The Future of the Profession Crossfire Edition

Episode Notes

Transcript

@theBar

The Future of the Profession Crossfire Edition

08/07/2019

[Music]

Jon Amarilio: Hello everyone, and welcome to CBA’s @theBar, a podcast where young and youngish lawyers have unscripted conversations with our guests about legal news, events, topics, stories, and whatever else strikes our fancy.

I am your host Jon Amarilio of Taft Stettinius & Hollister, and co-hosting the pod with me today is my friend, Jeff Moskowitz of J. Moskowitz Law, LLC.

Hey Jeff.

Jeff Moskowitz: Hey Jon.

Jon Amarilio: So first time co-hosting, right?

Jeff Moskowitz: That’s correct.

Jon Amarilio: How do you feel about it?

Jeff Moskowitz: I’m pretty nervous.

Jon Amarilio: You should be. Don’t mess it up, a lot of people are listening. This is an awkward.

Jeff Moskowitz: I don’t know.

Jon Amarilio: Are you ready?

Jeff Moskowitz: Not ready.

Jon Amarilio: Let’s get started. We’re joined today by Bob Glaves, Executive Director of the Chicago Bar Foundation and Jessica Bednarz, the Chicago Bar Foundation’s Director of Innovation & Training.

For those who don’t know the Chicago Bar Foundation, it’s the charitable arm of the CBA and has the mission of bringing the legal community together to improve access to justice for people in need and to make the system more fair and efficient for everyone.

Bob holds degrees in Law, Poli Sci and Journalism, and has been leading the CBF since I was in high school roughly.

Bob Glaves: Ouch.

Jon Amarilio: Just saying. His tenure has been marked by success after success as the CBF has grown to become the largest and most impressive organization of its kind in the country. Bob is truly a national leader in this area and we’re lucky to have him here with us today.

Jess holds Business and Law degrees and once upon a time was a practicing family law lawyer, but decided to give up that acrimony to make a difference in the nonprofit sector. We’re lucky to have her as well.

Bob, Jess welcome.

Bob Glaves: Thank you.

Jessica Bednarz: Thank you.

Jon Amarilio: Thank you for being with us.

Bob Glaves: Despite the high school dig.

Jon Amarilio: Yeah, well no, it’s just a fact, it’s not a judgment.

So, we are here to talk today about the future of the legal profession, specifically proposals put forward that have the potential to radically change the practice of law and the definition of the practice of law. Some say for the better, others say for the worse, we’re hoping to hash some of that out today.

So let’s start with the why rather than the what Bob. You’ve been a big advocate of deregulating or differently regulating the practice of law for some time, why do you think that’s necessary, what’s driving that effort?

Bob Glaves: Well, somewhere along the way our profession priced the regular, the proverbial regular guy out of the market for legal services. We’re just not affordable or accessible to the average person when they have a legal problem. And so some people qualify for free legal aid, there’s not enough of that to go around even if you do qualify, but that’s really low-income disadvantaged people who are going to be able to do that.

So the large majority of the middle class makes too much to qualify for what’s already scarce legal aid, and is struggling to find help in the market with few exceptions. There are a few exceptions where it’s working like if you have a personal injury case, a lot of that criminal market if you have a criminal issue, operates on a fixed fee basis where people can make a judgment call about how important it is to them, and it’s usually pretty important to them.

Jon Amarilio: And personal injuries contingency.

Bob Glaves: Right, personal injury is a contingent fee, so you don’t have to have money on the front end. If you’ve got a good case, you’re going to be able to usually get a good lawyer and pay them as part of the case.

But other people are operating more on the billable hour since the 70s is when that really became prevalent and that’s when we really started to see this problem develop where it got increasingly expensive and unaffordable to regular people to be able to afford services, it did.

We don’t think it’s a coincidence that that happened when the billable hour became more prevalent, but it’s certainly timewise does coincide.

Jon Amarilio: Jess, you designed and help manage the Justice Entrepreneurs Project, right?

Jessica Bednarz: Correct.

Jon Amarilio: And that’s designed to help with some of this?

Jessica Bednarz: It is with the pricing part of it?

Jon Amarilio: Yeah.

Jessica Bednarz: Yeah, for sure. So as Bob mentioned with the pricing, it’s a huge problem for the public for several reasons. So a lot of attorneys these days obviously bill by the hour, we will use family law as an example, so if someone comes in they need to get divorced and they’re given a consultation, maybe at that point they’re finally given an hourly rate, so they actually have to get in the door to even get that usually.

But then the attorney won’t give them a full price for the full service, right, because there are always so many variables, they don’t know what’s going to happen. And for the people that we’re trying to help who are on a budget that’s not very helpful, they only have X number of dollars per month to spend on this, and if you can’t tell them how much this might cost, that’s not helpful to them, no.

Jon Amarilio: So you put our audience can’t see it, but when you said so many variables, you used air quotes and playing some sarcasm there.

Jessica Bednarz: Of course, yes.

(00:04:52)

Jon Amarilio: But if I can play the skeptic, there are a lot of variables in litigation, right. If a litigator, let’s say in the family law case were to take the case on a flat fee and end up being a very long and acrimonious divorce, then that lawyer would lose a lot of money and there’s also lost opportunity cost there, right?

