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Committee continues discussion on sharing fees, nonlawyer ownership

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John Stewart

John Stewart

Moving to what its members know will be sensitive issues on fee sharing and law firm ownership, the Special Committee to Improve the Delivery of Legal Services is awaiting results from questions it has placed on the Bar’s annual membership survey.

The committee, at its January 14 meeting, discussed a wide range of issues, including sharing legal fees with nonlawyers and nonlawyer ownership of law firms.

Committee Chair and immediate past Bar President John Stewart said the committee is only discussing possibilities right now but said it will begin “putting meat on the bones” at its February and March meetings. Its final report is due to the Supreme Court and Bar Board of Governors by July 1.

The committee hopes to have some results from the Bar membership survey, which was sent to members in mid-January and is due back by January 25, when it meets again February 16. Sarah Sullivan, who chairs the subcommittee seeking feedback from lawyers and the public, said the committee was able to get several questions on the survey.

Committee member Josias Dewey said the idea of allowing a way to experiment with rule changes before they become permanent — sometimes referred to as a regulatory sandbox — might be a way to determine the best approaches to any changes to sharing fees or allowing nonlawyer ownership in firms. Dewey chairs the subcommittee looking at those issues.

“In terms of fee sharing, there are a number of different issues and approaches that are raised by any attempt to modify these rules,” he said. “The sandbox may provide a venue where we can have the flexibility to issues that might come up as opposed to trying to theoretically anticipate problems.”

Stewart said he expects the committee will discuss the sandbox idea at its February meeting.

Dewey said the impetus of fee-sharing rules appear to be to prevent aggressive solicitation of clients. But he noted competitors for lawyers, such as online companies marketing legal forms, rely on heavy marketing as part of their business plan.

“In some ways, these rules are beginning to operate to restrict lawyers and limit our ability to compete, while these competitors are creating and finding ways around these restrictions,” Dewey said.

While the subcommittee is looking at alternatives, it has not made any recommendations, he said.

Stewart said the most radical modification would be to change the current Rule 4-5.4 to say sharing fees with nonlawyers is allowed. By extension, that would affect lawyer referral services, allowing nonlawyer ownership in firms, and open up ways to working with online companies that sell forms or provide other legal services.

Committee member Cesar Alvarez said he favored easing restrictions on fee sharing, but added, “I think you need to implement certain restrictions because I can see how this would get out of hand very, very quickly.”

That would include for-profit referral companies giving advice to clients on the worth of their cases and threatening to withhold referrals from lawyers unless the referral companies got a say in how cases are handled.

On nonlawyer ownership, committee members noted that major accounting corporations are setting up legal divisions to offer legal services to their accounting clients, while law firms have no effective way to respond. Members also said that while some claim current protections are needed to preserve lawyers’ independent judgment, others see the restrictions as attempts to limit competition.

Whatever changes are made, Stewart said protection of the public would remain a priority.

“This is my personal opinion…the Florida Supreme Court is open to the consideration of most anything that’s reasonable, as long as there is a mechanism that the public will at least be as well protected as they are now and…they will find themselves more available to receive legal services,” he said.

Stewart also said changes could bring oversight to legal services provided by nonlawyers that are now unregulated.

“It’s an interesting situation that actually by lightening the rules in some respects and coupling with other components, we are actually strengthening the regulatory structure,” he said.

Sullivan noted despite concerns about change there is ample existing evidence that the existing legal system fails to meet the needs of most people.

“We’ll have people who have valid concerns or questions [about the committee’s ultimate proposals] which is where the data and information is going to be incredibly important,” she said, but added, “How can we as an industry say we’re succeeding if we’re failing to meet the needs of 80% of the clients out there?”

Florida is among several states looking at legal regulations and how they affect a changing legal marketplace and access to legal services. California is looking at widespread changes, while the supreme courts in Utah and Arizona have already approved massive rule overhauls.

More information about the committee, efforts in those other states, and related documentation can be found on the committee’s webpage at: https://www.floridabar.org/about/cmtes/cmtes-me/special-committee-to-improve-the-delivery-of-legal-services/.

The committee is charged by the Supreme Court “to study whether and how the rules governing the practice of law in Florida may be revised to improve the delivery of legal services to Florida’s consumers and to assure Florida lawyers play a proper and prominent role in the provision of these services.”

It will specifically look at lawyer advertising, referral fees, fee splitting, entity regulation, regulation of online service providers, and regulation of nonlawyer providers of limited legal services. Additional topics consistent with those subjects may also be addressed.