The report published Monday by Stanford Law School's Deborah L. Rhode Center on the Legal Profession said this conflict of interest is most notable in the area of legal reform where state bars consider the only acceptable solutions to be lawyer-centric ones like more pro bono or increased legal aid.
State supreme courts should embrace legal reform by allowing individuals and companies, not just lawyers, to offer legal services and create regulatory authorities capable of governing a wide range of legal service providers, according to the report. Or, state supreme courts can limit the practice of law to only activities performed by lawyers and defer regulation of all other legal service activities to state lawmakers.
"The most basic reorganization a state court could perform would separate out the professional association from the bar regulator but otherwise leave the current regulatory approach intact," the report said.
States have been slow to adopt regulatory reform in the face of opposition from attorneys who don't want nonlawyers to be let into the practice of law.
Despite opposition, both Arizona and Utah have implemented reform: Arizona has changed its legal rules to permit alternative business structures, and Utah has launched a regulatory sandbox.
Last year, the Rhode Center published a report finding that regulatory reforms implemented by the top courts in Utah and Arizona are driving innovation without appearing to pose harm to consumers.
The most recently published report offers state supreme courts with five alternative structures for legal regulation: keep the bar as the regulator, but expand the scope of regulated providers; split regulatory duties across multiple organizations; split regulatory authority and create a new regulator for nontraditional legal services; create a single new regulator for all legal service providers; or redefine the practice of law to other branches of government to regulate legal services.
Each of these alternative structures for regulation of the legal profession have opportunities and challenges, according to the report.
For example, if the state supreme courts create a new regulator for legal service providers, the benefit of this approach is separating the regulation of lawyers from other alternative legal service providers, the report said.
However, the challenge of creating a new regulator for legal service providers is in creating confusion over having "two regulatory bodies overseeing the same general area of activity," according to the report.
The report notes that the legal industry lacks definitive data showing that current licensing requirements and bar rules protect consumers from harm.
"We should acknowledge that many of the rules and requirements we associate with lawyer regulation are often primarily markers of membership in a professional association, rather than consumer protection regulations," the report said.
--Editing by Nicole Bleier.
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