Jessica Bednarz: They could, they didn’t price it correctly. There’s a way to do it where you take all of those variables into account. So I think an example that we often talk about is the General Counsel at Air Canada has to come up with a price when he reports to the people, has to report to there, and they don’t have a lot of sympathy for him when he’s like well, there’s so many variables I don’t know, because on their end, they have to give you a price for a flight and think about all the variables that they have to take into consideration.

Some of them are completely out of their control like the weather, right, but there is a way to account for that. You know roughly every year maybe you could look back and see how many flights you had to cancel or whatever because of weather and you can kind of build that risk premium I think into your pricing.

So I think there’s just a more sophisticated analysis that I think needs to take place that attorneys aren’t taught in law school, because we don’t learn how to run a business in law school. So they either don’t want to go through it or they just don’t know to do that.

Jon Amarilio: Fair enough. So there have been several proposals that have been put forward in states like California, Arizona, Illinois and I was hoping we could touch on some of those today. They, as far as I could tell from my very basic research on this, they fall into three basic categories.

The first is allowing non-lawyers to provide certain kinds of legal services to the public that includes paraprofessionals and tech companies. The second lane is allowing lawyers to split fees and referral fees with non-lawyers and non-law firm businesses, and the third is allowing non-lawyers and businesses to invest in law firms and have equity stakes or shares in those firms.

I think the third is probably the most controversial and I really want to get to that, but let’s go in order. Let’s start with allowing non-lawyers to provide certain kinds of legal services to the public. Bob, what are we talking about there?

Bob Glaves: Well, this is one of many times or anything a good analogy of looking at this situation is looking at what other professions do. So like if you go — you’ve got a medical issue and you go to a doctor’s office, you may never even see a doctor, you might see a nurse you might — I was at physical therapy earlier today where I was working with physical therapists, who’s very good at what they do, but there’s all kinds of other professionals who might see that.

So you would go get a flu shot at Walgreens, you’re never going to see a doctor, you’re going to see — I don’t even know what their certification is to do that. But there’s all these different people that are involved in the medical system who we don’t call non-doctors by the way, we call them by what they do.

We are the professional who likes to call everybody who isn’t one of us or not, which is the start of the problem, but we all do it. It’s just baked into our profession that everybody who isn’t a lawyer is a non-lawyer instead of they’re a paralegal or they’re –

Jessica Bednarz: Other legal professional.

Bob Glaves: Yeah, so other legal professional would be a broader way to say it, but like there’s lots of ways you could describe what they actually do, right, a marketing professional, and we don’t do that.

So part of it is just kind of looking so in any other profession and this will come up in the investment side too, there’s all these other people involved in and if you go to a larger law firm like Taft where you are, you probably have a marketing director, you have probably a COO, a CFO, you probably have a CIO, a Chief Information Officer or something like that who was in charge of technology, a marketing director, lots of paralegals, legal secretaries, legal assistants, probably there’s project managers now, there might even be a pricing manager at the firm or pricing director.

Jon Amarilio: Yeah I hate that guy.

Bob Glaves: Well, so but think of all those different professionals I just mentioned who all work inside of a large law firm.

Jon Amarilio: Yeah.

Bob Glaves: They’re not just non-lawyers, they’re all people doing things right, and so the more we might be able to look at our system and say okay, are there things that we already know lawyers don’t necessarily need to be doing or really shouldn’t be doing because we’re not very good at it, right. We went to law school to be lawyers, right, we’re good lawyers.

Jon Amarilio: So what are we talking about, like examples?

Bob Glaves: So let’s take the marketing example, like the marketing expertise that somebody who is an expert in that, so who would be a CMO, a Chief Marketing Officer on their firm or somebody is a marketing professional, they are trained to look at how do you market your services, how do you do all these other things.

And if you’re in a big firm, you probably have somebody like that in your firm. If you’re a solo or small firm lawyer, you can try to do that through consultants or other people but like you’re not going to be able to afford to hire your own person, right.

Jon Amarilio: Right.

Bob Glaves: So finding ways to be able to do that, but on the service side, we have a program here in Chicago and they have it out in California too called Justice Court, where somebody coming into court who’s on their own and doesn’t know where to go or what to do.

(00:10:00)

The first person they’re going to see in the normal course is a sheriff. They’re going to have to go through security, right, but we’ve got these tend to be students or recent college graduates, who are in the Justice Court Program who are effectively like docents in the courthouse, and they’re helping people figure out where they can go to find help.

Sometimes, people just don’t even know how to find the courtroom or how to read the summons or whatever they’ve got in their hand that they need to do. Sometimes, they really do need legal help so how do they find that in the courthouse, finding lawyers or other help, but they’re like navigators, docents and we should recognize that more broadly than just this program inside the court, maybe in the community to have some kind of professionally recognized as a navigator who will help people find us, lawyers or find online resources or find whatever they’re going to need.

They don’t necessarily need to be lawyers but we don’t have any recognition. We just call anybody who isn’t a lawyer, a non-lawyer.

Jon Amarilio: So something more akin to like a quasi solicitor.

Jessica Bednarz: Maybe someone who in addition to what you just described also provide some advice in a very limited scope.

Jon Amarilio: How so?

Bob Glaves: Well like in tax and immigration, there is a way to because there are federal systems with immigration or tax. The Federal Government licenses certain people who typically are not lawyers to be Accredited Representatives they call them in immigration, I can’t remember what they call them in tax.

