The ABA Commission on Ethics 20/20 has decided that it will not develop a proposal for consideration by the association\’s policy-making House of Delegates on whether nonlawyers should be allowed to have some form of limited ownership interest in U.S. law firms. In a joint statement released today, co-chairs Jamie S. Gorelick and Michael Traynor confirmed that the commission agreed at its meeting last week in Washington, D.C., to shelve plans to submit a proposal on nonlawyer ownership for consideration by the House in when it convenes during February\’s 2013 ABA Midyear Meeting in Dallas. Gorelick and Traynor indicated that feedback received from other bar associations and individual members of the profession did not suggest a groundswell of support for revising the ABA Model Rules of Professional Conduct to permit a limited form of nonlawyer ownership. The Model Rules, which are the direct basis for professional conduct…

via Ethics 20/20 Commission Suspends Campaign to Draft a Proposal on Nonlawyer Ownership of Law Firms – News – ABA Journal.

It turns out that there is distinct lack of enthusiasm in the profession for rules diluting the “core value” of lawyer control of law firms.  Should we be surprised? Does this and the end of Jacoby & Meyers’ Quixotic assault on New York’s version of Rule 5.4 may mean the United States will remain an exception as non-lawyers become increasingly involved in the provision of legal services?

The  February  2012 status report submitted to  the State Bar Board of Trustees Committee on Regulation,  Admission and Discipline (RAD) by acting Chief Trial Counsel Jayne Kim describe a much needed structural reform in the Office of Chief Trial Counsel (OCTC):  moving to to a pure vertical prosecution model.  Under this system, the essential facts of the case don’t have to learned by four or more OCTC attorneys under the current model.   This encourages early disposition of cases by investing the attorney responsible for overseeing investigations in the final result.  There is also the positive news that OCTC is instituting a monthly training program for discipline prosecutors.

It is not clear whether approval of what the Chief Trial Counsel by discipline defense counsel is the kiss of death.  Every time I say nice things about them, they seem to lose their job.  I will go out on a limb one more time and state that the acting Chief Trial Counsel is moving OCTC in a direction it should have been moving some time ago.

The California Supreme Court has asked the State Bar is withdraw its prior submission of  six proposed new Rules of Professional conduct, and instead submit the entire set of proposed rules.

When the the rules were approved by the State Bar Board of Governors (as they were then known) in September 2010, many assumed the new rules would immediately be sent to the Supreme Court for its approval.  The Commission the drafted the rules had, at that point, spent the last nine years drafting the proposed rules.   The high Court was rumored to be unhappy with the glacial progress of the subcommittee.

Strangely, the State Bar waited until July 2011 to submit only six of the 67 proposed new Rules to the Supreme Court for approval.   Three months later (and more than ten years after the Commission began its work) later the Court issued an order, requested by the State Bar, withdrawing the partial submission so the State Bar could submit all 67 of the proposed new rules in a single comprehensive petition.   A petition that, three more months down the road, has yet to be filed.

To be sure both the Supreme Court and the State Bar have had their hands full in the last year, between a new Chief Justice, embroiled in a battle over court control, and the State Bar, embroiled in its own battle over governance.  And, in the State Bar’s words, the fruit of the Commission’s years of labor is one of the most complex proposals ever submitted by the State Bar to the Supreme Court.  The new Rules with their extensive Comments weigh in at over 100 pages, three times as long as the current Rules of Professional Conduct (the original 1928 Rules of Professional Conduct are about four pages long.) Yet part of the reason for the extraordinary slow genesis of the new Rules was the painstaking process the Commission went through to obtain input from every stakeholder, including, as evident from the Commission’s action summaries, informal input from the Supreme Court itself.

Could it be that, after all this time and effort, the powers that be are having seconds thoughts about the whole project?    The current discipline system, the folks that will actually be “hands on” with these new rules, has been through several years of change, including new management in the prosecutor’s office, a new set of procedural rules, an exhausting effort to eradicate the investigation backlog, and the uncertainty over the bar’s future raised by the governance battle.  Some breathing room before this profound change doesn’t seem unreasonable but the learning curve for both the discipline professionals and the profession as a whole will be steep because these rules, by adopting the extensive comment sections, are intended to be a more than just disciplinary rules.

The acceleration of change in the legal profession is written in the history of our Rules of Professional Conduct.  The original 1928 Rules served until 1975, almost fifty years.  The 1975 California Rules were re-written after only 13 years, a decision taken after ABA decided to replace the 1969 Code of Professional Responsibility with the Model Rules in 1983.  Our current Rules were adopted in 1989 and deemed worthy of replacement only 12 years later.  Events are moving so fast in the ethics world that the Committee’s work product might already be obsolete;  the ABA’s Commission 2000 work was one off the original spurs to California’s decision to revise our rules just twelve years after that had been completely re-written but the ABA has already moved on the ABA 20/20, which is dealing with cutting edge issues like public investment in law firms.   Some of the slowness in adopting the proposed new Rules may stem from the prospect that they already need extensive revision.

