When It Comes to Innovation, Lawyers Are Being Left Behind

by Eric Cooperstein on October 18, 2018

lawyers left behind by innovation quote eric cooperstein

One of the most frequent excuses we hear for the glacial pace of innovation and problem-solving in the legal profession is that our ethical rules are too confining. Eric Cooperstein and Megan Zavieh propose to remove this last barrier and use this 4-part series to highlight the ethical rules that most desperately need updating. Excuses be damned, these changes would free lawyers to innovate, adapt, and‚ hopefully‚ bridge the gaping access-to-justice divide. This series focuses on updating the Rules of Professional Conduct that threaten the very future of law practice.

In our first post on revising lawyers’ ethics rules, we argued that an overhaul of the advertising rules is long overdue. Today we explore Rule 5 of the Model Rules of Professional Conduct, which is ripe for innovation in its own right.

Professional Independence – Rule 5.4

Let’s begin with Rule 5.4, which purports to govern lawyers’ professional independence and prevent lawyers from sharing fees with non-lawyers.

To set the tone, here’s a composite of several conversations we’ve had with lawyers about the scope of Rule 5.4:

Can I incentivize my non-lawyer employees by paying them a percentage of the fees on files if they meet efficiency goals on that case?

No. Rule 5.4 prohibits that.

Can I defray the costs of rolling out a web-based platform for serving more clients by paying my web developer based on the volume of business generated? 

Nope. Rule 5.4 prohibits that.

Well, can I get some venture capital to fund the franchising of my law firm concept and in exchange give the funders a 10% interest in the business?

No dice. You got it—Rule 5.4.

Rule 5.4 says lawyers cannot share fees with non-lawyers. So no per-case bonuses, no law-firm ownership for non-lawyers, and no referral fees. Without these guardrails, the thinking goes, hordes of money-hungry non-lawyers will improperly influence lawyers to settle cases prematurely or abandon difficult, unprofitable clients. Rule 5.4 protects the profession, and therefore clients, from the ugliness of the capitalist marketplace.

Oh, those weak-willed, spineless lawyers! One might wonder how they dress themselves each morning, let alone represent their clients’ diverse, complex, high-stakes interests. Thank heavens Rule 5.4 insulates us from Machiavellian business interests.

How ironic that other ethics rules—especially Rules 4.2 (contact with represented persons) and 4.3 (contact with unrepresented persons)—protect the public from lawyers’ interrogation and negotiation superpowers. Maybe sharing fees with non-lawyers is our kryptonite?

Rule 5.4 assumes lawyers are unable to maintain independence if a non-lawyer owns a financial stake in the entity providing legal services. This is absurd and, frankly, insulting. With all of ethics rules to which we are subject, the duties we owe our clients and the courts, and the manner in which we are entrusted with client funds, we as a profession have somehow deemed it necessary to protect ourselves from outside financial investment?

Notably, our rules do not explicitly prohibit investment in our law firm by a manipulative and ill-willed licensed attorney who could just as easily corrupt our professional judgment.

Rule 5.4 says that no matter how upstanding lawyers are as a profession, and no matter how much the public trusts us, when it comes to money, we are so susceptible to influence that we must protect ourselves from ourselves. Oy. We wonder why the public doesn’t trust lawyers? We don’t trust ourselves. The prophecy has been self-fulfilled.

We Are Stronger Than Regulators Think

A lawyer’s judgment is influenced daily by financial pressures. Undoubtedly, Rule 5.4’s drafters knew about work in a private law firm. But perhaps they drafted the rule before billable-hours goals, utilization and realization rates, and per-partner profitability came into vogue. Because struggling solo lawyers feel pressure to settle cases (if only to manage their financial exposure). Lawyers with “mill practices” emphasize high volume over personalized client attention. Thinking we need to protect the public by limiting lawyers’ financial relationships with non-lawyers sounds noble (maybe), but it lacks support in the empirical data.

Experiments with non-lawyer ownership of law firms have yet to collapse any democratic legal systems. The District of Colombia Rules of Professional Conduct allow non-lawyers to own up to 25% of a law firm. Great Britain began allowing non-lawyer ownership of law firms in 2011. And Australian non-lawyers have been permitted to purchase equity interests in law firms since 2007.

