CBA Record

Legal Services issued a thorough and well- reasoned “Issues Paper Regarding Alterna- tive Business Structures” and invited com- ment. This Issues Paper laid out the many potential benefits to the profession and to access to justice that would flow from allowing more flexibility in law firm owner- ship and investment. The Paper also noted that in other countries and jurisdictions where alternative business structures have been allowed, there has been no evidence of harm to the profession. In spite of the fact that there has been no documented harm elsewhere, the comments to the Issues Paper from the ABA membership were overwhelmingly negative, with a relatively small number of supporters drowned out by a cascade of opposition. Many of the comments were nakedly protectionist and short-sighted. Other commenters raised legitimate con- cerns about protecting professional loyalty and independence, but nothing that could not be addressed through regulations. As other countries already are proving, we can protect our duties of professional indepen- dence and loyalty while at the same time being more flexible on investment and ownership. Among the consequences of the outmoded restrictions on investment for lawyers is that investments in legal innovation increasingly are just going around the profession. Avvo and Legal Zoom are just two examples of entities that are attracting significant outside investment and driving a number of innovations around market- ing and technology that have the potential to meaningfully increase access to legal help. These entities are more limited in their impact because they can’t themselves provide legal services, and instead have to work around the ownership restrictions by connecting with other lawyers who must remain independent. All Animals Are Equal, but Some Animals Are More Equal than Others The continued opposition to anyone other than lawyers having ownership in law firms hinders innovation in the profes- Legal Innovation Increasingly Flows Outside of the Profession

sion in another important way as well: by artificially limiting the roles of the many other professionals who play a key part in law firm success. Many other professionals who specialize in technology, marketing, management, finance, and other key disciplines bring necessary expertise that complements what lawyers bring to the table and is crucial to innovation and business success. Yet these other professionals are then prevented from sharing in the ownership or profits of a firm. Lawyers are similarly prevented from partnering with professionals from other disciplines to deliver a comprehensive suite of services. So Why Are We Still Doing This? Putting aside the protectionist elements in our profession, who I believe are only a vocal minority, I believe the main reason these limitations continue to exist is that lawyers genuinely concerned with potential threats to their professional independence don’t see a good enough reason to risk changing the status quo without proof that it will lead to something better. Given the large and growing gap today in access to justice for such a large segment of our com- munity (not to mention the other points noted above), that simply is not a good enough reason. There clearly is a major market failure for people in the middle market who need legal services, and the genuine concerns about preserving pro- fessional independence can be addressed through new rules that also open the door to broader ownership and investment. In addition to evidence this is work- ing out okay in other countries, lawyers in Illinois and elsewhere in the country who work in-house for corporations have proven this can be done. Lawyers who work in-house don’t check their ethics at the door, they do pro bono work, and they have figured out how to maintain their professional independence in the corporate setting. Companies that want to bring legal services in-house take on the ethics responsibilities that come with it. Regulation that allows other owners and investors in law firms can do that as well, requiring anyone who wants to deliver legal services through an alternate

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Save on hundreds of popular titles! For gifts, your reception area or personal use. Guaranteed lowest rates, convenient ordering. Hundreds of satisfied CBA members. To order, visit www. buymags.com/chbar or call 800/603-5602. business structure to expressly agree to be responsible for adhering to the Rules. The Overly Restrictive Advertising Rules The principal Rules impacting marketing and advertising for lawyers are Rules 7.1 through 7.4 of the Illinois Rules of Profes- sional Conduct. Like the Rule regarding ownership and investment in law firms, the overall intent of these Rules is laudable: to protect clients. But along with helping to protect clients from false or misleading communications and coercive or harass- ing behavior, the Rules have the effect of making it harder for people to understand their legal issues and to find quality, afford- able legal help to address those issues. These Rules start in the right place. Rule 7.1 prohibits lawyers from making false or misleading communications about their credentials or services. That is as it should be. Similarly, Rule 7.3 at its core serves an important purpose by prohibiting solicita- tion of clients through coercion, duress or harassment. It is elsewhere in Rule 7.3, and in Rules 7.2 and 7.4, where the Rules get overly prescriptive and excessively limiting. Rule 7.3 with limited exceptions pro- hibits solicitation when a client is “known to be in need of legal services.” And when it is permitted, Rule 7.3 goes on to require that the words “Advertising Material” be included on any communication that is considered a solicitation of this nature. Rule 7.2 says a lawyer can advertise in a number of ways but can’t pay someone for a communication that recommends the lawyer’s services. As the comment to the Rule 7.2 states, “A communication contains a recommendation if it endorses or vouches for a lawyer’s credentials,

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