These folks are allowed to help you with forms. They’re allowed to –

Jon Amarilio: So these are just basic tasks.

Bob Glaves: Basic tasks yeah, and but they, some of these folks are pretty knowledgeable, but they have to meet a certain criteria, a certain licensure to be able to do it.

Jessica Bednarz: Yeah and like in Washington and I don’t know that we’re proposing this, but in Washington, they have limited license legal technicians in the family law context to, I might get this a little wrong, but in addition to what a paralegal can do and they can actually tell them what the law is and give them a little bit advice. They don’t go to court, I don’t believe and they don’t negotiate anything. But they can do a little bit more than just help people fill out forms.

Jon Amarilio: I mean there are plenty of trained lawyers who give out bad advice every day. Do we think that people who are less trained are going to be giving out better advice?

Bob Glaves: It depends what kind of advice we’re talking about though. I mean again like so much we — there are truly complicated things and as Justice sat being an advocate in court, the training we have as lawyers is really important if you’re doing a really big deal of some type. You don’t probably want a lawyer to help you with that.

But a lot of things are simpler, it’s like filling out like or looking at a contract and that or a court form and not knowing what you’re supposed to do with it, like where do you — if you’re trying to do this on your own, it’s a simpler issue.

Jon Amarilio: So this is a pretty uncontroversial aspect of the reform movement, correct?

Bob Glaves: Well, it depends who you’re talking to I would say.

Jon Amarilio: How so?

Bob Glaves: I think a lot of people see this as a slippery slope if you open up the door to somebody other than a lawyer giving any kind of advice. How do you define where that line is and there’s always this fear of some that you’re taking business away from lawyers who are already struggling and we but we come back to is like you’re not getting this business right now.

These people are not coming to you and they’re trying to do this on their own or they are going around us and they’re going to LegalZoom and some of these other things that are propping up to try to serve them, because we’re not doing it well.

Jeff Moskowitz: But Bob, then how do you rationalize where maybe they aren’t coming to the lawyer now, but in the future, you might have people who otherwise would have but now will take advantage of these other resources. So you could actually be taking away people who would otherwise go to an attorney to utilize these resources.

How do you address that from the lawyer’s standpoint?

Jessica Bednarz: Well, I personally think that’s okay. I’m all for free market and if they can go to whoever they want I think it’s going to cause the lawyers to up their game and it’s just going to create a stronger legal profession and marketplace overall.

So I would be fine with that. I mean I support lawyers and I want lawyers to be thriving and we need lawyers, but I’m also not in the business to protect lawyers, like I want lawyers to thrive and I want clients and people out there who need legal services to get it. So how can we make both of those things happen?

Jon Amarilio: So that’s a perfect bridge to the second lane of reform I was reading about, which is allowing lawyers to split fees and referral fees with non-lawyers and non-law firm businesses. Bob, can you teed that up for us a little bit? What are we talking about there?

Bob Glaves: Sure. So this is interesting. What the word split fees mean, the phrase split fees means, it is a big piece of the question like.

(00:15:01)

So we have these rules in place right now where lawyers are not allowed to share fees with any other lawyer who’s not in their law firm or has a formal referral relationship where they are responsible for the client as well, and –

Jon Amarilio: And those are ethical rules, for our audience.

Bob Glaves: Those are ethical rules, right, yes, I am sorry, yes, they are Rules of Ethics and they are meant to preserve the independence of the lawyer so that they’re not somebody who isn’t a lawyer is not influencing behavior in a potentially bad way like your judgment as a lawyer.

Jon Amarilio: Right.

Bob Glaves: And also to protect the public, that’s what those were put in place for you. That’s what everybody will tell you the purpose is when you kick the tires on that one and try to say well, why if I split lawyers with my paralegal or with my marketing director or with a company that’s better at marketing than my solo small firm is, why would that necessarily be bad for the public or interfere with my independent judgment.

Jeff Moskowitz: So let’s kick the tires on it. So if you have, I understand what you’re saying on the lesser extent if you’re splitting money with your paralegals, if you’re splitting money with your marketing directors, sure, but let’s expand on the third party that you came up with, your advertisers, and let’s say, you have independent businesses that are now coming in and they’re marketing for these cases.

Once they get to a point where they’re marketing and they have so many cases, the lawyers are now very dependent upon them. Would that be fair?

Bob Glaves: I mean they’re going to be more dependent perhaps because these companies can end up with having a lot more clients, but these are clients that the lawyers generally aren’t getting right now. So this is getting more clients potentially to the door of the lawyer through a new mechanism.

So like a LegalZoom for instance and then we’re not here to endorse LegalZoom or to knock LegalZoom, they’re out there.

Jessica Bednarz: The most well-known example.

Bob Glaves: They’re very well-known, they’ve done very well for themselves, they’ve got more than 5 million customers since they started and just got a $500 million second-stage investment for — I think that was considered for a quarter of the company, which means somebody just valued their company more than $2 billion last summer.

So they’re doing something right, but they’re — if you’ve ever seen a LegalZoom commercial on TV, if you watch sports, you would have seen these, they do very good marketing about people who have legal issues and are looking for a lawyer and don’t know what to do and because they put a lot of resources into it and a lot of expertise that we don’t have.

