By Toby J. Rothschild
In July of 2018, after receiving a report on the legal market landscape, the Board of Trustees of the State Bar of California convened a task force to review issues of access to legal services through innovation (ATILS). After more than a year of study, consultation, public input and debate, the ATILS Task Force presented its Final Report and Recommendations to the Board of Trustees. This article is designed to bring California lawyers up to date on the current status of the recommendations.
The ATILS Task Force made seven recommendations to the Board of Trustees. At its March 2020 meeting, the Board approved three of the recommendations and deferred the remaining ones until the Board’s May meeting. The Board has now voted to move forward with all seven of the ATILS recommendations, as set forth below.
Recommendation 1: Issue for Public Comment an Amended Rule of Professional Conduct 5.4 to Expand the Existing Exception for Fee Sharing Arrangements with a Nonprofit Organization, and Continue to Study other Possible Revisions to the Rule.
This proposal recommended amending Rule 5.4(a)(5) to expand the circumstances in which a lawyer may share fees with a nonprofit organization. The current rules allow lawyers to share court-awarded fees with nonprofit organizations under certain circumstances. ATILS proposed allowing the sharing of settlement fees as well, but only with nonprofit organizations organized under section 501(c)(3) of the Internal Revenue Code. The Board accepted the proposal in March 2020 and the rule change was sent out for public comment. This public comment period ended on May 18, 2020. The comments will now be reviewed by the State Bar’s Standing Committee on Professional Responsibility and Conduct, which will be providing a report to the Board with its recommendations concerning the proposed rule change. It will then return to the Board for further action, which can include rejection of the proposed amendment, circulation of a revised version of the rule for further public comment, or submission of the amendment to the Supreme Court of California for its approval and inclusion in the Rules of Professional Conduct.
Recommendation 2: Issue for Public Comment an Amended Rule of Professional Conduct 1.1 that Would Add a New Comment Providing that a Lawyer’s Duty of Competence Encompasses a Duty to Keep Abreast of the Changes in the Law and Law Practice, including the Benefits and Risks Associated with Relevant Technology
This proposal recommended adding a Comment to Rule 1.1 to include understanding the benefits and risks of technology as part of the definition of competence. This tracks, in a somewhat different form, the American Bar Association Model Rules of Professional Conduct. In this time of remote working and videoconferencing, this issue takes on added importance. Like recommendation 1, the Board accepted the proposal in March 2020 and agreed to send the rule change out for public comment. The comments have now been received and they will be reviewed by the Committee on Professional Responsibility and Conduct and will then return to the Board for further action as outlined above.
Recommendation 3: Issue for Public Comment a New Rule of Professional Conduct 5.7 Addressing the Delivery of Nonlegal Services Provided by Lawyers and Businesses Owned or Affiliated with Lawyers
The ABA Model Rules include Rule 5.7, which addresses when the rules apply to lawyers performing services that could equally be performed by nonlawyers without violating unauthorized practice rules. When it adopted the new rules in 2018, the California Supreme Court did not include a rule 5.7. The State Bar’s Rules Revision Commission recommended against it, as the California statutory and case law spells out how the issue is addressed. This recommendation proposes adopting a Rule 5.7 to make clear when the California Rules of Professional Conduct apply in such circumstances. At the March board meeting, this proposal was combined with Recommendation 5 and deferred for further consideration.
Recommendation 4: Commend to the Anticipated State Bar Paraprofessional Working Group the Key Principles Identified by ATILS in Studying the Concept of a Licensing Program that Authorizes Eligible Nonlawyers to Provide Limited Legal Services
For several years, the Board of Trustees has included in its strategic plan exploring the licensing of nonlawyers to provide some types of limited legal services. The current plan states:
No later than July 31, 2021, explore options to increase access through licensing of paraprofessionals, limited license legal technicians, and other paraprofessionals.
The Board officially established the paraprofessional working group at the same March meeting at which it considered the ATILS recommendations. Anticipating this, ATILS provided a roadmap of issues for the new task force to consider in its deliberations about the licensing of paraprofessionals. ATILS identified 14 implementation and regulatory considerations for the new task force to consider in its work. These range from background checks, ethical standards, financial responsibility, and continuing education to extensive outreach and community education. The Board of Trustees approved sending the ATILS considerations to the Paraprofessional Working Group for its consideration. That group has now been appointed and has begun meeting.
