Return to ELP Seminar Participants' Papers 1999- http://www.uiowa.edu/~cyberlaw/elp02/priorpap.html
 

I. INTRODUCTION

II. THE PROPOSAL

1. NONLAWYER ADVOCACY IN THE PERSONAL INJURY SECTOR ONLY
2. ENSURING COMPETENCY
3. ALLOW NONLAWYER ADVOCATES TO NEGOTIATE SETTLEMENTS
4. REQUIRING LAWYER APPROVAL OF SETTLEMENTS
5. REQUIRING LAWYER-CONDUCTED TRIAL WORK IF SETTLEMENT FAILS

III. THE POSITION OF THE AMERICAN BAR ASSOCIATION

1.   BACKGROUND
2. THE ABA'S GOALS REGARDING NONLAWYER ACTIVITY

A. INCREASING AFFORDABLE ACCESS TO LEGAL SERVICES

i. Creating affordable rates for legal services
ii. Ensuring know-how and expertise through specialization
iii. Eliminating the economic pressure to charge high fees

B. PROTECTING THE PUBLIC FROM INCOMPETENT OR UNETHICAL CONDUCT OF LEGAL ADVOCATES

i. Disciplinary actions
ii. The controls of the fee market
iii. Control mechanisms
iv. The ABA'S admission

IV. CONCLUSION

Popular opposition to the unauthorized practice of law rules has varied in strength ever since.  Today, academic demands to amend the rules proscribing the unauthorized practice of law abound.  Indeed, the popular justification for doing so is simple, yet compelling -- for many people, hiring a lawyer is exorbitantly expensive.  Therefore, a large sector of American society fails, or is reluctant, to do so despite an undeniable need for legal assistance.  Furthermore, for many low- to moderate-income consumers who do seek the services of a lawyer, the financial strain is exhausting, often causing the client to terminate the service before reaching the ultimate goal for which the service was requested.

Such a dilemma calls into question the American lawyer's monopoly on legal services.  Potential clients who clearly have the financial means to hire a lawyer can do so without hesitation.  Those who clearly don't have such financial means can at least rely on free legal service organizations or pro bono representation.  Yet, because the legal profession allows only lawyers to represent clients, the options available to low- to moderate-income persons who don't qualify for legal services are disheartening:  either forgo legal representation entirely, scrape the bottom of the family bank account, or incur additional debt and hope for the best.

It is the need of such "have-not-enough" clients that has fueled the debate over amending the current prohibition of the unauthorized practice of law.  These clients need a more attractive alternative:  nonlawyer advocacy.  While lawyers hold a monopoly on the practice of law in America, they are by no means the only professionals qualified to represent the interests of others.  With education, training, and specialization, nonlawyers can, and do, acquire the tools needed to provide competent legal services.

This paper focuses on the need to amend the rules that prohibit the unauthorized practice of law as they apply to personal injury plaintiffs.  While most interested academics argue for expanding the scope of allowable activities of nonlawyers in a broad, general sense, this paper recognizes that, as a class, personal injury plaintiffs have the most equitable claim for nonlawyer advocacy.  This need is a direct result of both the great proliferation of the paralegal profession, and the personal injury plaintiff's bondage to the contingency fee.

Since the 1960s, the paralegal profession has grown exponentially.  In 2000, there were over 188,000 paralegals working in the United States, and the Bureau of Labor Statistics predicted that the profession will continue to grow at a faster-than-average rate through at least 2010.4   While the original paralegals were essentially glorified legal secretaries, runners, and clerical help, today, paralegals are highly skilled and educated, and are valuable employees to lawyers across the country.  The roles filled by paralegals are vital to the success of the modern law firm because of their ability to perform substantive legal work that traditionally was done only by licensed attorneys.  According to the United States Supreme Court, these substantive tasks include, without limitation, "factual investigation, including locating and interviewing witnesses; assistance with depositions, interrogatories and document production; compilation of statistical and financial data; checking legal citations and drafting correspondence."5   This substantive ability benefits the employing firm since it affords the lawyers additional time to represent more and more clients.

Subsequently, the substantive work done by paralegals also benefits clients, since it can be billed at a much lower hourly fee.  As a result, the use of paralegals has given clients (particularly low- to moderate-income clients) increased access to the legal system through more affordable, yet equally competent, services.  Put very simply, this is the very goal called for by many opponents of the unauthorized practice of law rules.