Sadly, it appears that most innovation in the legal profession is coming from outside the practice and is being spearheaded by non-lawyers. Legal Zoom and Avvo have built super-charged internet engines to identify potential consumers of legal services, increase access to legal services, and—to the extent lawyers provide those services—control how the work is routed to lawyers and how much the lawyers are paid. What roles have lawyers played in these developments? Very few, if any. Except, of course, to oppose them.

Fixing the access to justice gap will require innovation. Indeed, the gap has proven so stubbornly resistant to decades of lukewarm policy tweaks that we can conclude a fix will demand game-changing innovation. Other issues plaguing the legal profession will benefit, too.

Innovation requires significant investments of time and money. Practicing lawyers—whose days are often filled only with their provision of legal services—have proven unable (and, perhaps, unwilling) to reinvest their time and money into meaningful innovation.

Lawyers Funding Lawyers

Some lawyers manage to make it happen. Erin Levine of Levine Family Law Group, a full-service family law firm, recently built and launched Hello Divorce, a self-help platform for California family law litigants. She kept her firm open and helping people during her innovation cycle. But most lawyers with great ideas for innovation can’t fathom launching a powerful new innovation at all, let alone doing it while continuing to run a law firm.

Our observation is that lawyers at the forefront of innovation—often with an access-to-justice angle, but not exclusively—seem to be leaving their law practices entirely. Take, for example, Chad Burton of CuroStudio and CuroLegal and his former partner Nicole Braddick of Theory and Principle as two examples. There are more. When they stop practicing law, the rules let them solicit investors. But relying on innovation by non-lawyers and so-called “recovering” lawyers is fraught.

Our rules—or, more precisely, states’ implementation of the Model Rules—hinder the innovation process. Every entity currently offering legal services lacks access to catalytic outside investment.

Imagine if Uber could have launched and grown only by reinvesting its profits (or by relying on taxi companies and their drivers to give them money to develop their disruptive technology and implement their vision). The game-changing innovations would never have happened. What are we leaving on the table? What could outside investment unlock in our industry?

Consider a law firm that wants to implement a costly custom software solution to allow its lawyers to take and resolve pro bono matters at scale. Or a non-profit or low bono firm that needs a significant influx of cash to create and implement a new solution to grow its services.

The profession’s allergy to outside cash prevents these entities from creating or implementing tools that could—without hyperbole—change the way our profession and our society delivers legal services and bridges the yawning access-to-justice divide.

Arrogance Preventing Meaningful Change While Lawyers Are Left In The Cold

Maybe it’s plain arrogance that lets lawyers believe that other professions have nothing to teach us about business or innovation, or that partnerships with non-lawyers cannot grow the market for legal services.

Still, while lawyers sit around grinding our collective teeth about Legal Zoom, long-established market forces drive non-lawyers and their capital to carve up and repackage a host of services that we used to regard as the practice of law.

We have long known, for example, that accounting firms provide tax consulting and strategic planning services that look an awful lot like giving legal advice. There are entire industries that provide employers with “out-sourced” human resources services, assist closely-held businesses in converting to employee-owned (ESOP) companies, review discovery documents, and facilitate completing and filing mechanics liens.

Non-lawyers can own these companies and provide services that used to be performed by lawyers alone. Notably, they can also accept and leverage investors’ cash to do it better, more efficiently, and in more innovative ways.

This trend is not limited to transactional work. The Social Security Administration has decided that non-lawyers may represent claimants in hearings before administrative law judges. That process, for the uninitiated, involves direct examination of the claimant, cross-examination of government experts, and making legal arguments to the ALJ.

A social security benefits services company—not organized or holding itself out as a law firm—is doing exactly the things that lawyers have always thought was their birthright.

In Washington State, the nascent Limited License Legal Technician program allows “technicians” to provide some legal services after completing a one-year educational program and 2,000 hours of field experience. The program is limited to family law for the moment, but there are plans to expand to landlord-tenant law and elsewhere. These are just a few examples.

These entities are exempt from fee-sharing, trust accounting, multi-jurisdictional practice, non-compete, and advertising rules that restrict how lawyers run their businesses. These “outsiders” innovate, invest, solicit venture capital, and partner with other professionals in ways that lawyers may not. All this because lawyers must be “independent.”

