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Board questions fee splitting, paralegal proposals from court’s special committee

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The Board of Governors will debate and make its recommendations November 8

John Stewart

John Stewart

The meeting was the second session where Stewart answered board members’ questions about the recommendations made by the special committee, which was appointed by the Supreme Court in 2019 to look at how legal services are provided and how that affects legal system access. The meeting was devoted to asking questions only. The board will have another special meeting November 8 devoted to debating the special committee’s findings and then deciding on its own recommendations to the court. It will be up to the court to decide what happens to the committee’s proposals.

Bar President Mike Tanner said the court has agreed to wait for the board’s recommendation before considering the special committee’s report, which was submitted June 28.

Board members acknowledged they have received overwhelming opposition from Bar members to the committee’s proposals, both in comments filed with the Bar and directly from their constituents. But Stewart, a former Bar president, said the special committee addressed important matters.

“This is a controversial issue. There’s no question about it,” Stewart said. “I think these issues are important and I think if we don’t address them, we’re making a mistake….

“At the end of the day, economic forces are going to dictate results and I think that we have to be careful with the hubris…that lawyers are somehow so different than everyone else, that we own the province of professionalism and ethics…. That’s a very dangerous hubris to get into. We have to understand that business is different.”

The meeting was devoted to addressing the committee’s recommendations that nonlawyer employees of law firms be allowed to have a minority ownership interest in those firms, that lawyers be able to split fees with nonlawyer entities such as online legal providers, that Florida Registered Paralegals be allowed to provide more services while remaining under lawyer supervision, that Bar advertising rules be streamlined, and that nonprofit law firms be allowed — essentially ratifying the current operating structure of many legal aid agencies.

At its September 8 meeting, the board asked questions about the committee’s conceptual approval for a legal lab where innovative ways of providing legal services would be tested and monitored under Supreme Court supervision. All of the committee’s other recommendations including on fee-splitting, nonlawyer ownership and paralegals, Stewart said, are actually tentative ideas that would be tested in the lab.

He added that the actual recommendation on the lab is that if the Supreme Court is receptive to the idea, the committee be given another six months to fill out the details of how it would operate. That’s the only actual recommendation in the final report, he noted.

Much of the board questioning came over what evidence the committee had that allowing nonlawyer ownership of law firms or splitting of fees with nonlawyers would improve legal system access.

Sia Baker-Barnes

Sia Baker-Barnes

“From my constituents, the biggest question I’ve gotten is, how will this proposal help the problem,” said board member Sia Baker-Barnes. “From a data and metrics perspective from any of the areas that you’ve studied, have you found any objective data that this proposal allowing nonlawyers to have some form of ownership of law firms will help in any way?”

“I would say most likely, no,” Stewart replied, noting there is some encouraging preliminary data from other states and countries, but they are different from Florida. “I don’t think there is data. But where do you get data on something that you can’t do? That’s the problem.”

“From my perspective, if I were sitting in a committee position addressing access to justice, I would want to know whether the proposals that were being raised would actually help,” Baker-Barnes said, asking if the committee had looked at other professions where outside businesses were allowed ownership interests.

“No, we didn’t look to outside professions,” Stewart replied. And he likened the committee’s actions to taking a case to trial, even if a win wasn’t certain.

“That’s not how it works,” Stewart said. “We have to go through the process to find out the answers. Because that very reason is why we really lean toward the lab and we really resisted making rule changes.”

Instead an idea can be tested and vetted and any resulting rule changes will be based on evidence, he said.

John D. Agnew

John D. Agnew

Board member John Agnew noted the purpose of Bar Rule 4-5.4, which governs fee splitting, was to protect the independent judgment of lawyers. He asked how that would be protected if law firms shared profits with nonlawyer owners.

“Our committee never disagreed with that concept [on independent judgment]. Our committee simply felt by having nonlawyer ownership or sharing fees with nonlawyers you haven’t automatically eliminated lawyers’ professional judgment,” Stewart replied. “…. None of the other rules go away…. Permitting one other thing does not give you carte blanche to ignore every other rule that’s in Chapter 4 or any other chapter.”

“That’s not to say it isn’t a slippery slope,” Agnew returned.

In response to another question, Stewart said many Bar members don’t understand what the committee suggested for testing in the lab. It would not allow passive outside investors in law firms, majority ownership by nonlawyers, or other companies to own law firms. It would only allow minority ownership interests by people working for the firm.

And everyone in such an ownership or fee-splitting arrangement would have to agree to be regulated by the court, he said.

“The report talks about anytime you’re going to have anybody who’s not a lawyer participate in the process that whether it is a person or an entity or whatever way they would be permitted…they come under the auspices of the Florida Supreme Court for regulation,” Stewart said. “If our goal is to be protectionist, which is what I hear, that is going to fall on deaf ears.”

The danger, he said, is that the practice of law can be defined as something only lawyers can do and so widely that it includes areas where no lawyers will provide services, whether because of economic or other reasons.

