EVIDENCE-BASED LAWYER REGULATION.

Author:Chambliss, Elizabeth

ABSTRACT

The legal profession is losing its authority over the regulation of legal services. Recent changes in antitrust law have put state bar associations under a spotlight. Competition from technology companies and concerns about access to justice have increased political pressure for market liberalization. Independent research is challenging the unique value of lawyers ' services, even in formal legal proceedings, and this research is increasingly well-organized and well-funded at the national level. The organized bar is asleep at the wheel and ill-prepared to respond.

This Article argues that the United States is moving toward evidence-based lawyer regulation, and suggests strategies for equipping the bar to contribute to evidence-based policy-making. It focuses specifically on strategies for institutionalizing independent research norms within the profession and promoting research as an essential component of professional self-regulation.

INTRODUCTION I. PRESSURE FOR EVIDENCE-BASED REGULATION A. State-Action Antitrust Immunity After N.C. Dental B. Implications for Lawyer Regulation C. ABA Model Regulatory Objectives II. OVERVIEW OF EXISTING RESEARCH A. Lawyers' Monopoly over the "Practice of Law" B. The Impact of Counsel C. The Role of the Bar? III. INSTITUTIONALIZING EVIDENCE-BASED SELF-REGULATION A. State Supreme Courts B. Law Schools C. Bar Associations CONCLUSION INTRODUCTION

In May 2017, the South Carolina Bar House of Delegates passed a "Resolution on Court-Centered Regulation of Legal Services," (1) in which the Bar emphasized the power of state supreme courts to regulate legal services, (2) adopted the principle that the delivery of legal services must be conductcd "under the auspices of lawyers," (3) and petitioned the South Carolina Supreme Court to adopt a rule regulating the delivery of legal forms. (4) The proposed rule provides, in pertinent part, that "[a]ny legal form available to the public for self-completion or completion with assistance of a scrivener for profit must be prepared or approved by a lawyer authorized to practice law by the Supreme Court of South Carolina." (5)

What problem is this rule designed to solve? One might imagine that the goal of the rule is consumer protection: that consumers are increasingly vulnerable to the provision of low-quality legal forms by non-lawyers--in particular, by commercial providers such as LegalZoom (6)--thus, the proposed rule is necessary for quality control. Many lawyers in good faith believe that commercial and paraprofessional competitors provide subpar products and services and pose a risk to consumers. (7) The South Carolina Bar emphasized the need for consumer protection in the final version of its petition. (8)

Alternatively, one might imagine that the goal of the rule is lawyer protection: that lawyers are increasingly vulnerable to competition from alternative providers; thus, the proposed rule is necessary to shore up judicial protection for lawyers' monopoly over legal services. Many commentators in good faith believe that the evidence--if we had it--would show that lawyers' traditional monopoly is overbroad, and that consumers would benefit from increased competition in the legal services market. (9) The South Carolina Bar questioned this view in its petition. (10)

What evidence should state supreme courts consider in assessing the need for anticompetitive regulation? And which side should bear the burden of proof? (11) Historically, courts have required little evidence in support of lawyers' monopoly claims. (12) State supreme courts claim broad "inherent powers" to regulate the practice of law (13) and have proved to be a friendly forum for lawyers' claims of exclusive competence. (14) A national survey of the regulation of the unauthorized practice of law found that courts typically "make[] sweeping assertions about the potential for injury" from non-lawyer providers without offering any evidence. (15) Moreover, though state supreme courts play an active role in formal regulatory enforcement, such as lawyer disciplinary proceedings and prosecutions for unauthorized practice, courts have delegated most other regulatory authority to committees of practicing lawyers, who police the boundaries of their own monopoly with little supervision. (16)

