercifully referred to as a “legal lab”, instead of a sandbox) citing ethics concerns about lawyer independence, as well as disparate treatment of lawyers participating in the “lab”. Florida, like California, is a “big lawyer” state with about 72,000 lawyers.

The reformers are not going to go away. But the current disenchantment with the tech entrepreneurs is going to make it tougher for them. Organized opposition from lawyers in the “big lawyer” states is not going to go away either. It may be that the deconstruction of guild will have to await another day, long hence, to go forward.

One thought on “The Guild Strikes Back

  1. Hi, David –

    Brilliant article – the best analysis of the decline and fall of the State Bar that I’ve yet encountered. You need to do a re-read to clean up some errors (mostly missed words/phrases). But the analysis of what has happened with the State Bar is spot on.

    Of course, I vehemently disagree that politicizing the Bar by having all the Governors/Trustees appointed by self-interested politicos (except MAYBE those appointed by the Supreme Court) with overriding social agendas was an improvement over the “issue of the year” practice with the elected presidents (and remember – I was the guy who got to lobby those ideas to enactment or otherwise). Diversity is a wonderful thing, in its way. But elevating diversity above all other considerations does NOT equate to public protection, no matter what the Legislature sticks in the State Bar Act.

    But my disagreement with one of your conclusions in no way diminishes by admiration for the article as a whole. It needed to be said, so thanks for saying it.

    Best, Larry

    Larry Doyle Law Office of Larry Doyle

    Sent from my iPad

    >

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