There have been efforts to make Rule 5.4 less stifling. But some of the exceptions are as absurd as the rule itself. In some jurisdictions, insurance companies have “captive” law firms that hold themselves out to the public as law firms, but that only defend policyholders of the insurance company that controls the firm. Bar associations—which are, obviously, not licensed to practice law—operate referral services that require lawyers to split fees with them.

We are asserting our “independence” straight to our extinction. The practice of law is being carved up like so many cuts of meat, each slice a value-judgment that what lawyers do is not quite so unique as we lawyers think. Lawyers are missing out on the spoils of these new ventures, of course. But the greater missed opportunity is that we are not even part of the conversation.

Change Is Possible

Our argument for change is not theoretical. Change is possible. Like Britain and Australia, we could allow full or partial non-lawyer ownership of law firms. We could allow sharing of legal fees with non-lawyers (while ensuring the lawyer retains complete control over the attorney-client relationship and decision-making process).

Until ethics rules evolve, lawyers will struggle under the weight of the old ones that directly cripple their innovation. This crisis should be self-evident: lawyers face possible sanction, clients suffer, and access to justice remains as sticky as ever, all because we lack the will and creativity to create a regulatory regime that fosters innovation and empowers us and our profession. If we continue to do nothing, we’ll just keep getting carved to pieces.

The post When It Comes to Innovation, Lawyers Are Being Left Behind appeared first on Lawyerist.com.

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Going Really Paperless with iPad Pro and Apple Pencil

by Eric Cooperstein on February 13, 2017

I’ve been operating a paperless office for nearly ten years, ever since I realized a couple of months into my solo practice that I did not want to fill my basement or garage with closed client files. My paperless workflow is simple: I scan all paper that comes into the office and keep most of it until I close a file, when all of the paper gets tossed.

But I have struggled to find a good system for managing my handwritten notes of phone calls, meetings, court appearances, etc. As I wrote on Lawyerist several years ago, taking notes is very important for keeping track of what information you have exchanged with clients and other parties, and it is critical for defending ethics and malpractice complaints.

What to Do with Your Notes

Some paperless lawyers may have shifted to taking notes on their computers but I prefer not to use a speaker phone all the time, and a laptop is cumbersome in meetings. Besides, some studies that show that your brain remembers more when you hand-write your notes.

So, what to do with all those pages of notes? Scanning notes after every phone call or meeting is inefficient because you have to name and save each note. I could scan them to the same file or create a notes file for each client but that, too, was tedious. So I would just stick the paper pages in a folder and scan them all at the end of a case before I trashed them. Relatively efficient, and it meant I didn’t have access to my notes when I was out of the office.

I also used the legal pads as a sort of reminder system to keep track of who had not called me back. This meant I would end up with several legal pads on my desk with notes of active matters. It was kind of a mess.

Then last summer I saw Paul Unger of Affinity Consulting use an iPad Pro and Apple Pencil to take notes right on his iPad. A chorus of angels started singing in my head! Scales fell from my eyes! My note-taking woes would be solved!

Using the Apple Pencil to Take Notes

The transition to taking notes on a screen was seamless. As soon as I started using the Pencil, I was hooked and I have literally not written on a legal pad since. The key feature is that when you are using the Pencil, which is powered by a rechargeable battery, the iPad recognizes its tip instead of your hand. This means you can just rest your hand right on the screen while you are writing, just like you would on a piece of paper (particularly useful for us lefties). The tip of the Pencil is pressure-sensitive, so lines vary in thickness as you write. Writing on glass turns out to be not much different than writing on paper.

GoodNotes 4, an inexpensive app, is loaded with features that make electronic note-taking better than the old-fashioned way. If are a sloppy writer like me, the undo button will wipe away a word you’ll never be able to figure out later. The eraser lets you fix things elsewhere on the page. The “shapes” button will help you draw a box with straight lines or an oval. Of course, you can change colors, line thickness, etc. There’s also a tool that allows you to move blocks of handwriting around on the page, which is great for rearranging notes of calls with your non-linear clients. Your doodles will improve measurably and then you can move them out of your notes so your clients will never see them.

If you write neatly enough the app can translate your handwriting into type with a couple of clicks. I find this not as helpful as I might have thought—if my writing is neat enough for the program to read, then I can read it too. But that same functionality allows the app to search for a handwritten word within a particular file. That’s right, all your handwritten notes—stored as PDFs—are permanently word-searchable.