Unfortunately, this benefit to the client is only realized in non-contingency fee cases.  Lawyers whose services correspond with some variation of an hourly fee can provide more affordable legal services by delegating substantive tasks to paralegals whose hourly fee is much lower than a lawyer's.  Conversely, under a contingency arrangement, the fee consists of a stated percentage of any recovery the lawyer procures.  Although the lawyer may delegate tasks to a paralegal (a cheap way for the lawyer to free up his or her own time), the savings earned in doing so are never passed on to the client.  The lawyer's contingent amount remains the same and does not diminish if the lawyer utilizes the less expensive services of a paralegal.  This results in a financial inequity between the services available to clients, depending solely on the type of services needed.

One may argue that this inequity is a farce because the availability of contingency fees gives most personal injury clients access to legal services that would otherwise be impossible if the client were forced to pay the lawyer's hourly fee.  The contingency fee option, so the argument goes, provides such clients with access to legal representation otherwise beyond their means.  Lawyers for personal injury plaintiffs might argue that because the lawyer receives nothing if no recovery is realized, the lawyer assumes all the risk.  This assumption of total risk eliminates any claimed inequity due to the use of a contingency fee.  Yet, this inequity is very real because a high-income client with a moderately valued claim is free to, and often does, choose to pay the lawyer's hourly fee rather than give up a full third (or more) of the award, thereby paying a lower total fee for the same service.  Such an option is not available to the average client, let alone the average low- to moderate-income client.

In sum, despite the rules that proscribe the unauthorized practice of law, the expansive use of paralegals has already resulted in greater access to more affordable legal services.  However, although the contingency fee contract provides personal injury plaintiffs with access to legal representation, it denies such plaintiffs the benefits of more affordable legal representation.

The unauthorized practice of law rules benefit personal injury plaintiff lawyers by allowing the lawyers to refuse to reduce their contingency amount despite the use of paralegals who greatly minimize the lawyer's cost of securing an award.  Consequently, the same rules harm the personal injury plaintiffs themselves by prohibiting legal advocacy by anyone other than a licensed lawyer -- a lawyer who will undoubtedly bind the plaintiff to the inequities of a contingency fee contract.
Unless lawyers change the way they bill personal injury clients, this legal snare demands fundamental changes to the way personal injury law is practiced today.  This paper proposes amending the unauthorized practice of law rules to allow, in limited circumstances, nonlawyer advocacy of personal injury plaintiffs.  After setting forth the details of the proposal, this paper will address how the proposal comports with the American Bar Association's recommendations while simultaneously avoiding the legal profession's concerns with the unauthorized practice of law.
 

II. THE PROPOSAL

 The proposal set forth herein consists of the following five main components:  (1) Allow competent nonlawyers secure their own personal injury clients, free of lawyer supervision, for a lower contingency fee; (2) Allow those nonlawyers to negotiate and secure settlements on behalf of those clients, short of trial; (3) Ensure the settlements are competent and fair to the client by requiring the nonlawyer advocate to hire a lawyer to review and approve the file and the terms of the settlement; (4) Require the nonlawyers to indemnify the lawyers who approve the settlement; and (5) If the nonlawyer cannot reach a settlement, require that the nonlawyer advocate hire a trial lawyer to take the case to court.

1. NONLAWYER ADVOCACY IN THE PERSONAL INJURY SECTOR ONLY
Although many people support amending the unauthorized practice of law rules to allow nonlawyer advocacy of any type of client, this proposal limits such advocacy to that of personal injury plaintiffs.  As argued above, non-personal injury clients already enjoy more affordable legal services because of the lawyer's extensive use of paralegals.  While increasing affordable access to justice to all clients is an admirable goal, this proposal recognizes that the legal profession may not be ready for such pervasive change.  This limited proposal simply strives to afford personal injury plaintiffs with the same benefit (less expensive paralegal work) that is currently available to all clients.  Giving personal injury plaintiffs the option of hiring a nonlawyer allows these clients to take advantage of the competent ability of paralegals while avoiding the contingency fee trap.