So in our thinking here, the solo small firm lawyer, the Bar Association itself does not have the resources and expertise to do that kind of marketing and certainly doesn’t have the scale. So why not allow a lawyer to take part of a fee from a client they probably never would have gotten except for this company and give it to them for the service of connecting them to the client.

Jon Amarilio: So you’re saying it’s increasing the pool of potential clients at the expense of lowering rates for those clients.

Bob Glaves: It may have the effect of lowering rates, it depends on what the service is. If it’s a more commoditized service that you’re providing, maybe it does lower the rates from what some people are typically charging. I think that depends a lot on what people are charging.

Jon Amarilio: Have you seen a lot of pushback on that idea?

Bob Glaves: Splitting fees?

Jon Amarilio: Yeah.

Bob Glaves: Absolutely. Some other Bar Associations this does not happen so much in the Chicago Bar Association but some other Bar Associations perhaps and other states have had issues with this and there, again, I think when you listen to what the legitimate concerns are they say well what about the parts of the market that function better like personal injury.

It’s like well personal injury doesn’t need to be part of this, because contingent fee market operates just fine and that was never really the — that’s not what LegalZoom is doing either, that’s not the where the market failure is happening.

It doesn’t need to be — contingent fee doesn’t need to be a part of this, in our proposals and wouldn’t be. There’s no reason to have to do that. But what actually fee sharing means?

So when you gave us our three scenarios at the beginning, the third one about ownership that’s where people get really freaked out and see that as a slippery slope towards that. But if you’re paying for a service out of your fees that isn’t necessarily a fee split.

It’s fee for service, right, you’re giving — you’re buying a sort of service. So if that happens to come out of the same bucket as your fee did, who cares, that’s not necessarily a fee split.

So that I think is probably where we’re leaning in our own proposals in Illinois right now is to say this isn’t even a fee split. We’re not talking about sharing fees with everybody at least not at this stage. They definitely are in California.

(00:20:00)

Jon Amarilio: Okay, it’s probably a good place for us to take a break, we will be right back.

[Music]

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Jon Amarilio: So let’s pick up with the third element that we were talking about before just allowing non-lawyers and businesses to invest in law firm stuff, equity stakes and law firms in some cases to even have shares that are tradable in markets in law firms. Am I characterizing that idea fairly?

Jessica Bednarz: Probably, but I wanted to touch on one thing that we were talking about during our break, which is to point out people who maybe have not thought about it in this way and I hadn’t thought about it in this way for a long time, and I can’t remember who said it, maybe it was Bill Henderson.

But in the legal profession with the ethics rules we’re not only regulating the practice of law but we’re also regulating the business of law and to my knowledge there isn’t another industry including even the medical profession where they regulate the business of the profession as well, and it just seems really strange that us who are in the business are creating the rules to run the business.

Jon Amarilio: So let’s talk about that. I wonder if the reason that exists in the practice of law is because of the potential for perverse incentives, almost unique potential in the practice of law for perverse incentives that things like allowing non-lawyers to use Bob’s favorite term, would create if they had an ownership stake in the firm.

So if you have like an investor in a firm and I’m just making this scenario up kind of off the top of my head. I wonder if that has the — well I know that it has the potential to create split loyalties for the lawyer, right, because they have their traditional loyalties to their client, but now they also have fiduciary duties to their investors to maximize profits. So you have two masters there and how can you serve both at the same time?

Jessica Bednarz: I see that question, and I’m going to ask you to weigh in on that but I also want to say, it seems like you’re assuming that lawyers never do anything or don’t have an incentive to make money as well and I just think that’s bananas. I mean let’s see, we don’t have a ton of lawyers who are going in front of the ARDC every year but we have lawyers that get disbarred and suspended regularly because they’re either stealing money or commingling it. So how is that any different than an investor into kind of an example that you just gave. It’s not exactly the same, but I think —

Jon Amarilio: That’s a fair point, it would only exacerbate that problem, would create more opportunities for lawyers to get in trouble and blur the lines, Bob.

Bob Glaves: I mean, I think you’re in a large law firm right now. I think in any larger law firm and I actually feel like I was — I spent most of my time in a smaller law firm. I don’t think it was a lot different. I think there was, there was a sense of professional obligation and responsibility for sure in our practice, but everybody was trying to make money.

And the other partners in the firm wanted to make money and there was lots of incentives and pressures to try to bring in more money and to be as profitable as possible just in a lawyer owned operation.

I just don’t really see — I think Jess said it well, what’s different about another investor who wants to make money being part of that, just as a general term. It could be bad, but like, we still regulate the profession right. So we can have some things about what lawyers can do and what they can talk to their investor or there are other people about, we can regulate all that still.

Jeff Moskowitz: My fear I guess would be the fact that a lawyer is always incentivized to protect at the end of the day they’re licensed and they’re not going to take risks, so generally that ultimately will take away the thing that will allow them to eat.

On the other hand you have a businessman who comes in and all they care about is the bottom line then they’re going to be going around looking for the lawyers that they can push to the point where possibly the work isn’t as good but they’re covering more clients or they’re doing the work for cheaper.

So how do you deal with the fear that we have these lawyers who are now pushed, they have huge debt. I did a little bit of research beforehand. The average that was a $115,000 coming out of law school in 2018 with 75% of the students borrowing.

