Ethical Hurdles to Legal Tech Adoption and Growth

My co-author for this 3-part series on the Fight Against the Unauthorized Practice of Law is Billie Tarascio, owner of Modern Law, a family law firm serving the greater Phoenix area, and Access Legal, a legal technology company that provides cloud based legal document automation for law firms and the public.

The unauthorized practice of law is regulated to protect the public, not to protect attorneys from the competition of legal technology companies. As we discussed in our last installment, crying UPL to stop the use of technology in the legal profession is not working, so attorneys need to embrace technology and its many benefits to their practice. Still, though, attorneys need to understand the boundaries that exist when adopting technologies.

Limited-Scope Legal Services

With the availability of technology to assist lay people, more and more are requesting lawyers provide an alternate way to receive attorney services.  Sometimes a potential client will approach an attorney with paperwork they have prepared themselves, or they will approach an attorney asking for in-court representation only. This provides attorneys with new opportunities, but also new ethical challenges.

Like most jurisdictions, Arizona specifically allows attorneys to practice limited-scope legal services. This means an attorney can take on part of a case, be paid for that portion, and support the client as he or she continues to represent him or herself. In Arizona, the representation must be reasonable to the client and the matter, and the agreement as to the limitation on scope must be clearly defined in writing. In the case of a client seeking only in-court representation, the attorney would need to analyze the matter and the client, and determine how much time they would need to competently provide limited-scope legal representation. It can be ethical, and it can be beneficial to both the client and the attorney, but the process requires careful analysis of all of the facts in the case and the specific ethical rules that apply.

Partnership and Sales Channels

Legal technology companies collaborate with attorneys, and those relationships can be complicated. In the non-legal world, a simple word like “partnership” refers to  two companies embarking on some type of joint effort, commonly a co-marketing effort or reseller agreement. It is rarely seen as a legal partnership. However, the law comes into play when legal tech companies and attorneys collaborate, because attorneys must adhere to more stringent advertising and marketing rules than the tech company does.

Referral Fees and Fee Splitting

On the legal technology company side, care has gone into the pricing and fees to avoid challenges when working with attorneys. LawDingo has an interesting model: Lawyers pay a subscription fee to be listed on its site and earn fees from the clients directly.

Attorneys have to be very careful with respect to earning referral fees from a non-legal business. Based on a recent Arizona case, a lawyer can earn a referral fee from a non-legal entity if referring someone who is not a client to that entity. How does this affect attorneys’ collaboration with legal tech companies? Well, if a potential client comes to an attorney and it’s not a fit, the attorney can send the client to a non-legal company in exchange for a referral fee. We recommend investigating the ethical rulings in your state as multijurisdictional issues can complicate matters quickly.

Ethical rules exist to protect the public as do the rules for the unauthorized practice of law. As the many hundreds of legal technology companies start to work together through automation, the legal industry should move its focus away from trying to stop progress and instead toward how to collaborate with legal technology for mutual benefit.

 

About Mary Juetten

Mary Juetten
Mary Juetten is the founder and CEO of Traklight and the co-conspirator behind Evolve Law. She specializes in helping companies in transition or startup create sustainable, operational, and financial growth. Her financial credentials and legal degrees provide a foundation for consulting on business or practice improvement. Mary created the only self-guided risk management software platform that creates a custom business risk and intellectual property (IP) strategy and automates the client question and intake process for business, IP, and startup or venture attorneys. Mary is an international writer, who contributes to Forbes, the ABA's Law Technology Today, GoDaddy Garage, and the Lawyerist plus wrote KPIs for Small Law Firms for Thomson Reuters; speaker; and mentor. Mary is on the GLSA Board and is a LegalShield Access Advocate.

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