2. ENSURING COMPETENCY
In order to ensure the competency of such nonlawyer advocates, implementation of minimum education requirements is essential.  However, one must recognize that a law school education is not the only way to acquire the ability to be an effective legal advocate.  Herbert Kritzer, Professor of Political Science and Law at the University of Wisconsin-Madison, argues that specialized training, like that acquired through paralegal education and real experience, can provide the tools needed to be an effective advocate in a specialized field.  Kritzer writes:
[T]he key to effective representation is the combination of three types of expertise: knowledge about the substance of the area, an understanding of the procedures used, and familiarity with the other regular players in the process. The latter can come only with experience, but the first two (substantive and procedural expertise) could be imparted through one-year, specialized training programs for paralegals, legal technicians, and licensed advocates. The expertise necessary to handle specialized proceedings or tasks can also be acquired experientially, either through an apprentice-like process or by parallel experience.6

While a law school education provides a "broad but shallow education,"7 an accredited paralegal education, specializing in personal injury matters provides a narrow but deep understanding of the intricacies of personal injury law.  This understanding is essential to the success of this proposal.

 In addition to minimum education requirements, ensuring the competency of nonlawyer advocates could be achieved through certification or licensure.  Currently, national paralegal associations like the National Federation of Paralegal Associations (NFPA) and the National Association of Legal Assistants (NALA) offer their members certification upon passage of a stringent exam and certain other requirements.8  While NFPA and NALA certification is strictly a voluntary means of marketing oneself to potential employers, states could simply require it of nonlawyer advocates of personal injury plaintiffs.  Furthermore, to ensure ongoing competency, states could require a minimum of regular continuing legal education courses in personal injury law.

Perhaps the most important means for ensuring the competency of nonlawyer advocates is to set a minimum practical experience requirement.  While a deep paralegal education provides the tools needed to become an effective advocate, before a nonlawyer can become fully competent, he or she must use those tools to assist real clients in a law firm setting.  Practical experience in tasks such as investigating, communicating with the client and the adversary, conducting discovery, and negotiating a settlement are essential to the success of a personal injury practice.  Until the nonlawyer perfects these skills, he or she cannot be deemed a competent advocate.  Therefore, a minimum experience requirement should be imposed as a means of ensuring the competency of nonlawyer advocates.

3. ALLOW NONLAWYER ADVOCATES TO NEGOTIATE SETTLEMENTS
Under this proposal, nonlawyer advocates would be given free reign to negotiate and procure settlements on behalf of their own clients.  The current unauthorized practice of law rules allow nonlawyers to engage in a substantial amount of substantive legal work, so long as the nonlawyer remains under the immediate supervision of a lawyer who is held accountable for the nonlawyer's work.  This requirement ensures the competency of the nonlawyer's work and gives the client some redress in case of malpractice.

Because this proposal requires lawyer approval of any settlement reached by a nonlawyer, the need for constant lawyer supervision is eliminated.  This proposal critically questions why a lawyer must supervise and be accountable for the work product of an equally competent nonlawyer.  If an able nonlawyer can reach a settlement on behalf of a client just as skillfully as a lawyer can, a potential client should have the option of paying a lower fee to an independent nonlawyer advocate rather than a higher fee to a lawyer who simply endorses the same work.
 
4. REQUIRING LAWYER APPROVAL OF SETTLEMENTS
While this proposal endorses the ability of nonlawyers, it also recognizes that the legal profession is ardently concerned with protecting the interests of clients.  This proposal protects both the independence of the nonlawyer advocates and the interests of the client. The ultimate concern is with the fairness of the settlement itself.  Therefore, although the nonlawyer advocate is free to conduct an independent investigation and settlement negotiations, once a settlement is reached, the nonlawyer must present the case to a lawyer for approval.  For a flat fee paid by the nonlawyer, the lawyer would then carefully review the file and the settlement agreement.  If, in the lawyer's independent opinion, the agreement presents a fair settlement to the client, the lawyer would approve the settlement, and the case would close.  As a condition of the settlement approval, the nonlawyer would fully indemnify the lawyer from liability stemming from any potential action subsequently brought by the client.  If, however, the lawyer determined that the settlement was not in the best interest of the client, negotiation between the nonlawyer and the adversary would simply continue until the lawyer approves of the settlement or negotiation breaks down entirely.