GoodNotes 4 automatically backs up your files as PDFs to Dropbox, Box, Google Drive, and other programs. It will also back up files you haven’t named yet. It can search for file names within the app. You can import a Word document or PDF, take notes on the document, and then save it as a new PDF. Clients can sign their real signatures on your iPad, not just scrawl with their fingers. My only complaints about GoodNotes 4 is that it does not have an option for automatically numbering pages within a file and that the size of the thumbnails of your files cannot be adjusted.

Notability is another popular note-taking app. And Evernote and its alternatives, of course.

Choosing an iPad Pro

There are two sizes of iPad Pro: regular (the size of the original iPad), and full letter-page size (also known as Ginormous). I went with Ginormous. I’m glad I did, because more than 80% of the time I’m using it for taking notes and I like having the same full-size sheet of “paper” to work from that I’ve always been used to. But it’s a lot of screen space, and many apps don’t seem to know what to do with all that extra real estate.

The only downside for the iPad Pro and Apple Pencil is that the Pencil needs to be recharged periodically. You can stick it in the power jack for the iPad, but then you have this Pencil awkwardly sticking out from your iPad. I tend to use the very small, likely-to-get-lost-but-so-far-so-good power cord adapter. The only way to shut “off” the Pencil is to turn off the Bluetooth on the iPad, which I do at the end of the day so the batteries on both don’t run down. Recharging the Pencil is pretty fast and on a very busy note-taking day I might recharge it once in the afternoon.

… or Microsoft Surface?

In deference to Windows users, I need to acknowledge that I recently tried a client’s SurfacePro 4 with its powered stylus. The stylus is not as elegant as Apple’s (the Windows stylus looks and feels like an engineer’s mechanical pencil) but it is clearly more functional. The top of the stylus works as an eraser, it has a “right-click” button on it, and there is an embedded magnet that attaches it to the tablet. The contact with the screen is slightly different than on the iPad but you can achieve the same handwriting dexterity. Personally, the stylus alone would not motivate me to switch but it is a very good option for Windows users.

Conclusion

Despite the fact that the iPad Pro has been out since the spring of 2015, few lawyers seem to be using it. It’s often a conversation piece when I show up to meetings with it. But this is the best piece of technology I’ve bought since I purchased an iPhone. Now I can say my practice is truly paperless.

Going Really Paperless with iPad Pro and Apple Pencil was originally published on Lawyerist.com.

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Go Rural, Young Lawyer!

June 27, 2014

shutterstock_143902714In tough economic times like these, some new lawyers may want to open their minds to a different type of risk and go west — or north, or south, or east — to find a job beyond their urban dreams.

Go Rural, Young Lawyer! was originally published on Lawyerist.com.

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Go Rural, Young Lawyer!

June 27, 2014

shutterstock_143902714In tough economic times like these, some new lawyers may want to open their minds to a different type of risk and go west — or north, or south, or east — to find a job beyond their urban dreams.

Read the full article →

This Post is Privileged and Confidential

February 20, 2014

email-disclaimersEmail disclaimers should be sparingly used, appear at the beginning rather than the end of the email, and state that information in the email is confidential or privileged only when it really is.

This Post is Privileged and Confidential was originally published on Lawyerist.com.

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This Post is Privileged and Confidential

February 20, 2014

email-disclaimersEmail disclaimers should be sparingly used, appear at the beginning rather than the end of the email, and state that information in the email is confidential or privileged only when it really is.

Read the full article →

Ninety-Five

September 3, 2013

OLYMPUS DIGITAL CAMERAWe have talked about the problems with bar associations, wondered whether they are still useful, and suggested ways for them to stay relevant. This is one bar association president’s answer.

Ninety-Five was originally published on Lawyerist.com.

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Ninety-Five

September 3, 2013

OLYMPUS DIGITAL CAMERAWe have talked about the problems with bar associations, wondered whether they are still useful, and suggested ways for them to stay relevant. This is one bar association president’s answer.

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Networking Strategies for Introverted Lawyers

March 24, 2011

The introverted lawyer is at risk of malpractice as well as slow intake.

Networking Strategies for Introverted Lawyers was originally published on Lawyerist.com.

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Networking Strategies for Introverted Lawyers

March 24, 2011

The introverted lawyer is at risk of malpractice as well as slow intake.

Read the full article →