Chicago Bar Group Urges Legal Tech Partnerships With Nonlawyers

Lawyers would be able to partner with nonattorneys to provide legal tech solutions in Illinois under changes proposed by a Chicago Bar task force.

The suggested changes, which must be approved by the Illinois Supreme Court, are similar to those put forth in recent months by task forces in Utah, California, and Arizona. They’re often posed as efforts to increase access to legal services for low- and middle-income communities, but could also give the Big Four and others a wedge into markets dominated by traditional law firms.

The proposed changes made Wednesday in the 116-page report by the Task Force on the Sustainable Practice of Law would allow lawyers and nonlawyers to co-own operations that would become “Approved Legal Technology Providers.” Regulations in Illinois and most states explicitly forbid such arrangements.

Though the task force started its work last October, the effort gained a new urgency with the advent of Covid-19, said Bob Glaves, executive director of the Chicago Bar Foundation. “It has underscored the need to be able to deliver legal services to people who need them,” Glaves said of the pandemic.

The task force shied away from suggesting the total elimination of the state ethics Rule 5.4—which prohibits fee-sharing between lawyers and nonlawyers except in limited circumstances—as Arizona has undertaken.

The group suggested that the Illinois Supreme Court establish a process to evaluate “whether broader changes to Rule 5.4’s limitations on ownership of law firms are necessary to spur more innovation in the delivery of services.” In the meantime, the rule should be revised to clearly allow new, regulated entities to sell consumer-facing legal tech products and services, the task force said.

“The prospect of pushing lawyers out of ownership involvement in technology-based services seems counterintuitive, more likely to impede than encourage outcomes that will best serve consumers,” the task force said.

Big Four ‘Threat’

Because of the current rules, lawyers have effectively been excluded from devising and promoting legal tech solutions—even opening themselves to state bar discipline should they try, said Mary Robinson, chair of the task force’s technology committee.

Loosened law firm ownership rules in large states like Illinois, which boasts one of the largest legal markets in Chicago, could be of interest to the Big Four accountancies. Law firm leaders have noted that alternative legal service providers like the Big Four could take advantage of regulatory changes by opening operations that compete more directly with law firms.

The report included a “letter of dissent” from John Thies, a past president of the Illinois State Bar Association. Thies “strongly opposed” changes that would give nonlawyers a greater role in the operations of law firms, or in particular client matters.

“Such recommendations pose a tremendous threat to lawyer independence, and run the risk of damaging the viability of large and small firms alike,” he wrote.

Other big cities like Washington, D.C. also are studying whether they should loosen their law firm ownership rules. A D.C. Bar committee announced in January it will study evolving legal service delivery models in the U.S. and abroad, including nonlawyer ownership of law firms.

The Chicago task force report is open for public comment through Aug. 21.