5. REQUIRING LAWYER-CONDUCTED TRIAL WORK IF SETTLEMENT FAILS
Despite careful and deliberate steps to ensure nonlawyer competency, this proposal stops short of permitting nonlawyers to engage in actual trial practice.  Adversarial courtroom trial work demands a keen understanding of evidentiary principles that only a law school education and state licensure can provide.  Therefore, although with proper education and experience, nonlawyers can adequately negotiate a fair settlement, if negotiation fails and the case must enter the courtroom, the client needs the skills of a trained trial lawyer.

When this occurs, the nonlawyer would then be forced to hire a trial lawyer at a flat or hourly fee to argue the case in court.  Yet, because the vast majority of personal injury cases settle before trial, the prospects of hiring a trial lawyer remain remote.  The nonlawyer rather than the client incurs the expense of hiring a trial lawyer, so this acts as an incentive to the nonlawyer to facilitate settlement.  Yet, because a lawyer must approve the settlement, the nonlawyer advocate faces a simultaneous disincentive to reach a quick settlement just to avoid the cost of hiring a lawyer.

III. THE POSITION OF THE AMERICAN BAR ASSOCIATION

1.   BACKGROUND
 In 1992 the American Bar Association created the Commission on Nonlawyer Practice for the purpose of "conduct[ing] research, hearings and deliberations to determine the implications of nonlawyer practice for society, the client and the legal profession."9  The Commission launched an expansive data compilation project and received meaningful input from "every identifiable group and sector having an interest in the provision of legal services in the United States."10  After three years of research, the Commission published its recommendations in a report entitled, "Nonlawyer Activity in Law-Related Situations."  This report sets forth the official position of the ABA on nonlawyer advocacy, and epitomizes the sentiments and concerns of the legal profession in general.

2. THE ABA'S GOALS REGARDING NONLAWYER ACTIVITY
 After assessing the most comprehensive collection of data ever assembled concerning nonlawyer advocacy, the Commission recognized two urgent goals of the legal profession:  (1) "Increasing the public's access to the justice system and to affordable assistance with its legal and law-related needs;"11 and (2) "The protection of the public from harms arising from incompetent and unethical conduct by persons providing legal or law-related services."12  Finding a way to realize both of these goals is the essence of the debate over amending the unauthorized practice of law rules.  Implementing the proposal outlined herein would accomplish both goals simultaneously.

A. INCREASING AFFORDABLE ACCESS TO LEGAL SERVICES
Concerning the ABA's first goal, the Commission considered several reasons why potential clients fail to seek the services of a lawyer, including "that lawyers are not always available at affordable rates; that for some kinds of specialized issues ... few lawyers have the knowledge and experience needed; ... and that lawyers' significant debt burdens and rising operating costs put lawyers under economic pressure to charge higher fees."13  This proposal alleviates each of these concerns.
 
i. Creating affordable rates for legal services
Obviously, the nonlawyer's lower cost makes access to legal services more affordable.  This proposal creates an option for personal injury plaintiffs never before available.  The contingency rate at which nonlawyer advocates would be hired would be determined entirely by what the market for these services would allow.  Take, for example, a personal injury case generally valued at $100,000.  If the client hired a lawyer and signed a one-third contingency fee agreement, the client would receive $66,666 and the lawyer $33,333.  Under this proposal, however, if the client hired a nonlawyer advocate and signed a 15% contingency fee agreement, the client would receive $85,000 and the nonlawyer would receive only $15,000 (less the cost of hiring a lawyer to approve the settlement -- $1000 to $2000 perhaps).  Therefore, this proposal would save the client over $18,000 in legal fees.

 If, however, the nonlawyer failed to procure a settlement, his cost of hiring a lawyer to argue the case in court might substantially erode the nonlawyer's earned fee.  This puts a premium on nonlawyers who are successful in procuring settlement.  If a nonlawyer repeatedly failed to settle, the market would effectively remove him from the profession.  If a nonlawyer enjoyed repeated success, however, the market might allow his contingency rate to increase.

ii. Ensuring know-how and expertise through specialization
This proposal also addresses the Commission's second enumerated reason why clients fail to seek legal assistance by advocating nonlawyer representation only for personal injury plaintiffs -- the shortage of advocates with specialized knowledge and experience.  Since nonlawyer advocates under this proposal are allowed only to practice personal injury law, they would be highly specialized in their field.  This would assure potential clients that their chosen advocate is keenly aware of relevant issues and strategies.

iii. Eliminating the economic pressure to charge high fees
The Commission recognized that the escalating cost of a modern law school education places enormous pressure on lawyers to charge a high fee in order to pay off their student loan debts.  This inherent pressure is nonexistent for nonlawyers who never incurred the expense of a law school education.  Under this proposal, personal injury clients are assured that market forces alone drive the fee charged by their nonlawyer advocates, rather than an internal financial struggle.