Recommendation 5: Form and Appoint a New Working Group to Explore Development of a Regulatory Sandbox that Can Provide Data on Any Potential Benefits to Access to Legal Services and Any Possible Consumer Harm if Prohibitions on Unauthorized Practice of Law, Fee Sharing, Nonlawyer Ownership, and other Legal Restrictions are Relaxed or Completely Suspended for Authorized Sandbox Participants
This recommendation calls for the State Bar to establish a working group to consider a “regulatory sandbox” that would allow limited experimentation with changes to the Rules of Professional Conduct to permit participants in the sandbox to experiment with such activities as fee sharing with nonlawyers, nonlawyer ownership of law firms, and other currently prohibited activities. Each participant would be closely monitored and would provide data to permit a more well-informed discussion of such issues in the future. Some of the questions are whether a machine using artificial intelligence (AI) can deliver advice and legal assistance, whether a technologist who develops software to allow a law firm to deliver its services more efficiently and effectively can own a part of the firm, and whether a firm can provide a consumer-facing legal advice and assistance product online and share the fee with the creator of the software.
The Board of Trustees considered this proposal at its March meeting and decided to table it until the May meeting to allow time to discuss it with the bar’s stakeholders, such as the legislature and the Supreme Court. At the May meeting, the Board was presented with three options: (i) the original ATILS proposal, (ii) a sandbox proposal similar to the original ATILS proposal but that would prohibit the Task Force from considering any changes in Rule 5.4 or the creation of a Rule 5.7, and (iii) an option that would look at other ways to expand access to justice without the sandbox or any pilot projects that would change the Rules of Professional Conduct. After public input and debate, the Board approved going forward with the ATILS sandbox proposal. The State Bar will now establish a task force to move this proposal forward. Along with Recommendation 5, the Task Force’s charter will also include a consideration of Recommendations 3, 6 and 7.
Recommendation 6: Consider Authorizing a Study of Potential Amendments to the Certified Lawyer Referral Service Rules and Statutes, and Amendments to Relevant Rules of Professional Conduct to Ensure that Together They Properly Balance Public Protection and Innovation in Light of Access to Justice Concerns and with a Particular Emphasis on Ascertaining if Existing Laws Impose Unnecessary Barriers to Referral Modalities (including Online Matching Services) that are in the Public Interest
Under the Business and Professions Code, the Rules of Professional Conduct, and the State Bar Rules, the State Bar certifies lawyer referral services. There are a number of requirements to become a certified service. There are also online referral services that are not certified. (See Jackson v. Legalmatch.com (2019) 42 Cal.App.5th 760 [255 Cal.Rptr.3d 741].) ATILS recommended that the bar take a closer look at the lawyer referral system and see if it is creating barriers to access that are not in the public interest.
The Board of Trustees included this recommendation in the referral to the new task force created under Recommendation 5. Specifically, the Board directed the new working group to “evaluate . . . the Lawyer Referral Service rules, to determine whether and the extent to which the rules inhibit innovation and access to justice, and make appropriate recommendations for revisions.”
Recommendation 7: Consider Recommendations for Amendments to the Rules of Professional Conduct on Advertising and Solicitation Informed by the Current American Bar Association Model Rules, the Proposed Advertising and Solicitation Rules Developed by the Association of Professional Responsibility Lawyers, and Recent Amendments to the Advertising Rules in Other Jurisdictions. In Particular a Reconsideration of the Existing Designation of “Real-Time Electronic Contact” as Prohibited Solicitation
The State Bar’s Rules Revision Commission reviewed and proposed amendments to the Rules of Professional Conduct. Their recommendations were approved by the California State Bar’s Board of Trustees and submitted to the California Supreme Court in March of 2018. In May of 2018 the Court approved a new set of rules to go into effect on November 1, 2018. Among the rules proposed by the Commission and approved by the Supreme Court were the rules governing advertising and solicitation. Meanwhile, in August 2018 the ABA modified its Model Rules to substantially revise and simplify the rules in the 7 series, covering advertising and solicitation. ATILS recommended that the Bar take a close look at the new ABA Model Rules and at other proposals to make sure that the rules do not interfere with truthful information reaching consumers which could help close the justice gap. The Board included this recommendation in its charge to the new working group created in response to Recommendation 5.
Conclusion: For 15 months, the ATILS Task Force studied the way legal services are delivered in California to see if there are unnecessary impediments to access to justice. It heard from experts, studied current activities in other states and other countries, reviewed hundreds of public comments, and conducted town halls and roundtables with stakeholder groups. The Task Force debated and drafted a series of recommendations. Over the course of two meetings, the Board of Trustees accepted all of the recommendations and referred them on for further study and implementation.
The Task Force also identified a number of other issues that were outside of its purview, but which are important to study if access to justice is truly to be improved. These include, among others, court reform, increased court funding, increased funding for legal services programs, encouragement of pro bono services, educational programs for low- and moderate-income communities, and improvements in ADR. These issues may be necessary, but will have to wait for another day or another forum to be addressed.
Toby J. Rothschild is Of Counsel to OneJustice, a statewide legal services program support center. He was co-vice chair of the ATILS Task Force and was a member of the State Bar’s Rules Revision Commission. He is a member of the CLA Ethics Committee.