(00:24:58)

So you have these — these lawyers who are coming out with massive amounts of debt and then if you have a private investor that’s now dictating what their practice looks like or how many cases they’re taking on and what their caseload is. I mean how do you deal with the possibility that maybe now we’re not going to have a situation where lawyers are forced to take on more cases than they can handle in order to keep paying their bills with somebody who’s breathing down their neck to handle all this work.

Jon Amarilio: Yeah. So I guess to paraphrase Jeff’s asking will this just create a race to the bottom for legal fees.

Bob Glaves: Again I think your professional responsibility as a lawyer isn’t going to change in your environment necessarily, right. And an investor can’t dictate how many cases you take because they can encourage you to take a lot of cases, but like you’re going to have to be responsible as a lawyer for your clients still. But at some level in the end the race to the bottom are giving crappy service, or cheap service, the company’s not going to make it very long doing that. The brand is going to be known as you can go here and get cheap crappy service, or you can go to place that’s going to stand behind the services or kind of professionals are putting out there.

Jeff Moskowitz: I mean Bob you mentioned that they’re slick advertisers. So they could — they’re selling all sorts of different people’s services. So if they’re putting up and changing websites and changing whatever it is that they’re doing, then people are calling in because they’re advertising and then they’re just farming it out to different lawyers.

Jessica Bednarz: I don’t know. I just don’t see that.

Bob Glaves: Yeah I think — in this day and age with Yelp and everything else that’s out there and the ability to complain like, because they are not unregulated right, they’re going to be regulated by these companies, any other company like LegalZoom today for instances, regulated by I think probably the Attorney General or the Consumer Protection Division there in the state. They’re going to be regulated in it.

So if they’re actually doing an outright scam, they’re — they can be regulated that way, but like they also — if people are just giving feedback constantly, I got really terrible service from this place. Over time people learn about that and are getting savvy enough to check on something on the internet. There’s a lot of information out there that people can gather right now.

Jeff Moskowitz: Possibly what I would argue that how do they even necessarily know if they’re getting bad service? If that’s kind of the — what they’re getting and what they’re used to getting. If somebody came in and you had a traffic ticket or you had a DUI, you might not necessarily understand what the consequences are and you might not understand that you got a poor deal.

I mean it’s not like people are going walking around they’re like hey man, after my DUI, this is what I got. What do you get? It’s not that people are sharing. I think a lot of times similar to the medical practice, people are private about their legal issues, because they’re — there are personal issues and there may be embarrassing issues. So I don’t know that there’s — that they would even know if they’ve gotten fleeced.

Bob Glaves: Would they know that now with a regular lawyer.

Jessica Bednarz: Yeah as you say, do we know – yeah. I think we’re also again assuming that all lawyers are giving really great service.

Jeff Moskowitz: Well then let’s just — let’s be totally honest on the podcast. We know that not all lawyers are giving great service. I mean we can already say that. So my concern is, if you have mounting financial debt and less and less places for people to make money because it is now being dictated by big, big commercial firms or whatever you want to call it by a business interest you are going to have a race to the bottom because they’re going to want to cut their costs to raise their profits, right, that’s business.

Bob Glaves: So you can already do this in law — I mean not in law, excuse me, but you can do it in law in the UK and Australia and parts of Canada already, they already have — ownership has opened up and that profession doesn’t seem to have gone completely bonkers there. It seems —

Jon Amarilio: Well I remember reading an article not too long ago quoting the Lord Chief Justice of England and Wales saying, in the 10 years since we’ve started allowing businesses to invest in law firms, we’ve seen none of the promised benefits.

Bob Glaves: Well the benefits issue is not the same as what we’re talking about right now. The benefits may take longer to appear because one of the things they did in the UK that was unfortunate. They used to have very good funding for legal aid that went well into the middle class for qualifying.

Jon Amarilio: And that’s been slashed.

Bob Glaves: They slashed it at the same time. So they basically just created havoc in the market and then deregulated it and then said, well gee, we haven’t solved access to justice by changing the regulation. Well do you still need to fund legal aid for people who can’t afford it for one thing, but I don’t think the Lord Chief Justice pointed all these problems either that everybody’s afraid of.

The practices we hear that the professions raise their game over there with competition and having some – and has better business instincts now. It may take time for that to appear.

(00:30:03)

But dentist, doctors have had this for longer and there could be a race to the bottom there, I don’t think we’ve seen that.

Jeff Moskowitz: But I would argue this because there’s a shortage of doctors and dentists, the ADA then once they started having a glut of admissions to dentist school or dentistry school — or a dental school there’s — there it is, third time is the Charm, but once they saw that they were having huge amounts of admissions they shut down their ranks and they created a little bit of a shortage in the dentistry world which then will raise your prices. For lawyers we haven’t done that, there’s 1.3 million lawyers registered in the country right now.

More than doctors, more than police officers, more than pilots, I looked this up before I got here, considerably more. There’s only 850,000 sworn officers in the United States and only 609,000 pilots, but we have 1.3 million lawyers.

Bob Glaves: So, whose problem is that?

Jeff Moskowitz: Well, no but Bob I’m saying it’s a top-down problem. You can’t let them, if the law schools are going to continue to charge this much money and you’re creating lawyers, but they have to take on this amount of debt. I think that we got to look upstream on the problem, because you are — my concern is that there’s going to be this like financial burden that is going to dictate what lawyers do.