B. PROTECTING THE PUBLIC FROM INCOMPETENT OR UNETHICAL CONDUCT OF LEGAL ADVOCATES

The ABA's second goal is the battle cry of opponents of nonlawyer advocacy.  Members of the bar contend that "the only way a person can demonstrate the degree of knowledge and judgment needed to render legal assistance is by taking all of the steps required for bar membership."14  As previously argued, however, bar membership is not the only path to competency and ethics.  Herbert Kritzer recently concluded a detailed study comparing the legal services provided by lawyers and nonlawyers in a variety of settings in Wisconsin.  Kritzer concluded that his  "systematic research makes it clear that nonlawyers can be effective advocates and, in some situations, better advocates than licensed attorneys.  The assertions by members of the legal profession that the public is protected when only licensed attorneys provide legal services is not supported by what happens when specialized nonlawyers are permitted to represent clients."15

i. Disciplinary actions
As previously argued, some of the most sensible ways to prevent incompetent nonlawyer behavior is to set strict education, training, and experience requirements, followed by mandatory certification or licensure.   Despite these practical requirements, many opponents of nonlawyer advocacy assert that nonlawyers would tend to engage in inappropriate conduct because they are currently not subject to the same disciplinary procedures as are lawyers.16  Although it would be easy enough to make nonlawyers subject to the same disciplinary actions as lawyers,17 some believe that such actions do little to protect the public because over 90 percent of national disciplinary complaints are dismissed.18  Furthermore, "[t]he bar's discipline system does little to deter poor service because sanctions are almost never levied for anything less than criminal behavior, gross and repeated negligence, or unconscionable overcharging."19

ii. The controls of the fee market
One of the strongest deterrents of incompetent conduct is the competitive marketplace.  Both the client's and the nonlawyer advocate's self-interest ensure competency.20  Plaintiffs are cautious and deliberate when they choose someone to represent them.  If a client is uncomfortable with the credentials of nonlawyer advocates, the market still gives the client the option of hiring a more expensive lawyer instead.  More importantly, the competitive marketplace itself is the most powerful incentive for nonlawyer advocates to provide competent services.  "It is very much in the [nonlawyer advocate's] interest to perform the tasks for which he has contracted and not to leave dissatisfied clients in his wake.  A bad reputation will lose customers and money.  Professionals who fail through incompetence lose the investments they made in their enterprises and their prospects for future success."21

iii. Control mechanisms
Kritzer argues that nonlawyers could be regulated in the same fashion as lawyers, and identifies three mechanisms for doing so:
* Institutional controls, in which institutional forums within which the lawyers work take some responsibility for uncovering and sanctioning lawyer misconduct (in the federal courts this is exemplified by Rule 11 sanctions for filing frivolous cases, unsupported claims, and motions.)  [Under this proposal, since nonlawyers are prevented from engaging in trial work, they have no contact with any such institutional forum.  However, the lawyers who review and approve the settlements procured by the nonlawyer advocates could serve this function nicely];
* Liability controls, in which disgruntled clients can seek compensation by bringing a claim for professional malpractice; and
* Disciplinary controls, in which independent agencies (often a part of the state bar) investigate and prosecute violations of rules of professional conduct (with the final disciplinary authority typically resting with the state supreme court).22
It is clearly feasible to apply these three control mechanisms to nonlawyers as well as lawyers.

iv. The ABA'S admission
Finally, even the ABA itself recognizes that the public can be protected from incompetent or unethical conduct by nonlawyer advocates through a variety of possibilities, including "consumer protection laws, unfair and deceptive trade practice statutes, criminal laws against fraud and the traditional remedies of actions sounding in negligence."23  The ABA also recognizes that registration, certification or licensure of nonlawyers is an option that merits further study.24

IV. CONCLUSION
The ABA's Commission on Nonlawyer Practice embraced the idea that nonlawyers play an important role in increasing access to affordable legal services.25  Although the Commission recommended continuing the regulated activities of nonlawyer advocates who are authorized by statute, court rule, or agency regulation26, the Commission stopped short of endorsing a blanket rule that would permit independent nonlawyer advocacy.  Instead, the Commission deferred to the discretion of the states to regulate nonlawyer activity as they deem appropriate.27  In other words, if a state adopted an independent nonlawyer advocacy program, the Commission would approve it, but the Commission does not expressly recommend it.