This practice of unsupervised delegation has drawn increasing antitrust scrutiny from the Department of Justice (17) and finally was upended by the Supreme Court's 2015 decision in North Carolina State Board of Dental Examiners v. Federal Trade Commission, (18) N.C. Dental involved an antitrust challenge to the state dental board's campaign against commercial teeth whitening. (19) The board, made up primarily of dentists, had issued cease-and-desist letters to non-dentist teeth whiteners, leading non-dentists to stop offering teeth whitening services in North Carolina. (20) The question was whether the board's actions were protected by state-action antitrust immunity, (21) as defined in a series of cases beginning with Parker v. Brown (22) The Court held that the board--though defined by statute as an "agency of the State" (23)--was not entitled to state-action immunity, because the board was controlled by active market participants without adequate state supervision. (24) N. C. Dental thereby narrowed the scope of state-action immunity for professional licensing boards and exposed "vast areas of state regulation to new antitrust scrutiny." (25)

N.C. Dental has significant implications for lawyer regulation. Most immediately, it alters the balance of power between lawyers and their competitors, by exposing the lawyers on regulatory committees to "huge potential antitrust liability." (26) Although state supreme courts, acting in their sovereign capacity, are immune from federal antitrust law (27)--for instance, when they adopt mies of professional conduct (28)--N.C. Dental limits state-action immunity "when the State seeks to delegate its regulatory power to active market participants" (29) such as practicing lawyers. To claim state-action immunity after N. C. Dental, bar committees must show that their regulatory activities are subject to "active supervision" by the state. (30) Thus, in order to shield bar committee members from antitrust liability, N.C. Dental requires state supreme courts to provide active supervision of bar regulatory activity, (31) in effect imposing a signing requirement on what was previously informal, interstitial regulation. (32)

N.C. Dental also signaled a heightened standard for "active supervision" review. (33) Although the case presented no specific supervisory systems for review, (34) in dicta, the Court outlined a substantive, versus merely procedural, standard, stating that "[t]he supervisor must review the substance of the anticompetitive decision, not merely the procedures followed to produce it." (35) The Court also cited antitrust scholarship calling professional licensing boards "cartels by another name" and urging the Court to put licensing boards "under the Sherman Act's microscope." (36) Thus, most commentators read N. C. Dental as tightening the standard for "active supervision" and signaling the need to produce a record of substantive, evidence-based review. (37)

The American Bar Association (ABA) also has increased the pressure on state supreme courts to become more proactive and data-driven in assessing the need for anticompetitive regulation. In February 2016, the ABA House of Delegates adopted Model Regulatory Objectives for the Provision of Legal Services to guide courts in their regulation of "non-traditional legal service providers." (38) Viewed by opponents as a subversive effort to recognize non-lawyer providers, (39) the move also reflected proponents' desire to guide the profession's regulatory authority over non-lawyer competitors--in particular, technology companies and online, commercial platforms for legal services. (40) In the words of then-immediate past ABA President William C. Hubbard, who championed the measure, "We're not going to put the Internet back in a bottle.... Let's stand up and lead." (41)

The ABA's adoption of regulatory objectives invites the production of empirical data and research to assess the costs and benefits of anticompetitive professional regulation. A shift to evidence-based argument already is apparent in calls for "smarter" (42) regulation as a middle ground between lawyers' traditional monopoly and unregulated competition. "Evidence-based" regulation has also gained traction in other jurisdictions (43) and professions. (44)

But if, as this Article argues, pressure for evidence-based regulation is increasing, the next question is how this plays out. Calling something "evidence-based" does not make it so; it merely shifts the terms of debate. Lawyers tend to view N.C. Dental as imposing a burden of production; that is, the need to "make a record that justifies the regulatory action," (45) without necessarily evaluating the quality of the data. Researchers, meanwhile, have labored for decades to bring rigorous, independent research to bear on the regulation of lawyers, and such efforts recently have made a resurgence, (46) including at some elite law schools. (47) N.C. Dental and the ABA's adoption of model regulatory objectives create new pressure--and a pulpit--for such research and debates about its implications. The choice for the bar is no longer a choice between assessment and no assessment, but rather a choice about the terms of assessment and the profession's authority in that debate.

This Article argues that the profession's authority over the regulation of legal services increasingly will require a commitment to evidence-based regulation, and outlines strategies for institutionalizing that commitment. One set of strategies is aimed at state supreme courts, which play an important hortatory as well as authoritative role. Another is aimed at law schools, particularly professional...

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