Jon Amarilio: Well, let’s roll that back a little, because it raises a question in my head. Jess, maybe you can answer this. So there’s 1.3 million lawyers, but we are always talking about lack of access to justice. How — what explains that gap? Other than just lawyers are too expensive which I’m sure is true, but is a little simple.

Jessica Bednarz: Well, something I actually wanted to add to the last conversation is not — it kind of lawyers are too expensive, but I think and if you guys read the report that Bill Henderson put together for the State Bar of California like the cost of legal services has gone up and I think — and one of the reasons I want to have these investors come in, is because I think there’s a big chunk of the population and we even see some of the segments at the JEP where we can’t serve them, like we can’t provide them the one-on-one service that they need, because the cost of providing those services is too high for a variety of reasons.

So we need to come up with different options. We need to find ways where we can either do one too many or provide them something with less than full representation that maybe is not delivered by a lawyer, because we can’t do it.

Jonathan Amarilio: So that gets back to the first point, but and I suppose they are fairly to be fair about it rather all interrelated, but I guess that brings us back to the question I asked Bob a little while ago, which is, if we’re going to have investors in law firms then are those lawyers going to owe fiduciary obligations to those investors and is it okay to serve two masters or is it doable to serve two masters at the same time? You guys pushed back on that and said lawyers are already doing that because they’re trying to maximize profits, yes and no, there’s still only one master in the game, they’re trying to maximize their own profits, but they have ethical duties to their clients. Here if you have ethical duties to two different “clients”, right, interests I should say, an investor and the client and those come into conflict which is a very easy thing to imagine, how our lawyers supposed to navigate that?

Jessica Bednarz: Well, I think you can have entity regulation though have we not talked about this yet?

Bob Glaves: Yeah, we haven’t necessarily, I mean, we can regulate entities for sure, but the other thing I was going to say to that is to go to the entity regulation thing next, just to, you can regulate the entity that you let into the market.

Jessica Bednarz: Yeah.

Jonathan Amarilio: So what are we talking about there when you say that?

Bob Glaves: Well, I’ll let just talk about that and what I wanted to point out though is we have an increasing segment of the profession work in-house at corporations right now. They are in-house legal departments. Every day that master that they’re serving is their company right, that’s their only client, who is a for-profit entity who — they have to navigate that every day.

Insurance companies for the long — as long as I’ve been a lawyer and probably longer will hire you a lawyer if you have insurance, car insurance and you get in an accident, who is being paid by the insurance company, but is representing you as a person. So you’re already navigating that all the time and we just haven’t seen like these widespread ethics problems in these areas of where people already are serving more than one “master”. And it sort of takes a dim view of lawyer ethics that we can’t navigate that and just say to the investor like that we can’t do that, right?

And as long as lawyers are going to standing up for their responsibilities, but this is where the end of the regulations is a good segue to.

Jessica Bednarz: Yeah. So, then the ethics rule is to allow entities to come into our marketplace, but we’re going kind of outline what you need to do in order to do that. So —

Jonathan Amarilio: So what are we talking about like true passive investment?

(00:34:55)

Jessica Bednarz: I guess. I don’t know. I guess maybe gone that far yet, but like an example that we’ve used like in our proposal with Avvo for example, we would allow them to come in obviously they’re not — they’re owned by investors at this point, they would allow — we would allow them to come in, but they would have to register and meet certain requirements and we would make sure to build in the consumer protection to those requirements and if they didn’t meet them, then they can’t play in our space.

Jon Amarilio: So you’re saying we can solve this problem down the road, but we’re not there yet. In terms of regulations like —

Jessica Bednarz: You got really close. I mean what we proposed and I don’t know if you read the ARDC’s report or a proposal that they circulated, I don’t know the proper term for it a couple months ago, but they are — they have put together a proposal that is just that.

Jon Amarilio: Okay.

Bob Glaves: And that’s — so we at the Chicago bar put one together and it’s very similar. So you’d have to like agree that you’re not interfering with the independence of the lawyer to be able to do this, you’d have to — in our version of it, lawyers would have to have malpractice insurance or you’d have to be upfront that they don’t, you’d have to have a complaint process for if somebody doesn’t like what happened to them.

There are some basic stuff that the entity would have to agree to be able to operate here where lawyers will be allowed to work with them and if they won’t agree to it, the lawyer can’t work with them. So company comes in, agrees to abide by these things and this could be the same thing for the investments. You can play in our space and the lawyer is allowed to play with you. If you don’t, then the lawyer can’t, that’s where we have the edge on them still as we can say what the lawyers can and can’t do.

Jeff Moskowitz: So, zooming out for a second, I mean, we’re very, very specific right now. We’re talking about three very specific pathways and if I’m correct, the whole point of all three of them is to address an access to justice issue, right?

Bob Glaves: I’d certainly address a market failure. Access to justice for people who can pay something and all of these lawyers that we just recognize we have more layers that we’ve ever had at the same time more people not using them, right.

Jessica Bednarz: Yeah, it’s pretty opportunity for lawyers, too.

Bob Glaves: Yeah.

Jeff Moskowitz: So I guess I’m back to just at the beginning. If I wanted to create a product and I needed raw materials to create that product, whatever the cost of the material is, is going to dictate what the end product is, right? If I need wood for it and the cost of timber goes up, the cost of my products cannot go up, right?