A few weeks ago, the President of the State Bar of California, in discussing the Bar’s strategic plan, indicated that tougher discipline, higher admission standards (including some form of “residency” for aspiring lawyers), and  increased continuing education requirements, might all be expected in the next few years.  He also stated that the State Bar would be taking a hard look at the its current Lawyer Assistance Program and whether it is consistent with State Bar’s public protection mission.

At the recent meeting of the Association of Professional Responsibility Lawyers (APRL), presentations addressed Prof. Thomas Morgan’s thesis that lawyers are no longer a profession but merely “consultants”, the relief sought by large multi-national law firms from America’s onerous loyalty-based conflict rules (which, unlike European rules, don’t allow them to take on work adverse to current clients), and the important role that lawyer assistance programs play in addressing the underlying problems that cause attorney misconduct.

The disciplinary authority in California has been steaming toward more regulation for some time now but its clear that the captain (captains?) has ordered full speed ahead.  The bar as a whole is being blown by different winds toward an unknown destination, one of those winds being the demise of the current expensively educated and highly regulated bar as a viable economic model.  Of course, it only seems that these  powerful forces are disconnected from each other. They can’t really avoid contact and when it occurs, the results will naturally be energetic.

The capacity of the marketplace to assign values that are completely out of touch with reality has been graphically demonstrated lately but we have known about for a long time.   The classic book on the subject,  Mackay’s Extraordinary Popular Delusions and the Madness of Crowds, was published in 1852.  Among the many examples Mackay cites in this exhaustive documentary of human folly are the South Sea Bubble,  a stock speculation mania that gripped Great Britain the 18th century.

In the meantime, innumerable joint stock companies started up every where.  They soon received the name of Bubbles, the most appropriate that imagination could devise.  The populace are often most happy in the nicknames that they employ.  None could be more apt than that of Bubbles.  Some of them lasted for a week or a fortnight and were not more heard of, while others could not even live out that short span of existence.  Every evening produced new schemes and morning new projects.   (Mackay, at 54.)

Part of the wisdom of the marketplace is that Bubbles, big or small, inevitably burst.  We are living through a painful reunion with that wisdom now in the collapse of the housing bubble, a collapse whose shock waves have spread through almost every aspect of our lives.

The lawyer business has been as impacted by those shock waves as much as any other part of the economy but is also undergoing a collapse that is peculiarly its own.  In an earlier post, I wrote of Prof. William Henderson of Indiana University Law School’s work showing the last forty years of exceptional growth in law firm revenues, a “golden age” a he puts it, is ending.   The reasons are many, but the essential fact is that our customers have decided that they no longer going to pay the legal bills that they have been paying for the last thirty years.   The law business long ago priced itself out of the reach of the middle class;  now large corporations have decided they don’t want to pay the hierarchical compensation structure of the large law firm.   Largely thanks to technology, they have other options.   The law business is experiencing the creative destruction thing that is capitalism’s way.

The future is going to look much different than the past.  And that future, again thanks to that same technology,  is going to arrive faster than we think.  We need to think about that future;  as Criswell reminds us, it will be where we will spending the rest of our lives.  It will include more in-house counsel, more automation of routine tasks (like document review) formerly done by lawyers, more outsourcing of legal work to lower labor cost environments (not necessarily overseas),  and at least limited public investment in law firms.   And fewer lawyers, maybe a lot fewer.

What will those lawyers do?  They will have to do something more than just provide “legal services”.   They will have to provide value that can’t be provided by technology or outsourcing.  Pretentious as it sounds, they are going to have to provide wisdom, a rare commodity whose value is conferred by an understanding of human experience.  The future of the law business lies in ABA Model Rule 2.1.

In representing a client, a lawyer shall exercise independent professional judgment and render candid advice.  In rendering advice, a lawyer may refer not only the law but to other considerations, such as moral, economic, social and political factors, that may be relevant to the client’s situation.

Some of us will recognize this as the essence of what we do.  This is why a lawyer is something more than a legal technician.   The creative destruction of the bursting of the law bubble is an opportunity for the law business to again embrace the legal profession, actually an opportunity for a lawyer renaissance.

Planting the seeds for this renaissance will mean huge changes in the law school business.  First year law students today should be studying ethics, jurisprudence, law business, information systems and dealing with real clients with real problems, saving substantive law for the second year and peforming an apprenticeship in their third year.  Law schools have to become lawyering schools.

Licensing authorities will have to make to make room for new categories of legal professionals, legal technicians whose training would be less expensive and whose degree of independent interaction with clients would be greater than today’s paralegals.  California has recognized the emergence of non-lawyer legal paraprofessionals, paralegals and documents preparers, and defined criteria for those occupations.   The creation of new categories of legal professionals seems very likely.

Whether lawyers, as we robustly define them now, continue to exercise independent judgment is the issue that is bubbling up with the bubble’s collapse.  Legal traditionalists would argue for maintaining the tradition of lawyer control of the provision of legal services and I would throw my lot in with them.  Independent judgment is exactly the commodity that gives our profession its fundamental value and that commodity is in greater demand than ever as society becomes more crowded and complex. The future will belong to the entrepreneurial lawyer and there is no reason why entrepreneurship can’t deliver that commodity.