State bar efforts to reform law firm ownership rules could spur the American Bar Association to eventually do the same, ABA president Judy Perry Martinez told Bloomberg Law.
Proposed reforms to further open the legal system to nonlawyers and tech companies to increase access to justice are being considered by several western state bar groups.
At least one city has joined the discussion, as bar groups in Chicago announced Oct. 7 they’d form a task force to explore possible regulatory reforms to make legal services more affordable and accessible.
“There’s no greater intractable problem right now in the legal arena than the fact that many people can’t afford legal services and don’t know how to access them,” Martinez said during an interview at the American University Washington College of Law.
Momentum building in the states and beyond could lead forces from within the ABA or outside the group to propose that its House of Delegates take up issues related to access to justice, Martinez said.
“What I know is that there are many in this country who can’t access legal services,” said Martinez. “And frankly, I think there is a moment in time, right now, where people are thinking critically and innovatively and with a different set of tools in their toolbox” about how to best tackle the issue.
Reform Road Map
Martinez, who began her one-year term as ABA president in August, has a background in access to justice and related issues.
In the 1980s, Martinez, a litigator at Simon, Peragine, Smith & Redfearn in New Orleans, helped establish the New Orleans Pro Bono Project.
More recently, she served as the chair of the ABA Presidential Commission on the Future of Legal Services, and as a special adviser to the ABA Center for Innovation. She was a lead force behind the 2016 Report on the Future of Legal Services in the United States, which, she argued, helped lay the groundwork for the current debates.
In that report, the authors determined that legal services are increasingly out of reach for most Americans and called the profession to action.
“We stepped out at the ABA when others really weren’t,” Martinez said. “I think we laid out foundational findings and recommendations that others have looked to. And even if they’re not utilizing them as their road map or blueprint—and I think some are—what they’re doing is taking off from that point and going forward.”
The report shied away from suggesting the types of sweeping changes being proposed by bar groups in Arizona, Utah, and California. Proposed changes in those states have included loosening or scrapping Rule 5.4, which prevents nonlawyers from sharing fees with lawyers, or from co-owning legal operations with them.
A task force in Arizona on Oct. 4 recommended to that state’s supreme court that it get rid of Rule 5.4, while also suggesting that a new group be convened to “immediately” figure out how to regulate legal entities in which nonlawyers have a financial interest.
In California, the state bar’s board of trustees will vote on a series of proposed changes to its bar rules in January, including one of the more controversial proposals, to amend its Rule 5.4 to permit law firms to share fees with nonlawyers.
Big Four Threat
While many in the profession have spoken out in favor of proposed reforms, there have been critics as well.
Leaders of the biggest law firms in the United States have expressed concerns that one unintended consequence of proposed bar rule reforms could be an open door for non-traditional legal players. There’s been concern for instance that the Big Four accounting behemoths—KPMG, PwC, EY, and Deloitte—whose revenues dwarf even the biggest of Big Law firms, could gain a foothold that allows them to begin to compete more directly with U.S. law firms.
“I think there’s an awareness of the Big Four,” Martinez said.
At the same time, she said, “the anchor on this work is bringing forth innovation and technology in a way that serves access to justice. That’s where this lies. That’s our focus.”
When asked if alternative legal service providers could help in promoting access to justice if given more latitude by rule changes, she said she didn’t know.
Though the ABA is not a regulatory body, its model ethics bar rules carry weight, to the extent that they’re suggestions to state bar groups that often accept the model rule language as their own after debating the rule change.
If the ABA is to address a change to Model Rule 5.4, Martinez said a motion in the House of Delegates could come from an ABA division or section, or from a state bar group.
It’s difficult to know if, or when, the ABA might move to change its rules, Martinez said.
Although there is movement for reform, she said most of the states considering change are just now beginning to figure out if in fact they can agree on acceptable reforms, and if so, what they’ll look like.
“What’s playing out here is similar to what’s played out in the past,” she said. “There has been activity in the states sort of sparking up. You see one state do something, and then you see another state. And then there may be some action by the ABA.”
The process “may not be as fast as some people think we should go. And it may be faster than others think we should go,” she said.