If you have massive debt on one end, why are we not just addressing that issue? If people were coming out of law school with less debt theoretically couldn’t they — couldn’t this maybe not even be a problem and then we don’t even have to discuss whether or not there’s going to be ethical issues and we could still self-regulate.

Jon Amarilio: So you are like endorsing Bernie Sanders right now, is that what’s happening?

Jeff Moskowitz: Yeah, I mean, I —

Jon Amarilio: So we’re going with this.

Jeff Moskowitz: I guess I’m saying I’m not going full Bernie here, but I’m feeling the Bern.

Jessica Bednarz: I think it would help, I don’t know if it would solve the entire issue, but it would definitely I think it would bring the cost of services down right because you want to build in the debt to that, but that’s, I mean, that’s not the only problem though like for instance, the way the courts are set up right now that that adds a lot of cost to the process and to the services.

Jon Amarilio: Wait explain that, you’re saying like that cost —

Jessica Bednarz: So for family law in example and I use that as my, as — because that’s my background but we also have a lot of family law attorneys at the JEP, the Daley Center which is where our family law cases are heard is not exactly —

Jon Amarilio: The Chicago courthouse.

Jessica Bednarz: The Chicago courthouse.

Jon Amarilio: The non-Chicago audience.

Jessica Bednarz: I mean you could be there for hours, just for a status call and you’re in there like once a month and it’s just there’s a lot of ways to build into it and that that adds to —

Jeff Moskowitz: How does a non-lawyer owning a law firm speed up the Daley’s Center’s court call?

Bob Glaves: It’s something we have to do on a parallel track. So to make services really affordable, we have to simplify our processes and make it easier for people, a routine hearing should be able to do by video or phone. You can do it in some parts of the state actually our rules allow it, but it’s just not commonly done right yet in court, but —

Jon Amarilio: Well, the Daley Center is still running on carbon paper.

Jessica Bednarz: Yes.

Bob Glaves: So, I think you hit the nail on the head, right? That is one of the big issues right, it’s the technology right, but getting into the 21^st century, that’s part of making services affordable too.

Jessica Bednarz: Yeah, I was just responding to the college debt.

Jon Amarilio: So just bringing — bringing down some of the structural costs?

Bob Glaves: Yeah and student debt is a bigger issue than our own profession, but it’s and I’m not feeling the Bern, but like I think there is a student that reform would be a great topic for another podcast another time, because it does uniquely effect I think professions where you need a professional license and the extra training to get into it and why has it gotten so expensive. I think that’s a very interesting question.

Jon Amarilio: Because the cash counts for universities.

Bob Glaves: Right. There’s a lot of things driving that, but like why did law school? Law school costs at least I graduated in 1991 from John Marshall and it costs, I think they’re going to bring it down with UIC merger.

(00:40:03)

But it’s more than three times what it was when I graduated to go to law school now, more than three times. It’s probably — it’s actually almost five times as much now for the three year degree.

Now inflation would have suggested it would double during that time. So it’s way above the cost of inflation has gone up. So there’s a lot of things that we need to self-reflect, self-examine in our profession and why law schools cost so much.

So we’re not saying this is a panacea to change the regulations but what we are saying is this will open up a lot more innovation and efficiencies in the market and allow other professionals besides lawyers. I know we’re all know no one else is here, right, because we went to law school, but we aren’t.

There’s a lot of other people who can help us do marketing and help us do technology and help us do a lot of these connecting, and maybe be the docent who will handle some of the simpler things that maybe we are not aware but will get us like ten times more cases by taking on that early role in a way that’s accessible to people.

Jon Amarilio: And with that piece of wisdom, we’ll take our second break.

[Music]

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[Music]

Jon Amarilio: So Bob, Jess, when we were off the air, we were having a great discussion that was unfortunately not recorded, but one of the parts of that discussion was about what all of these reforms could do to the practice of law. I think probably the reason you’ve been hearing some resistance from me, from Jeff and from so many other lawyers is that, we know how well-intentioned you are, but we’re concerned that some of these proposals are going to essentially rob the profession of law of its nobility to turn it into a commodity.

And by doing so frankly to lower our quality of life and the satisfaction we get from the practice of law. When you hear those concerns, how do you respond?

Bob Glaves: Well, there are parts of what we do that may actually be a commodity and we don’t think of it that way, but the services we deliver and then there’s the more “bespoke services” maybe you don’t even have to put that in quotes, I don’t know that’s just a word, right.

But the more customized service and the value that you provide to somebody any client you’re working with. So you’re counseling, the way you counsel them through something that even if you — they knew all the answers, we’re not rational people as human beings, we’re just not.

We are not hardwired to be rational, and you put yourself into an emotional scary situation. People make bad decisions all the time. So a good lawyer who’s counseling them through that and helping him through the situation is always going to be a value, you can’t commoditize that in the same way.

We know that lawyers representing somebody in court versus them doing it on their own get much better results and deals, much better results. Selling that piece of what we’re doing as opposed to trying to every piece of what we are doing right now when we’re billing by the hour, maybe that is commodity stuff sometimes.

Filling out forms, think of all the things that we do on our own now in our world, putting law aside, that you can book a hotel online right now and never talked to anybody, well that was impossible probably even 10 years ago. You book your flight, there’s all sorts of things that we have the ability to do right now. You can order groceries and have them delivered to your house. I don’t do that but like some people apparently do that.

