Deregulation Versus De-monopolizing — A Complex Debate Just Begining

There has been substantially more attention in the blogsphere to the deregulation of the legal profession.  See, e.g. the Wall St. Journal, law librarian blog, elawyering blog.

All are worth reading.  But I would urge attention to the difference between deregulating versus reducing the monopoly of the profession.

The issues having to do with removing regulations, such as by allowing non-lawyer ownership in law firms, dealing with interstate practice, allowing automated practice, or even eliminating all regulation of how legal service are provided, are very different from the question as to whether certain services now currently under the control of a professional monopoly should remain under that monopoly.

Its particularly interesting that a recent UK blog, by Stephen Mayson, points out that rhetoric notwithstanding, even in the UK, the profession is not being de-regulated in the normal sense of the word.

Time and again I hear (or read) that the Legal Services Act is deregulating the legal services market.  It is not.  Everything that is currently regulated remains so.

It is true that people who are not authorised persons (shorthand = legally qualified) are able to offer legal services that are not reserved activities.  This was true before the Act, which makes no difference to this situation.  So no deregulation there.

It is true that the Act now gives the power for the reserved activities to be changed.  It would therefore be possible for something that is currently regulated through reservation to authorised persons to become deregulated if the activity ceases to be reserved.  But I have heard not a whisper that this is likely to happen.  So no deregulation there, either.

Now, an activity that is presently not reserved could become so (the Legal Services Board is just starting to look at will writing and estate administration).  But that would bring what is presently unregulated – if not done by authorised persons – within the regulatory framework.  So still no deregulation.

Existing regulators – or even new ones looking for approval – can apply to regulate more reserved activities, but that will bring their members within (or more firmly within) regulation.  Still no deregulation.

And finally, people who are not authorised persons can apply to become members of legal disciplinary practices (until the ABS licensing framework comes into play), or members of ABSs, or to be approved as Heads of Finance & Administration (or the SRA-equivalent of Compliance Officers for Finance & Administration), and ABSs as entities will need licences.  In other words, more people who are not currently regulated will have to become regulated in order to operate.  No deregulation.

For the life of me, I can’t find any deregulation.  Perhaps what the ‘deregulators’ are really griping about is the increase in regulated competition.  But that’s a gripe about competition, not deregulation.

If we in the US were also to allow non-lawyers to do the some of the same things as lawyers do, but put in place a serious regulatory structure, we would in some ways be following the UK path.

Richard Moorhead comments:

The key issues that are raised by the Legal Services Act [US nomenclature alert. This is about the regulatory system, is not about administration of legal aid] are whether current regulatory tools adequately cope with current and growing levels of competition. They are surfacing the irrationalities which lay behind the old scheme and which have only half been tackled by the Clementi-inspired reforms. It is the quality of regulation that counts; market liberalisation and the separation of professional representation and regulation is beginning to test that quality. We can expect a much fuller and somewhat better informed debate about what works than was the case under the old structures and within the not too distant future further, probably radical, reform. The success of the Clementi reforms will be in exposing the flaws in our system, rather than solving them. [Bold added]

This suggests just now complicated these issues are, and how many parts have to move around.  It seems that the debate is only just starting in the US.  Nor can the ABA Ethics 20/20 process is somewhat engaging this (see, e.g. this paper on alternative business structures, which summarizes such structures in other countries).

From an access to justice point of view, I think the most important step is to open up things that you do not need three years of law school to do to people who have less training, but are well regulated from the consumer protection point of view.

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About richardzorza

I am deeply involved in access to justice and the patient voice movement.
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