This pseudo-endorsement is essentially meaningless.  State legislatures are largely composed of lawyers and persons loyal to lawyers.  Therefore, the lawyer's monopoly on legal services is not likely to see change anytime soon.  In the meantime, lawyers might welcome expanding the scope of activities in which a paralegal might engage because the status quo keeps paralegals under the direct supervision of a lawyer.

This status quo benefits lawyers because paralegals can do a substantial amount of lawyer-like work, which gives the lawyer more time to take on additional clients.  The status quo also benefits many clients, too, because the work done by paralegals is billed at much lower rates.  So, as the scope of supervised nonlawyer activities expands, the corresponding cost of those legal services, in fact, decreases.  Yet because of the punishing effect of contingency fees, until the scope of unsupervised nonlawyer services expands as well, personal injury clients cannot enjoy the same corresponding decline in cost.  The contingency fee puts personal injury plaintiffs at an inherent disadvantage in the pursuit for affordable legal services.  A lawyer can take the same percentage whether he does all the work himself, or delegates a substantial amount to his paralegal.  Although use of paralegals makes it cheaper for a lawyer to handle a personal injury case, the contingency rate remains unaffected.  It's just not fair.  Personal injury plaintiffs need nonlawyer advocacy to make their access to justice just as affordable as that of other non-contingency fee clients.

1 Jacquelin M. Nolan-Haley, Rethinking the Professional Monopoly from a Problem Solving Perspective, 7 HARV. NEGOT. L. REV. 253, 261 (Spring 2002).
2 Id. at 262.
3 Id.
4 Gloria McPherson, Legal Assistants:  An Evolving Role in the Practice of Law in Alabama, 63 ALA.L.REV. 178, 181; see also Bureau of Labor Statistics, Occupational Outlook Handbook, 2002-03 edition.
5 Missouri v. Jenkins, 491 U.S. 274, 288, n.10 (1989).
6 Herbert M. Kritzer, Rethinking Barriers to Legal Practice, 81 JUDICATURE 100, 101 (1997).
7 George C. Leef, Lawyer Fees too High?  The Case for Repealing Unauthorized Practice of Law Statutes, at http://www.cato.org/pubs/regulation/reg20nlc.html.
8 See, generally, http://www.paralegals.org/PACE/home.html and http://www.nala.org/cert.htm.
9 Commission on Nonlawyer Practice, American Bar Ass'n, Nonlawyer Activity in Law-Related Situations, xiii  (1995).
10 Id. at xv.
11 Id. at 73.
12 Id. at 125.
13 Id. at 4.
14 George C. Leef, Lawyer Fees too High?  The Case for Repealing Unauthorized Practice of Law Statutes, at http://www.cato.org/pubs/regulation/reg20nlc.html (emphasis original).
15 Herbert M. Kritzer, Rethinking Barriers to Legal Practice, 81 JUDICATURE 100 (1997).
16 George C. Leef, Lawyer Fees too High?  The Case for Repealing Unauthorized Practice of Law Statutes, at http://www.cato.org/pubs/regulation/reg20nlc.html.
17 Herbert M. Kritzer, Rethinking Barriers to Legal Practice, 81 JUDICATURE 100, 101 (1997).
18 George C. Leef, Lawyer Fees too High?  The Case for Repealing Unauthorized Practice of Law Statutes, at http://www.cato.org/pubs/regulation/reg20nlc.html.
19 Id.
20 Id.
21 Id.
22 Herbert M. Kritzer, Rethinking Barriers to Legal Practice, 81 JUDICATURE 100, 101 (1997).
23 Commission on Nonlawyer Practice, American Bar Ass'n, Nonlawyer Activity in Law-Related Situations, 10 (1995).
24 Id.
25 Id. at 125.
26 Id. at 130.
27 Id. at 134.