There is a lot of choices now that have and the stores are different, the stores that are still making them are a better personal experience for the people coming in. Stores used to be able to treat you like crap, like you had to go there to get your stuff. So how you got treated was how you got treated. The stores that are making it now are treating people well and making the experience really good.

My point I guess in the long winded way here is that, there are — it will make us rethink the value we’re providing and focus more on that if we’re getting pushed on the stuff that isn’t as valuable that we do or that’s easily replaceable.

Jon Amarilio: Jess.

(00:44:59)

Jessica Bednarz: Yeah, and I would say, I mean it makes me sad to think that, but I would also say it’s going to happen whether we want to or not, and we just need to make a choice now whether we want to be a part of it or not, because LegalZoom already exists, Avvo Legal Services used to exist, the only reason it still doesn’t got bought out by someone else, and I just didn’t want to go down that road.

So there’s nothing stopping those companies from continuing to pop up and take business from us. So we got to make a decision and decide, do we want to be out in front of all of this and help create the future or do we want to let people who are other legal professionals or not even in the legal profession and create the future for us. I think it makes more sense to do the former and figure out then ways that we can then maximize how we can use lawyers and how lawyers can thrive within whatever that framework is we want to create.

Jon Amarilio: All right, so let’s jump to something much more lighthearted and less serious and scary, Stranger than Legal Fiction. For those who don’t know the rules they’re pretty simple. Jeff and I were supposed to do some homework, one of us did, I won’t say who, researching a real —

Jeff Moskowitz: It was me.

Jon Amarilio: Yeah, there it is. Researching a real law that’s strange and probably shouldn’t be on the books, but does, and I made another one up and I’m going to pull the three of you to see if you can distinguish strange legal fact from fiction.

Everyone ready to play?

Jessica Bednarz: Yes.

Jeff Moskowitz: Yes.

Bob Glaves: All right.

Jon Amarilio: All right, so option number one. In Montana, it is illegal to carry or otherwise transport more than two elk in or on the top of any non-commercial vehicle? Everyone got that one?

All right, option number two. In Texas, it is illegal to buy, sell, offer to sell, acquire, receive or otherwise transfer for valuable consideration your eyes?

Jess, you had a pretty strong reaction to that, which one do you think is real?

Jessica Bednarz: Well I thought there, there are just two?

Jon Amarilio: There’s two, you got to pick the real one.

Jessica Bednarz: The elk.

Jon Amarilio: The elk, why?

Jessica Bednarz: I just like elk more than eyes.

Jon Amarilio: You’re like hunting elk, because that’s something —

Jeff Moskowitz: I can see that.

Jessica Bednarz: No, I don’t like hunting elk, I like, I like seeing them out.

Jon Amarilio: They are majestic creatures.

Jessica Bednarz: Yes.

Jon Amarilio: Yeah, okay, so the elk one.

Jessica Bednarz: I like animals.

Jon Amarilio: Right, just because you like –

Jessica Bednarz: Oh, I was going to say more, but I am going to stop.

Jon Amarilio: Sound legal reasoning there. Bob?

Bob Glaves: I could see the appeal of the elk one, just because if you put more than two elk, dead elk on the top of a car as opposed to a bigger vehicle.

Jeff Moskowitz: So the reason is –

Bob Glaves: So it could fall out on the road and cause an accident, right.

Jon Amarilio: True.

Bob Glaves: So that sounds plausible, but that one sounds so crazy, you really did an amazing job making that Texas one up or for some reason, I just feel like the Texas one is real.

Jon Amarilio: All right. Jeff, what do you think?

Jeff Moskowitz: I’m going with Jess on this. I’m feeling the elk.

Jon Amarilio: Yeah?

Jeff Moskowitz: Yeah.

Jon Amarilio: All right, Bob is the winner.

Bob Glaves: Wow.

Jon Amarilio: Texas Penal Code Section 48.02, I should add that I adjusted it a little bit, it’s true of any organ in Texas. I just picked eyes. I don’t know if you think that a State like Texas.

Bob Glaves: I can’t sell my kidney.

Jon Amarilio: What’s that?

Bob Glaves: I can’t sell my kidney.

Jon Amarilio: You can’t sell your kidneys either, although if I remember correctly there’s exceptions for blood, hair and blood products.

Bob Glaves: So you can still 00:48:21 if you want to do right.

Jon Amarilio: Yeah, yeah. I don’t know I’m licensed in Texas. I would have thought that their libertarian ideals would have allowed them to develop a free market, the kind of free market that Jess is such a fan of human organs, but apparently not.

Anyway, that’s going to be our show for today. I want to thank our guests Bob Glaves and Jess Bednarz for joining us in this controversial but fascinating conversation. They’re doing great work at the CBF.

I also want to thank them for everything they do at the CBF and for our profession and community generally.

I further want to thank everyone here at the CBA who makes this machine run including my unprepared co-host Jeff Moskowitz, our executive producer Jen Byrne, Ricardo Islas on sound, and everyone at the Legal Talk Network family.

Remember you can follow us and send us comments, questions, episode ideas or just troll us on Facebook, Instagram and Twitter @CBAatthebar. Please also rate and leave us your feedback on Apple Podcasts, Google Play, Stitcher, Spotify or wherever you download your podcast, it helps us get the word out.

Until next time for everyone here at the CBA, thank you for joining us and we will see you soon @theBar.

[Music]

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