“That means that that consumer can’t get help because it’s the practice of law and no lawyer will do the work,” Stewart said. “That’s an indefensible position, we have to get past that.”

At another point in the meeting, he noted the Supreme Court has allowed nonlawyers to provide what in the past was considered legal services limited to lawyers, perhaps most notably by providing title insurance.

J. Carter Andersen

Carter Andersen

Board member Carter Andersen asked how the special committee came about and whether Stewart, when he was president, had sought to have the panel created.

“It was discussions we had with the court and the court said, ‘Yeah, go study it,’” Stewart said. He also noted that the national Conference of Chief Justices has passed repeated resolutions calling for solutions to access problems, including helping self-represented litigants in court.

On expanding the services by paralegals under lawyer supervision, board member Sandy Diamond noted that lawyers already use paralegals and legal assistants for many tasks. “What’s different about what you all are proposing than what we’re doing now,” she asked.

“I think that really all we’re doing is providing permission for what lawyers are already doing, probably in violation of the rules,” Stewart said. “I don’t think there’s very much difference from a practical perspective.”

Sandra_Diamond

Sandy Diamond

Diamond noted the disputes that arose from the recent consideration of the Advanced Florida Registered Paralegal proposal from the Commission on Access to Civil Justice and which drew opposition, especially from the Family Law and Real Property, Probate and Trust Law sections. The board ultimately took no action. She asked how the legal lab would work out the details of expanded paralegal duties.

Stewart said the lab would lay out a decision-making process to follow. He added that hiring a lawyer would always be seen as the best alternative but the reality is many people can’t afford that.

He said the paralegal proposal is part of what he sees as a third option, which he called “do it with help,” between full lawyer representation and consumers representing themselves.

“The do-it-with-help model is an ever-growing model that I consider to be an underground black-market economy that is existing and growing,” said Stewart, citing the growth of online companies selling legal forms and related services.

The lab is a way to bring those services under Supreme Court regulation, he said, adding, “I think the committee believes the lab was a good way to start to push the envelope without ripping it open or popping the balloon.”

Lawrence_Sellers

Larry Sellers

On advertising, board member Larry Sellers asked if the streamlining of the rules was intended to help lawyers compete and whether the committee’s proposal to eliminate requiring lawyer ads be reviewed before the publication might reduce compliance with the ad rules. He cited Bar statistics that show 56% of submitted ads have a violation of Bar rules.

“It will allow lawyers to more simply get to the consumers in ways that consumers are used to being reached and maybe make us more competitive,” Stewart said. “I do think it will help in that regard.”

As for compliance, he said the Bar doesn’t know now how many ads should have been submitted for review and aren’t. He also said many of the violations in submitted ads might be small, technical matters.

The committee’s proposal would allow lawyers the option of seeking Bar review of an ad, with the provision if the Bar determined that the ad complied with Bar rules, the lawyer would be shielded from a later grievance action.

Board member Hilary Creary asked about the assertion in the committee’s report that allowing nonprofit legal firms might lead to more employment for lawyers. The provision recognizes that many legal aid agencies boards of directors have nonlawyer members.

Hilary Creary

Hilary Creary

“There’s no shortage of work for those legal aid organizations. To the extent they can have more resources, they can employ more lawyers,” Stewart said, adding there is considerable innovation in providing low-cost legal services.

He also said the Legal Services Corporation, which provides federal funding to several Florida legal aid offices, requires that one-third of the governing board be composed of consumers who would be eligible for the office’s legal services.

Creary noted that could raise questions about nonlawyers directing the actions of attorneys, and asked if the committee considered whether such board positions should be unpaid, as they are with current legal aid operations.

Stewart said the committee didn’t discuss that specifically, but added, “Our premise is that they [nonlawyers] will never control the law firm.”

Adriana Gonzalez, a member of the special committee who dissented from some of its recommendations, told the board she thought the committee should have heard from more people. While invited speakers from Utah, California, Arizona, British Columbia and the United Kingdom talked about changes they had made or were considering, she said the panel should have asked people from those jurisdictions with opposing views to speak.

She said she was partially motivated because one speaker lauded the service of nonlawyer “notarios” in helping in immigration cases while she personally has seen great damage done by notarios mishandling cases.

“I don’t think we vetted the issues enough, I don’t think we heard the counter side enough, I think we ignored data that was available to us,” Gonzalez said.

Stewart said the committee was open to anyone who wanted to speak and reminded the board that the committee’s only firm recommendation so far is to take another six months to work out how a legal lab would work.

“To vote no is to say you don’t want the committee to learn more, to do more study,” he said. “Who votes against learning?”

The Bar accepted comments from members about the special committee’s report through October 29, and they will be posted on special committee’s webpage. The special committee’s final report is here.

The special committee was directed by the court to study how legal services to consumers could be improved with lawyers playing a “proper and prominent role in the provision of these services.” It was directed to look at lawyer advertising, referral fees, fee splitting, regulation of lawyers, regulation of online legal service providers, and nonlawyer providers of limited legal services, and related matters.